管理層發言
Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global's Fourth Quarter 2025 Investor Call. This call and the associated webcast are the property of Liberty Global, and any redistribution, retransmission or rebroadcast of this call or webcast in any form without the expressed written consent of Liberty Global is strictly prohibited. Today's formal presentation materials can be found under the Investor Relations section of Liberty Global's website at libertyglobal.com. After today's formal presentation, instructions will be given for a question-and-answer session. Page 2 of the slides details the company's safe harbor statement regarding forward-looking statements. Today's presentation may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including the company's expectations with respect to its outlook and future growth prospects and other information and statements that are not historical facts. These forward-looking statements involve certain risks that could cause actual results to differ materially from those expressed or implied by these statements. These risks include those detailed in Liberty Global's filings with the Securities and Exchange Commission, including its most recently filed Forms 10-Q and 10-K as amended. Liberty Global disclaims any obligation to update any of these forward-looking statements to reflect any change in its expectations or in the conditions on which any such statement is based. I would now like to turn the call over to Mr. Mike Fries.
Hello, everyone, and thanks for joining us today. As you would have seen by now, in addition to our results, we announced two significant transactions earlier today, which, of course, we'll address in our prepared remarks. As a result, I think this call may run over 60 minutes. I hope you can stick with us because there's quite a bit to talk about here. We've broken this down into our typical quarterly results presentation, which Charlie and I will breeze through as we usually do, perhaps a little faster than normal, and then we'll move into more of a strategic update like we did two years ago at this time. I also think it might be a good call to follow the slides that we're broadcasting, especially in the second half. But let me jump right in on Slide 4. And certainly, by now, you are all familiar with how we organize and manage our business today. As illustrated here, everything falls into one of three operating verticals. Liberty Telecom comprises our four national FMC champions that generate $22 billion of revenue and $8 billion of EBITDA on an aggregate basis and where our primary goals are to drive commercial momentum and importantly, unlock equity value for shareholders. Much more on that in a moment. Liberty Growth on the far right houses our portfolio of media, infrastructure and tech investments totaling $3.4 billion today. And here, we're focused on rotating capital, right, and investing in high-growth sectors with scale and tailwinds. And of course, in the center sits Liberty Global itself with $2.2 billion of cash and a team with decades of experience operating and investing in these businesses. Now I'll come back to this slide and the strategic update. But first, let me provide some highlights on each of these for 2025. So it has clearly been a busy year for us on all three fronts. And as Slide 5 points out, we feel like we've delivered on our core strategic priorities. There's a lot of detail here, so I'm just going to hit a few of the high points. We'll talk about our telecom operating results in the next couple of slides, but we're pleased with the momentum that our commercial and network strategies are delivering, especially in the second half of the year, supported in part by the benefits we realized from AI. All of our three large OpCos hit their guidance targets last year. When it comes to unlocking value in telecom, a key goal for us, as you know, you've no doubt seen our announcements on the U.K. fiber transaction and our acquisition of Vodafone's interest in the Netherlands. We'll dig into both those deals shortly, but this is exactly what we said we would do on our call last year and the year before. At Liberty Global, we've totally reshaped our operating model, having reduced our net corporate spend by 75% in the last 12 months. Needless to say, we are excited to see how this new guidance leads its way into analysts' sum-of-the-parts calculations. And we continue to allocate capital to the highest return. As you know, we did reduce the buyback last year from 10% to 5% of shares partially, to be honest, in anticipation of some of these varied transactions. And so far this year, we're not actively in the market, but we always remain opportunistic on our stock and we'll keep you abreast of our plans throughout the course of the year versus guiding to them. And with respect to our cash balance, pro forma for the transactions announced today and for what we expect to realize in further asset sales, we should end the year with $1.5 billion of cash, and Charlie will get into that in a bit more detail in a moment. And then finally, our growth portfolio remains highly concentrated with five assets comprising 70% of the $3.4 billion in value. We couldn't be more excited about Formula E and the progress we're making on the Gen4 car, our racing calendar and of course, our sponsors. And we have renewed focus on the experience economy. I'm not going to get into much detail here. But by this, we mean live events, sports, etc. We probably looked at 100 deals in this space. We've done real work on about 40, and we've only closed a handful of very small transactions. So that should give you some comfort that while we're excited about this sector, we're staying very disciplined as we look to rotate capital. Now the next two slides summarize Q4 operating performance for our telecom businesses. In the U.K., Lutz and the team have implemented a number of things that helped improve broadband performance throughout the year, initiatives like bundling Netflix and being recognized as a top U.K. broadband provider. Those things drove a strong Q4 as well as stable ARPUs. Postpaid mobile results were impacted, however, by the increases that they took in October. Hopefully, we'll see improved performance in '26, especially as 5G coverage continues to grow and pricing pressure settles. In Ireland, a combination of fiber wholesale activations and improved network performance, actually, they are also ranked the best provider in the market and off-net expansion, supported net growth in the fixed base with stable ARPUs. Mobile in Ireland continues to grow steadily. Remember, we're an MVNO there, helped in part by a EUR 15 offer launched in June. In the Netherlands, Vodafone Ziggo's How We Win plan is driving substantial improvements in the broadband base. Becoming the largest provider of 2 gigabit broadband speeds in the market and recent recognition as the best TV provider helped make Q4 the single best result in fixed services in nearly three years with steady improvement over the last six months carrying into 2026. Postpaid mobile growth in Holland continues to be supported by nearly universal 5G coverage and a strong flanker brand. And then finally, Telenet had its highest quarterly broadband results in three years, helped by fixed mobile convergence in the South and a strong Black Friday period. And similar to other markets we operate in, ARPUs were fixed and mobile are very stable. Now if it wasn't enough information for you, we will be discussing three out of these four markets in our strategic update later in the call, including a lot more commentary on their performance and outlook. So in the meantime, Charlie, over to you.
