Liberty Global plc Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Core Platforms: Focused on creating and delivering value via Liberty Telecom, Growth, and Services. Liberty Telecom aims to drive commercial momentum, with markets facing competition; fiber/5G upgrades on track. Liberty Growth has $3.4B portfolio, with asset sales planned. Liberty Services includes Liberty Bloom near $100M revenue, Liberty Tech profitable, and corporate cost savings.
• Liberty Telecom Details: Virgin Media O2 merger with Daisy to create B2B powerhouse; VMO2 acquired spectrum, securing 30% market share; VodafoneZiggo seeing green shoots from strategic pivot; Belgium fixed network sharing deal progressing; Ireland fiber rollout at 80% by year-end.
• Liberty Growth Details: Portfolio value increase to $3.4B, asset sales ongoing, Formula E license extended, digital infrastructure investments.
• Liberty Services Details: Liberty Bloom on revenue track, Liberty Tech profitable, corporate costs reduced by $25M.

Segment Performance

• Liberty Telecom: Virgin Media O2 nearing merger completion with Daisy, creating a B2B powerhouse with GBP 1.4B revenue and GBP 150M EBITDA; VMO2 acquired 80MHz spectrum from VodafoneThree, securing 30% market share; VodafoneZiggo seeing green shoots from strategic pivot; Belgium fixed network sharing deal progressing; Ireland racing towards 80% full fiber rollout by year-end. Financially, VMO2 had modest revenue decline of 0.4% in Q2, adjusted EBITDA grew 1.1%; VodafoneZiggo revenue declined 2.4%, adjusted EBITDA down 0.1%; Telenet revenue increased 0.6%, adjusted EBITDA grew 2.8%.
• Liberty Growth: Portfolio worth $3.4B, primarily driven by additional investments and favorable FX movements. Top 6 investments comprise over 80% of value. Goal is to rotate capital into higher return investments. Exited position in Vodafone, netting around 10%-15% of asset sale goal. Formula E extended exclusive license through 2053. Digital infrastructure investments, including AtlasEdge and EdgeConneX.
• Liberty Services: Liberty Bloom on track to exceed $100M revenue and generate positive EBITDA; Liberty Tech generates $475M revenue with increasing profitability; corporate net costs guidance improved by at least $25M from initial $200M plan.

Guidance

• Telenet: Tightening adjusted EBITDA guidance to low single-digit decline, supported by strong first half performance, with tough comparator in Q3 due to prior year one-off deferred revenue benefit.
• Liberty Services and Corporate: Upgrading adjusted EBITDA guidance to around negative $175M from $200M.
• Other Segments: Reconfirming guidance metrics for VMO2, VodafoneZiggo, and Telenet remain unchanged.

Risks

• Market Competition: Impact on gross adds and churn due to new entrants like Altnets and MVNOs.
• Regulatory and M&A Uncertainties: Uncertainties in asset sales and restructuring plans.
• Economic Factors: Impact on consumer spending affecting broadband pricing and revenue.

Q: Telefónica's comments on the U.K. NetCo. Is this just not a good idea for one of the parties or to be debated further?

A: Michael Thomas Fries said there are other ways to achieve goals, like nexfibre joint venture, and there's an open mind to playing a role in consolidation through different vehicles.

Q: Is the HFC upgrade piece of the strategy still moving ahead?

A: Michael Thomas Fries said VMO2 is upgrading HFC homes to fiber, with 18.5M home footprint and 7M already fiber.

Q: When talking about timing in the next 12-24 months for corporate action, could it be growth or telecom assets?

A: Michael Thomas Fries said 12-24 months is a window for one or more assets in growth or telecom portfolios, with multiple options for spinning or tracking assets.

Q: What has driven broadband declines in Virgin Media O2 and how optimistic are you it can reduce?

A: Lutz Schuler said declines are due to churn from aggressive competitors paying customers to leave, but they're working on a retention machine and confident to stabilize.

Q: On broadband consumption and DOCSIS 4.0, how does it differ in Netherlands?

A: Michael Thomas Fries and Enrique Rodriguez said DOCSIS 4.0 in Netherlands is 90% cheaper than fiber, with upgrade plans on track within existing CapEx.

Q: Cash flow generation for 2026, details on Telenet and Ireland CapEx?

A: Charles Henry Rowland Bracken said it's too early for specific guidance, but Telenet ServCo and Ireland CapEx will fall, driving free cash flow positive.

Q: Why would assets outside Liberty Global be valued higher?

A: Michael Thomas Fries said European institutions demand local telecom assets, pure-play status, and dividend potential could lead to higher valuation.

Q: Turnaround in VodafoneZiggo and voluntary redundancy scheme?

A: Stephen van Rooyen discussed VodafoneZiggo's turnaround with organizational reset, pricing, churn, and network plans; Michael Thomas Fries said corporate restructuring tools will lead to lower costs.

Q: Bridging U.K. coverage gap and wholesale from Openreach?

A: Michael Thomas Fries said VMO2 aims to be a national player, with all options on the table for bridging the coverage gap.

Q: Exit from Vodafone, why?

A: Michael Thomas Fries said it's about capital allocation, as limited exposure and no strategic value made it the right move to reallocate capital.