Thanks, Mike. Now turning to our Q4 financial highlights. Our operating companies in the U.K., the Netherlands and Belgium delivered on their full year guidance metrics despite challenging market conditions. VMO2 delivered a revenue decline of 5.9% on a reported basis, which was impacted by lower Nexfibre construction revenues due to a slowdown in the fiber build and also sustained competitive pressure in both the fixed and mobile markets in the U.K. On a guidance basis, excluding Nexfibre construction and O2 Daisy, we delivered modest growth for the full year. Adjusted EBITDA declined by 2.4% on a reported basis, primarily driven by lower Nexfibre construction profitability. Excluding this, adjusted EBITDA fell by 1% in Q4, but we still achieved growth overall for the full year of positive 1%. Moving to VodafoneZiggo, we saw a revenue decline of 2.3% in Q4, driven by fixed churn and reduced low-margin IoT revenues. This was partially offset by the annual price adjustment and higher Ziggo Sport revenues. Adjusted EBITDA declined 3.4% in Q4, driven by this lower revenue and higher costs related to commercial initiatives. The full year figures were in line with the guidance in Q1 for the new How We Win strategy. At Telenet, we saw a revenue decline of 1.3%, driven by our strategic decision not to renew the Belgium football broadcasting rights and lower programming revenues. Adjusted EBITDA declined by 9.9%, driven by elevated labor and marketing costs as well as higher professional services and outsourced labor spend. Turning to our treasury update. We've been extremely proactive through 2025 and the early part of 2026, and extending our 2028 and 2029 maturities. And we successfully refinanced close to $15 billion across our credit silos. At both VMO2 and VodafoneZiggo, we have fully refinanced all 2028 maturities following successful term loan refinancings, senior secured note issuances and private taps within these credit silos. In Belgium, as we announced in Q3, we have EUR 4.35 billion of committed financing at Wyre, which is contingent on BCA regulatory approval of our fiber sharing agreement. A portion of the proceeds of around EUR 2.34 billion are allocated to repay the intercompany loan with Telenet and will be used to rebalance leverage at Telenet. We intend to further repay some of the 2028 debt at Telenet with the proceeds from our partial Wyre stake sale, which is expected to complete this year. All of this proactive refinancing activity has significantly reduced our 2028 maturities and maintained our average tenor of around 5 years at broadly comparable credit spreads to our historic levels. Turning to the next slide. We remain committed to our disciplined capital allocation model as we rotate capital into high-growth investments and strategic transactions. Starting on the top left, we successfully delivered against all free cash flow guidance metrics for the year across our OpCos and JVs. Additionally, following our corporate reshaping program, Liberty Services and Corporate closed 2025 ahead of guidance at negative $130 million of adjusted EBITDA, which is around $20 million better than our $150 million target. Moving to the Liberty Growth walk in the bottom left. The fair market value of our growth portfolio remained broadly stable versus Q3 at $3.4 billion. This was driven by modest investments in Nexfibre, AtlasEdge and EdgeConneX, offset by the partial disposal of our ITV stake and the full exit of our Enfabrica stake as well as positive fair market value adjustments at Formula E and UPC Slovakia, which has been held in the growth portfolio until the sale process completes later this year. Turning to our cash walk on the top right. We ended the year with a consolidated cash balance of $2.2 billion. During the quarter, we received $162 million of upstream cash and JV dividends and $140 million of net cash proceeds from disposals in our growth portfolio, including $180 million from the partial ITV stake sale. We spent $34 million on our buyback program during the quarter, repurchasing a total of 5% of our outstanding shares during the year. Moving to the bottom right, we are aiming to end 2026 with around $1.5 billion of corporate cash. After deducting for the cash outflows related to the M&A transactions Mike will touch on in a minute, we intend to replenish our corporate cash with a combination of dividends and cash upstream from our operating businesses as well as noncore asset disposals from our growth portfolio. Turning to Liberty Growth in Media and Sports. Our strategy remains to invest in live sports and entertainment platforms with growing global fan bases. Formula E is our lead example of this, and Season 12 has started strongly ahead of the launch of the Gen4 car. Our data center assets, EdgeConneX and AtlasEdge, continue to show strong top line revenue growth, supporting a $1 billion-plus year-end valuation. And our energy transition assets also made big steps forward in 2025. Egg Power secured GBP 400 million of senior debt to help fund over 400 megawatts equivalent of wind and solar power projects, and Believ, our destination charging business has now built 2,500 public charging sockets, which are averaging around GBP 1,500 of EBITDA per socket with a further 23,000 awarded to them by U.K. local authorities. And they're currently bidding on a large number of additional sockets, which are being awarded. In tech, the focus is on AI. We made a strategic investment in 11 labs, and we're also moving our in-house AI investments into the growth pillar, given their potential to sell services to third-party customers outside the Liberty family. We've also established a new services pillar and have transferred Liberty Blume into it from Jan 2026. Now Liberty Blume develops tech-enabled back-office solutions for Liberty Global companies as well as third parties. It delivered over 20% revenue growth in 2025, achieving over GBP 100 million of revenue with an order book of nearly GBP 400 million. The initial value has been set at GBP 100 million, and we've hired a new CEO to accelerate growth. Starting January 2026, we're also introducing an annual management fee of 1.5% of assets under management paid by Liberty Growth to Liberty Services. This fee will be funded by distributions from the growth portfolio, including disposals and will be used to fund direct and allocated operating costs such as treasury and related legal services, and these are all directly attributable to the growth portfolio. Turning to our guidance for 2026. We're providing guidance by operating company. For Virgin Media, O2 from Q1 2026, we will move to new disclosure, which better reflects the three key operating verticals following the creation of O2 Daisy. Now these are consumer, business and wholesale. There's a pro forma information in the stand-alone VMO2 release, which explains this further alongside updated KPI disclosures. On this basis, the VMO2 revenue guidance is now set on total service revenues, which we expect to decline by 3% to 5%. Now this is adjusted for the impact of the Daisy transaction, which is driven by continued promotional intensity, as well as planned streamlining of the B2B product portfolio following the creation of O2 Daisy. Adjusted EBITDA is also expected to decline by 3% to 5%, also against the comparable period adjusted for the Daisy impact, driven by lower revenue and lower gross margin due to the changing customer mix. Stable property and equipment additions of GBP 2 billion to GBP 2.2 billion, excluding right-of-use additions due to continued investment in 5G and fiber-to-the-home and adjusted free cash flow of around GBP 200 million for the year, supporting cash distributions to shareholders of the same amount. For VodafoneZiggo, we expect stable to low single-digit decline in revenue, driven by a lower fixed base and the flow-through of the front book pricing impact, albeit with support from continued price indexation in fixed and mobile. Mid- to high single-digit decline in adjusted EBITDA, driven by OpEx investments into network resilience and service reliability. Property and equipment additions to revenue is expected to be around 23% to 25%, driven by continued 5G and DOCSIS 4.0 investments, as well as the CapEx component of investments into network resilience and service reliability. Now to give more detail on this additional investment, we expect EUR 100 million of incremental investment of OpEx and CapEx into network resilience and service reliability during 2026. Now this will reduce to EUR 50 million OpEx impact in 2027 and 2028. And we're expecting adjusted free cash flow to be around EUR 100 million with no shareholder distributions planned for the year. For Telenet, we're introducing new full year 2026 guidance based on IFRS financials, excluding Wyre. We expect stable revenue growth, reflecting a stable operating environment and the annual price indexation under Belgium regulations, low single-digit growth in adjusted EBITDAaL, supported by OpEx savings from significant digital and IT investments and continued lower programming costs. Property and equipment additions to revenue of around 20% as investments in 5G and digital upgrades step down and positive adjusted free cash flow of around EUR 20 million. And finally, for Liberty Corporate, we expect around $50 million negative adjusted EBITDA, driven by the annualization of the cost savings from the corporate reshaping that took place in 2025 and the implementation of the new 1.5% management fee from the growth portfolio.
Thanks, Charlie. Great job. And now we're going to switch gears to what I think is the most important part of today's call. And that, of course, is an update on the key transactions we've just announced and how they significantly advance our plans to deliver value to shareholders. I'll start by revisiting the first slide that I showed you today, and that's the three core pillars of our operating structure, Liberty Telecom, Liberty Growth and Liberty Global. I won't go back through the strategies for each of these. I think you've got them by now. But what I have done on this slide is present a very rudimentary sum of the parts valuation exercise for these three pillars at the bottom of the slide. It shows that the Liberty Growth portfolio today, accepting the fair market value that Deloitte has prepared, is worth roughly $10 per Liberty Global share. Our corporate cash of $2.2 billion, even after a reasonable reduction of the value for the $50 million of corporate spend this year, is roughly $6 per Liberty share, which means that with an $11 stock price today, there's at least $5 per share of negative value being ascribed to our Liberty Telecom businesses. And of course, there are multiple ways of arriving at these figures. Some people start by valuing Liberty Telecom and then applying discounts to cash and Liberty Growth and Corporate. But I like this approach. Cash is cash, and we believe the growth assets are valued fairly and appropriately. More importantly, we're rapidly turning those growth assets into cash. We've already exited something like $1.6 billion in the last six years. So whether it's negative $5 or $0, you can see why we have focused a lot of time and attention on creating and delivering value in our telecom portfolio. Of course, the Sunrise spin-off just 14 months ago was step one. That transaction delivered what is today roughly $13 per share of value to Liberty Global investors, far more than anyone expected at the time or what the implied value was for that business at the time. And that's why we can say our stock really on a combined basis is up meaningfully over the last two years. Now moving to the next slide, here's another thing that gives us some confidence in the value of our telecom business. The European telecom sector has been experiencing a broad-based rally this year with the Euro Telco Index up 16% year-to-date and just about every major incumbent telco, and you know all the names, up even more than that, 20%, 25%. So what's happening here? We see three key tailwinds impacting the sector. First, of course, is an improving regulatory environment. This is not to say that we're totally satisfied with where things stand. You know us better than that. But if you look at the U.K. and the changes they've made to the CMA or if you look at the recently published draft of the EU's Digital Networks Act, we believe there's a good chance regulators continue to loosen rules around consolidation and spectrum policies, especially in the age of AI, where telecom continues to be perceived rightly as critical infrastructure for consumers, for businesses and for governments. Secondly, just as we are seeing in our own operations like Telenet, where 5G CapEx is largely behind us now or Ireland, where our fiber build is coming to an end, there is light at the end of the CapEx tunnel. And when you combine declining CapEx intensity with Telecom's high margins and stable revenues, you've got a strong recipe for improving free cash flow. And then finally, there is the AI thesis. It's hard to find an industry more ready to benefit from AI-driven efficiencies, customer improvements and network automation than the telecom sector. In addition, as AI permeates every aspect of our lives, our role, telco's role as foundational connectivity and data transport providers, I think, continues to increase. And then lastly, there appears to be a rotation going on here. Investors are growing a bit sour on how capital-light software-driven industries and rotating capital into more infrastructure-based or defensive sectors where AI is a net-positive and, quite frankly, unlikely to be as disruptive over time. I think the impact of AI, if you ask me, on our industry will be positively transformational. I recently asked the CEO of one of the big tech companies, 'Look, how do I go from spending $14 billion a year on OpEx to $7 billion? That's what I want to do.' He said, 'Bring me your P&L, and we'll go through it.' The point is we're just scratching the surface today. I think the upside for us from AI is massive, and it's massive for our entire industry. Now so with that as background, on this call, last year and the year before, we laid out two very specific goals related to our telecom businesses, and they're summarized here on Slide 16. The first was to prepare each of our Benelux operating companies, this was last year, for the next phase of value creation. And I'd say we achieved that goal. Bringing in Stephen van Rooyen as CEO, has been a game changer for VodafoneZiggo. And of course, today, we're announcing the acquisition of Vodafone's 50% stake in VodafoneZiggo in order to advance our plans to spin off a new company that combines our Dutch and Belgian operations. More on that in a second. And in the U.K., we committed last year to advance our plans to monetize our fixed network infrastructure for both financial and strategic reasons. And early last year, we pivoted away from a pure NetCo, as you know. But together with Telefonica, we continue to evaluate accretive ways to grow and finance fiber infrastructure in the U.K. Today, of course, we announced the acquisition of the U.K.'s second-largest AltNet, creating what will ultimately be an 8 million home fiber platform with the opportunity to further consolidate a fragmented market. So let's get into these deals, beginning with the Vodafone acquisition on Slide 17. After what can only be described as a very successful, and I mean, seriously rewarding partnership with Vodafone in the Netherlands, we're pleased to announce an agreement to acquire their 50% stake in exchange for EUR 1 billion of cash plus a 10% equity interest in a new company called Ziggo Group, which will own 100% of VodafoneZiggo and 100% of Telenet in Belgium. Now there are three primary reasons we're doing this, three primary benefits from this deal. To begin with, we believe the net present value of both operational synergies and incremental service revenues from this transaction and combination total about EUR 1 billion alone. And of course, pretty much all that accrues to us. Second, we think the combination of Holland and Belgium is a financial winner. As the chart on the right shows together, the two operations serve 7 million mobile subscribers and over 5 million broadband subscribers with total revenue of EUR 6.6 billion and over EUR 2.5 billion of EBITDA. The combination also creates a clear roadmap to reduce leverage to what we're estimating will be about 4.5x through a combination of synergies and improving operational performance. In fact, we think we'll generate $500 million of free cash flow by 2028. And then third and perhaps most importantly, we are announcing today our intention to list Ziggo on the Euronext exchange in 2027 and to simultaneously spin off our 90% interest to Liberty Global shareholders as we did in Switzerland. Interestingly, similar to Sunrise, there is a strong equity story here. Belgium and Holland are rational markets just like Switzerland. We have a clear network strategy in each country like we have in Switzerland. Our plans to reduce leverage are front and center and actionable like they were and are in Switzerland. And the financial profile should support both free cash flow and dividends in the future. Interestingly, this is more anecdotal, just as Sunrise was once a very successful public company that we took private and then relisted. Ziggo was also a very successful public company that we took private. So we will be reintroducing Ziggo to the public markets as we did with Sunrise. Now just a quick update on Slide 18 of VodafoneZiggo's recent performance. There's no question that Stephen's How We Win plan is driving clear operational turnaround. The combination of OpEx savings, repositioned broadband pricing, speed upgrades, and a multi-brand strategy are delivering materially lower churn. And you can see that on the bottom right of this slide, where Q4 '25 was the best broadband performance, I think, in 10 quarters, and things continue to look good into 2026. We've also provided a medium-term outlook for VodafoneZiggo on Slide 19. And while 2025 EBITDA was in line with our plan, 2026 guidance, as Charlie indicated, shows a decline impacted in part by our largely one-off investment we're making in network resilience and service reliability. In 2028, however, we expect EBITDA growth to rebound. We're not giving you actual numbers here, but we are confident in that trajectory. That EBITDA growth, combined with a very stable CapEx envelope should generate the meaningful free cash flow I just referenced. And as Charlie indicated, leverage will peak in 2026, but should decline thereafter, both organically from EBITDA growth and through asset sales like our tower portfolio, the proceeds of which we intend to use to reduce debt. And then a quick strategic update on Telenet on Slide 20. We can't underestimate the importance of the steps we've taken over the last 24 months in Belgium to both rationalize the market structure and create a clear operating road map for both of our businesses there. As you know, this is the first time we've completely carved out a fixed NetCo, which we call Wyre, and have even gone one step further by entering into a network sharing arrangement with the incumbent telco Proximus that will create arguably the most attractive fiber wholesale market in Europe. And to facilitate the carve-out, we secured EUR 4.35 billion of new capital to both fund the Wyre build and reduce leverage at Telenet. And as we've discussed, we're in the process of selling a stake in Wyre with the proceeds earmarked for further deleveraging in Telenet. The goal here is to bring Telenet's midterm leverage down to the 4.5x level. And Telenet, as part of the new Ziggo Group, I think, represents a very strong equity story itself with outstanding retail brands, significant B2B growth, an upgraded 5G network and long-term access to fiber. Perhaps even more importantly, though, with CapEx declining significantly this year, Telenet's free cash flow is at that inflection point and poised for continued growth. Now let's switch gears to the U.K. and our announcement today to use our fiber JV, Nexfibre to acquire Substantial Group, which consists of the Netomnia fiber network and a 500,000 subscriber broadband customer base for a total enterprise value of GBP 2 billion and a net payment of GBP 1.1 billion at closing. Now I'll walk through the various transaction steps on the next slide, but the goal here is simple. The first goal is to create the second largest fiber network after BT Openreach. When you combine Netomnia's 3.4 million fiber homes with Nexfibre's existing 2.6 million fiber homes and then you add 2.1 million VMO2 homes that will be made available to Nexfibre for upgrade, the platform will ultimately reach 8 million fiber homes by 2027. As I'll outline in a moment, there are significant benefits to VMO2 stakeholders here. This is a fantastic outcome for VMO2. It's also a strong vote of confidence in the U.K. generally. We want the U.K. government to know that we, together with our partners, are willing to commit significant capital to the U.K. based upon their pro-growth policies. And this next slide is one that you'll probably want to print out and tuck away somewhere. As I said, this is a complicated transaction, they often are, and this is an attempt to simplify it as best we can. On the left-hand side, you'll see the money and asset flows. The green numbers, when you take a look at the slide, if you're not looking at it now, the green numbers simply show the cash and how it moves from and to the various parties here. Approximately GBP 1 billion of equity will be injected into Nexfibre, the acquisition vehicle, and that's our 50-50 JV with InfraVia, of course. And this will consist of GBP 850 million of cash from InfraVia and GBP 150 million from Liberty and Telefonica. So the first point to make is that Liberty Global directly will be responsible for GBP 75 million of cash in order to complete this transaction. The GBP 1 billion together with a new debt facility, I think it's about GBP 2.7 billion, will fully fund both this transaction and the longer-term strategic plans for Nexfibre 2.0. Now once capitalized, Nexfibre distributes a little over GBP 2 billion of cash, GBP 950 million to Substantial Group for the Netomnia fiber assets, and GBP 1.1 billion to VMO2. Of course, VMO2 will use that capital to both acquire the broadband subscribers for GBP 150 million and reduce leverage. The vast majority of the GBP 1.1 billion going to VMO2 is in exchange for a significant commitment to utilize the Nexfibre network on a wholesale basis. That's how these deals work. Specifically, VMO2 will provide access to 2.1 million of its own homes and we will agree to pay Nextfibre wholesale access fees on those homes once they're upgraded to fiber. And additionally, VMO2 will pay wholesale access fees day one on another 2.5 million homes that overlap Nextfibre's footprint. So there's substantial value being contributed to the Nexfibre 2.0 plan by VMO2, and that's why it's being paid. Now as I mentioned, the benefits to VMO2 are substantial. To begin with VMO2 gets cash to reduce leverage. This is necessary, of course, given the increased wholesale fees paid out to Nexfibre. Second, it will end up with 500,000 additional broadband customers. Third, there will be substantial CapEx avoidance here, both in terms of the cost to build and the cost to connect millions of premises that will no longer be the responsibility of VMO2. We think the NPV of that is around GBP 800 million. Fourth, VMO2 will be able to continue providing construction and managed services to Nexfibre in exchange for revenue and positive EBITDA margin. The NPV of that contract, we think, is around GBP 400 million. And then finally, in addition to having access to the second largest fiber footprint in the U.K., VMO2 will also receive a direct stake in Nexfibre 2.0. Now looking ahead, I think this transaction also opens up the market for further consolidation, something that we have talked about for a long time and may just be on the horizon. One quick slide here providing additional context on VMO2's operational outlook, as I promised. On the left-hand side of Slide 23, we make the point that despite a highly competitive market, VMO2 has delivered pretty good financial results, especially in comparison to its peers. While revenue has been largely flat over the last four fiscal years, and you know that, EBITDA has grown annually at around 1.5%. During the same time frame, VMO2 has generated GBP 2.6 billion of cumulative free cash flow and distributed GBP 5.2 billion to Liberty and Telefonica in the form of dividends. We are happy shareholders here. That's clear. Now the rest of the slide identifies the main drivers of growth moving forward and why we're confident in the VMO2 story, including three powerful brands, Virgin Media, O2 and Giffgaff, that reach every segment and help drive fixed mobile convergence. There's also synergies and B2B growth from the recently completed O2 Daisy merger, a strong wholesale position as the number one MVNO provider and now a key partner in the second largest fiber footprint. I mean, Lutz and the team, we believe we have a pretty good head start in AI-driven innovation and efficiency as well. And on top of that, there's the opportunity to drive growth off-net to the 10 million homes we don't reach today. So a lot of really good things happening in the U.K. market for us. Finally, this is the key takeaways here on the final slide, what we'd like you to bring home from the second half of this call, right? Number one, we think the telecom sector broadly and equity values in Europe more specifically are poised for continued appreciation in the eyes of investors. Tailwinds from consolidation, stable cash flows and what appears to be a rotation into stocks that will be net beneficiaries of AI as opposed to roadkill are drivers here. Hopefully, by now, you're convinced that we are serious about delivering value to shareholders. The Sunrise spin-off was always step one. We told you that. And the transactions we announced today, in particular, the Vodafone stake acquisition and our intention to list and spin off the new Ziggo Group will be step two. In the meantime, we worked extremely hard to reshape our corporate operating model. This is not just a cost-saving exercise, even though it did save considerable costs. We believe that our structure today is fit for purpose, both to continue operating and investing in the TMT sector as we've done for the last 20-plus years, but also to provide our unique form of expertise to existing and future affiliates. Now while we were only marginally successful in convincing analysts to look at our corporate costs differently, we have been spectacularly successful at reducing those net corporate costs, as I said, by 75%. That is going to accrue to the benefit of our stock price. And we're excited about our growth platform. We have a great track record here, and we're focused on the right sectors where we have a clear right to play, as they say, and where there are tailwinds and scale-based opportunities that I think we're uniquely qualified to pursue. So stay tuned to see what we do there. And then finally, in our world, capital allocation is everything. Now where you choose to invest your capital, especially in a capital-intensive business, has never mattered more. We've always run our telecom businesses as if we're going to own them forever. And even in that context, they generally have not required any cash from us to achieve their strategic and operating objectives. We will invest in a telecom business when it unlocks value for shareholders. We've said that many times, like we did with Sunrise, deleveraging the company pre-spin and like we're doing with the acquisition of the Vodafone stake in Holland. We have been significant buyers of our own stock. $15 billion over the last nine years to be exact, reducing the number of shares outstanding by 63% and ensuring that those who stuck around with us end up with a bigger piece of the pie. If you owned 1% of our company in 2017, you ended up with over 2.5% of Sunrise, for example. And finally, we do believe there will be opportunities in tech, infrastructure, energy, media, sports, and live entertainment. These are areas where we have significant deal flow, great partnerships lined up, $10 per share of value and importantly, strategic flexibility to deliver that value to shareholders. So hopefully, that update was helpful for you, especially on the recent announcements of the two deals this morning. So with that, operator, we'll get to questions.
分析師問答
The first question will go to Robert Grindle with Deutsche Bank.
My head is spinning with all the news you guys have provided. So I'll ask one question about the U.K. deal. Eight million Nexfibre homes post deal completion and the 2.1 million HFC home upgrade. Do you think that definitively unlocks the U.K. wholesale opportunity in a major way? Do you think you have to wait to get to the full 8 million? Or are you on a course before you get to that point to get more wholesale business in?
I'll address that, Robert. Thanks for your question. Andrea or Lutz can add to this as well. We expect to reach the 8 million homes relatively quickly, probably by the end of 2027. This is a strong fiber target for Nexfibre 2.0, thanks to the contributions from the three entities. VMO2 will be a key wholesale partner for that 8 million home footprint. It's important to note that Lutz and VMO2 are continuing to upgrade their network. An additional 12 million homes will be part of the VMO2 network enhancements. Therefore, we anticipate effectively having a footprint of 20 million homes, with the majority being fiber. Our primary focus will be on expanding and managing our customer base within that 20 million home network, while also providing much-needed wholesale opportunities in the market. Does that answer your question?
It does, Mike. Is there a timeline on getting the rest of the VMO2 network upgraded?
Well, I don't know if we've disclosed that timeline. Lutz, if you want to reference that, let me know if we disclose that or not.
I would add that we have already upgraded 5 million homes to fiber out of the 13 million we plan to upgrade. So you can add these 5 million to the 8 million, giving you quick access to 13 million fiber homes. As for entering the consumer wholesale market, we have always indicated that we would do so. The more homes with fiber we can offer, the more appealing it becomes. We haven't provided any further guidance on how quickly we will upgrade the remaining homes, and we prefer not to at this time.
Our next question will go to the line of Josh Mills with BNP Paribas.
Maybe I'll take my questions on the VodafoneZiggo transaction. I think you're still talking about a stable CapEx envelope over the guidance period. But now that you're creating this new Ziggo Group with more scale, does it change your appetite or opportunity to invest more on the cable to the fiber upgrade strategy? Is there any synergies there you can take from your learnings in the Telenet business and bring them over to the Netherlands, it would be very helpful. And then secondly, I think on Slide 17, where you talk about the clear roadmap of bringing Ziggo Group leverage to 4.5x. Is that all organic deleveraging? Or would you be willing to inject cash into this business prior to the spin-off as you did with Sunrise?
Great questions. Regarding the network strategy for Holland and Belgium, those plans are in place. We have made a clear decision on the capital expenditure and network strategy for the fixed business in VodafoneZiggo's market, and we have opted for DOCSIS 4. The team has done an excellent job rolling out 2 gig service nationwide as the largest 2 gig provider, and they will soon offer 4-gig and 8-gig services. There is no plan to build fiber in the Netherlands, and we don't see it as necessary from a commercial or capital standpoint. Therefore, the capital expenditure profile remains unchanged due to this or any announcements we're making today. Regarding leverage, we have two main sources of deleveraging: the first is organic growth, and the second is free cash flow used to pay down debt, as we're currently doing in Sunrise. The third is asset sales. In Holland, we have PropCo and TowerCo, while in Belgium, we have the Wyre stake. These asset sales will help reduce leverage, alongside organic EBITDA growth and free cash flow for deleveraging. That is our plan. At this time, we do not expect to invest any capital or cash into the Ziggo Group for the plans set for launch in 2027. Charlie, would you like to add anything?
No, I absolutely endorse what it is. I mean remember, there are some pretty material financial synergies that we get, which obviously give us strong free cash flow. And I should clarify that, that $500 million is the annual target. It's not a cumulative target. I also think that Stephen has performed and his team, by the way, performed fantastically. And as they get this EBITDA turnaround, I think you can do the math and figure out how that contributes to getting towards this 4.5 target, which we think works based on what we saw in Sunrise.
The next question will go to the line of Matthew Harrigan with StoneX.
Since I'm the last American left in the draw again, when I talk to your U.S. peers about AI, they don't expect to see significant quantifiable benefits this year, but they see substantial improvements by 2028. Do you incorporate that into your projections? It's clear that the market isn't valuing the ventures plus cash appropriately, as they're not giving credit for your telecom operating expenses. What are your thoughts on how this will be reflected in the numbers? When you consider AI, it appears that a lot of the value from your network has been taken by tech companies in Silicon Valley. When AI fully integrates, do you anticipate seeing 85% of the benefits on the cost side, or do you think there will also be some revenue gains that will come your way? I realize this is a broad question, but it could be transformative if you could reduce your operating expenses, even if it takes 8 to 10 years.
Yes. Look, I'll address that generally, and I'll ask Enrique to step in and provide a bit more color. But three things are really driving for any telco driving the benefits from AI, right? Beginning with customer acquisition and retention, which we're all seeing marginal improvements from the investment in our call centers and things like that. The second is fraud, credit, things like that, that can really drive down OpEx and inefficiencies. And then as you mentioned, the network and operations. And I don't know, roughly, those are each going to contribute about one-third, let's say, of the demonstrable benefits we expect to see in the next, let's say, one to three years. And they're not small numbers. There will be real benefits. And I think the nice thing that I'm seeing in the space is that whereas a year ago on this call, I would have said that we're inventing a lot of these applications. Right now, we're getting bombarded with start-ups and third-party and Silicon Valley companies that are doing a much better job in many instances of creating these solutions for us. And so the pace of integration and implementation, I think, is speeding up, and it's real. So as I said in my remarks, I don't think there's an industry better positioned to benefit from marginal improvement in CapEx, OpEx and revenue from AI. But I would emphasize the word marginal there. That's really all we're doing at this stage as an industry is finding marginal benefits. I think the real home run is to think more broadly and bigger about how we kind of disrupt our own supply chain, our own software stacks, our own operating models, and to do that could be material. I'll let Enrique chime in if you want, if you're on, Enrique.
Yes. I mean, I think maybe the first thing I'll emphasize, Mike, is, as you said, it is real. We have gone from a year ago exploring AI to now seeing real benefits being delivered today and even more importantly, over the next 12 to 24 months, pretty material improvements. I would say, maybe as most of the industry is seeing a lot of benefits on the call center and the support part of the business first. We'll see that going to operations. But we're really, really getting excited about what we're starting to see as innovation more on the revenue side. I think we're going to see '26, at the end of '26, we're going to look back and look at those revenue opportunities as the year where they became real.
Mike, can I just have a quick plug? Sorry, I was going to say can I have a quick plug at sort of Liberty Blume. Look, the other aspect of this is back-office services, which is not as big as what Mike and Enrique said in the front office and middle office, but the back office still is material for telco, and it's about $1 billion, $1.5 billion by some definitions of spend for us. And what Blume is finding out is there's lots of tech enablement with AI tools to significantly reduce their accounting, their payments, their procurement of these financial products, etc., etc. And we're finding actually these are opportunities where we're getting massive savings by reducing heads, but we're able to scale our existing heads to grow revenues. And that's really what's driving that 20% revenue growth that we see in Blume. And actually, we see that continuing for many years.
Our next question will go to the line of Polo Tang with UBS.
It's really about VMO2 guidance. It was weaker than expected with a minus 3% to minus 5% decline in EBITDA. I think consensus on the same basis was probably getting for about minus 1%. Can you help us understand how much of the decline relates to the rationalization in B2B that may be specific to VMO2? And separately, how much of the decline reflects weakness in the broader U.K. markets? And can you maybe just give us some color in terms of what you're seeing in terms of U.K. competitive dynamics in both mobile and broadband? And I also have a quick clarification in terms of the Netomnia Nexfibre deal because VMO2 is receiving GBP 1.1 billion of cash from Nexfibre. But can you clarify what VMO2 is giving up? So specifically, what is the minimum commitment on the 4.6 million fiber footprint? And can you give some sense in terms of what the wholesale rate is per subscriber?
Yes. Thanks, Polo. I'll let Lutz address your first question around VMO2 guidance and what we're seeing in the market. And then Andrea, you can work up a good answer to the question around VMO2's commitments. I don't know how specific we're being about that as we sit here now, Polo, but I'll let Andrea address that. Guys?
Yes. Polo, so you can broadly contribute 30% to the B2B restatement of numbers, including Daisy. And 70% is attributed to a cautious view on the fixed consumer market. So it's not mobile, it is fixed consumer. As we all know, competition is very high as we speak. Yes, as Mike alluded to, I think we had a pretty good Q4 with very low fixed net add losses and a pretty stable ARPU. But so far, right, the market is even more competitive. There's some fixed telecom access ready outstanding from Ofcom. And therefore, we have factored this in as cautious guidance. The reason why you see a similar number on EBITDA is simply that we are also paying more and more wholesale fees to Nexfibre, and that is, to some extent, eating up some of our efficiencies.
To clarify, the guidance we provided for VMO2 does not include the transaction with Substantial Group. This is all occurring in real-time.
Yes, we're going to have to amend it.
Polo, there were three questions. One was whether we have any minimum penetration commitments. No, there is an adjustment at closing based on how many subscribers transfer over, but that is manageable. Going forward, there are no minimum commitments or migration commitments. The transaction allows Lutz full flexibility in managing the migration from HFC to fiber, which we deemed important in the overall market context. The second question was about what VMO2 is receiving. VMO2 will get $1.1 billion in cash and a 15% stake in Nexfibre. In exchange, it will spend GBP 150 million to acquire around 500,000 subscribers at closing, which we estimate the Substantial Group will have. It is also committing its traffic on 4.6 million homes; 2.4 million of these are in the overlapping Netomnia area, and 2.1 million are in new homes that will be part of Nexfibre 2.0, carefully selected to ensure a contiguous network. I'm sorry, there was a third point, but I can't recall it right now.
Third question is, are we providing any detail on wholesale rates and things of that nature. And the answer is no.
Our next question will go to the line of Ulrich Rathe with Bernstein Societe Generale Group.
On the Belgium deal, you mentioned a synergy figure there. Could you talk a little bit about what kind of synergies these are because this is a cross-border deal where the story in European telecoms has always been that it's harder to create synergies. And specifically on the synergies, would the financial synergies that Charlie sort of alluded to be included in that EUR 1 billion figure? And if I may just add a clarification, there was some Bloomberg sort of headlines about Telenet deferring a refinancing because of difficult markets. Could you comment on that, if that is appropriate at this time?
Charlie?
Yes. Let me just comment on the Telenet refinancing. I think we felt that the market fully understood the number of steps we were taking in Belgium, which we essentially were to pay down debt to 4.5x on Telenet through the Wyre sale and the fact that we docked in the refinancing to separate out Wyre at the EUR 4.35 billion, we thought have been well understood. I think it probably was in hindsight, too much for the credit market to digest in one go. And that's fine. I mean it was an opportunistic transaction as we always do. We thought that by halving the amount of available Belgium debt, there'd be a lot more demand than we felt, and it was a pretty choppy market. And you may recall, it was a softer market that we had a few weeks ago. So I think the discretion is the better part of valor. Nick and I felt that the right thing to do is to take a pause. We will let these transactions settle. We'll prove out the various steps. And at the right time, we'll go away and do what we usually do, which is in the $500 million to $1 billion tranches refinanced. But we still have plenty of time. I think as we tried to show in the results call, we actually don't have any material debt maturities if you include our revolver until 2029 in Telenet, but we're very confident, and hopefully the credit markets will support this, that as these steps unfold, we can essentially reprice the debt and extend the maturity. And it's interesting, actually, the debt still trades at a very tight level despite this transaction last week, which perhaps is a bit bewildering. Look, I think in terms of the synergies, I think I slightly disagree that I think there are cross-border synergies. Enrique has proved that with the incredible work he's been doing on technology. I mean there's an awful lot of scale benefits, and national technology doesn't really have a difference market to market. And I think also, as you rightly point out, the ability to drive financial synergies will come because we are able to use the platform that we will create in VodafoneZiggo and Telenet to really drive the technology across the broader footprint, which obviously has some benefits to us. So I think we feel pretty good about the synergies. And actually, to be honest with you, we might have undercooked them because we were obviously operating on a clean team basis in this transaction. So stay tuned. Let's see what we can come up with.
Yes. Our track record on synergies is pretty good. And I would agree with Charlie's comment that we've probably undercooked them, especially on the OpEx and potential revenue side. Does that answer all your questions, Ulrich?
Yes. I was just wondering, so are the financial synergies included? Or is the $1 billion just the operational bit.
They are included.
They are included, yes.
Our next question goes from the line of David Wright with Bank of America.
There's a lot to take in here. When considering the Ziggo spin, Mike, it presents a compelling equity story much like Sunrise, but it's important to note, as you pointed out, that Sunrise had a clear and robust dividend payout, especially in a low-interest environment. We've observed the positive impact of that dividend growth on the Sunrise share price recently. However, Ziggo lacks a similar dividend narrative. My next question is about the level of synergies you will need to realize in the short term to confidently proceed with the spin. Is the timing for that decision fixed? Additionally, I noticed that the VodZiggo guidance seems significantly weaker than many of us anticipated, especially compared to VMO2. As you reassess this business, I'm curious if you're aiming to establish a realistic baseline that you can reliably achieve, and perhaps consider increasing investments in 2026 for future growth.
Yes, David, those are excellent questions. I'll do my best to respond, and Stephen can chime in as well. Regarding timing, we have intentionally kept it broad. We anticipate that by 2027, especially in the latter half of next year, we will have the insight or projections that the market is seeking. This is similar to our experience with Sunrise, involving a deleveraging narrative driven by free cash flow, EBITDA growth, and asset sales. Additionally, we aim to provide a projection for free cash flow; today we mentioned a figure of EUR 500 million, which is 50% more than what Sunrise generates. While this won’t materialize this year or next, we are confident that we can outline this free cash flow narrative when we approach the market. We have discussed the How We Win plan, showcasing that 2026 will be an investment year, setting the stage for a rebound in 2027 and 2028. We believe that as all these elements come together, they will create a strong equity narrative. Importantly, unlike Oddo, we are not planning to launch this company through an initial public offering. We are not waiting to build up a book, looking for a minimum price, or raising primary capital. We are simply listing the shares and distributing them to shareholders, just as we did with Sunrise, allowing the market to assign a healthy value, significantly above the current negative $5 in our stock. The key belief here is that there is strong equity value in this narrative that shareholders will trade positively on the Euronext exchange, supported by a robust operating and brand-driven story. It will be above zero. That’s all you need to believe. We have considerable flexibility and freedom in planning our next steps, which is very exciting. Stephen, would you like to add anything regarding Vodafone?
Well, I think the only component I'd add to it is that, as you said, can you hear me, Mike?
Got you.
So look, as you said, I think the core of it is that we have an unfolding story of business improvement. So the underlying value of the core VodafoneZiggo business, I think, will come through as we get through the investment in 2026 and into 2027. We've shown a track record so far in the last 12 months, and we've got high confidence given what we're seeing today and given the plans we have ahead of us that 2026 will be another step forward in the plan. And as you say, 2027 will show those return on investments, and we'll accelerate out of that. So I think the core business, if you value the core business, will look slightly different in 12 months from now.
Our next question goes to the line of James Ratzer with New Street Research.
So I was interested in following up on the slide you had to discuss the kind of Netomnia Virgin transaction in a bit more detail on Slide 22. So you've got a very kind of helpful chart there showing all the cash movements. Could you just run me through also what the debt movements are because Netomnia, I think, will have around a bit over GBP 1 billion of debt on closing. Does that all go to Nexfibre? Or does some of it go to VMO2? And then of the subscribers or the homes, sorry, you've got the 2.5 million homes where VMO2 is going to pay committed wholesale fees on closing. How many subscribers does VMO2 have in that footprint, please? And then secondly, on the 2.1 million homes that then Nexfibre will be upgrading, what's VMO2's customer volume in that footprint? And to give us an idea of kind of Lutz's incentive to migrate customers over to FTTH, can you let us know, please, how many customers today within VMO2 have been upgraded from HFC to FTTH, where VMO2 has done that upgrade itself as a result of the overlay?
Thanks, James. Charlie, you hit the debt question, please?
Yes. So first of all, there's no incremental debt going on to VMO2. I'm not sure how much we're disclosing, but I would underline that Nexfibre will have a fully financed business plan to get to 8 million fiber homes with a combination of existing debt, but also the undrawn facilities. So this is a fully financed cash flow positive AltNet, which I don't think we can say about all of them. And I think in terms of the details of the numbers, look, let's take that offline because I'm not sure what we've agreed to disclose or not disclose. But that is the key message, fully financed and no debt into VMO2.
Regarding the 4.6 million homes, Andrea, I believe you can estimate the number of customers based on our overall penetration rates in those areas. It should be approximately equal to our current penetration rates, which seems like a reasonable assumption. Lutz, would you like to discuss the fiber question?
Yes. Currently, the number of fiber customers in our existing Virgin Media and O2 cable coverage is very low. The majority of our fiber customers come from the Nexfibre network. Importantly, no customers are leaving us due to technology issues. We are acquiring customers at the same rate in both the cable and fiber networks. Therefore, we don't have a commercial incentive to transition customers to fiber at this time, which is why our numbers remain low for now.
Yes. But in this, you should assume in the deal we just announced, there will be some incentives, for example, cost to connect, wholesale rates, but we're not disclosing those details today.
That will conclude the formal question-and-answer session. I would now like to turn the call over to you, Mr. Fries, for closing remarks.
Sure. Thanks for sticking with us, guys. Sorry, we went a little bit over. We had a lot, as you said, to disclose. I just want to say quickly, thank you to everybody on the call today from my team because this has been a Herculean effort and just about everybody on this call was involved in these transactions and of course, delivering these results. So thank you to each of you for the great work and terrific outcomes. And look at the deals we think were announced today, I'm excited about. I think they unlock both value, but also give us a tactical runway to control our destiny here, specifically in the Benelux region, but also, I think, increasingly in the U.K. market. So they're the right kind of deals. That's exactly what we told you we would do a year ago. I think you can trust us when we tell you where we're focused, what we're focused on, and how we intend to create value. So I appreciate you joining us. I know there'll be a lot of questions and follow-up, you know where to find us. So thank you, everybody.
Ladies and gentlemen, this concludes Liberty Global's Fourth Quarter 2025 Investor Call. As a reminder, a replay of the call will be available in the Investor Relations section of Liberty Global's website. There, you can also find a copy of today's presentation materials.