Liberty Global plc Q2 FY2026 earnings call

• Corporate Strategy & Capital Allocation • Liberty Global’s core structure is split between two core platforms: large-scale European telecom assets (aggregate $22 billion annual revenue, $8 billion EBITDA) and the Liberty Growth portfolio focused on media, sports, infrastructure, and tech investments. • Recent corporate restructuring reduced net corporate costs by nearly 75% over 2 years, with the company targeting a breakeven corporate cost position as early as 2027. • Management believes current Liberty Global share price (~$11) implies a 20% discount to the fair value of cash and Liberty Growth assets alone, with essentially zero value attributed to the core telecom operations, creating significant upside from planned value unlocking initiatives. • Capital allocation remains disciplined, focused on rotating capital into high-growth, high-value strategic opportunities, with all segment CapEx within full-year 2026 guidance ranges.

• Ziggo Group Spin-Off Progress • The planned spin-off of the newly formed Ziggo Group (combining Dutch and Belgian operations) remains on track, with all major regulatory milestones completed. The Belgian regulator approved the fiber sharing arrangement with Proximus, which will create a single fixed network covering 75% of Flanders. • Liberty Global is on track to close the acquisition of Vodafone’s 50% stake in the Dutch VodafoneZiggo business by the end of Q3 26, which is foundational to forming the combined Ziggo Group. • The NetCo/ServCo split of Belgian operations into Wyre (fiber infrastructure) and Telenet (services) is complete. This separation moves the full fiber buildout off the Ziggo Group balance sheet, rationalizes the Flanders fiber market, enables Wyre stake monetization to reduce leverage, and results in a less levered Telenet with a declining CapEx profile entering the spin-off. • Leadership for Ziggo Group has been appointed (Stephen van Rooyen as CEO, Jeroen Hoencamp as CFO), with the full leadership team expected to be announced in September 2026. • Internal synergy estimates for the combination have been raised, with expected synergies now meaningfully higher than the prior $1 billion NPV target. The spin-off timeline has been pulled forward to mid-2027 from the prior target of H2 2027. The spin-off equity story targets 4.5x net leverage and €500 million annual free cash flow by 2028, supported by €1.2-€1.4 billion in planned asset sales to reduce leverage that are already underway.

• Artificial Intelligence Strategy • Management views telecom as uniquely positioned to capture large, transformational benefits from AI, due to its proprietary scale data, large cost structures suited to automation, widespread consumer touchpoints, and core infrastructure (connectivity, data centers) required for AI distribution. • Liberty is currently capturing early operational benefits: 65% of VMO2 customers are reached by AI personalization engines, generative AI pilots in the Netherlands deliver 75% call containment, and AI is already reducing fraud, optimizing CapEx, and lowering field service costs. The company expects annual AI-driven cost savings to reach hundreds of millions of dollars long-term. • Analysis with McKinsey and Google indicates 20-40% long-term cost savings across core operating expenses, with potential savings as high as 70% in functions like customer care. These savings are reinforced by AI-driven cost reductions from third-party software and outsourcing providers, who are passing along savings to secure early contract renewals. • Within the Liberty Growth portfolio, Liberty is making targeted AI investments in relevant areas including voice AI, cybersecurity, network infrastructure optimization, and data automation, partnering with top-tier VC firms to align with strategic needs of core telecom operations. Liberty’s infrastructure vertical is also positioned to capture AI upside through data center investments in AtlasEdge.

• UK Virgin Media O2 Strategic Update • VMO2 is the only scaled challenger in the UK market, with the number 1 mobile network by connections, the second most reliable broadband network reaching ~19 million homes (nearly half already fiber), and three strong consumer brands: Virgin Media, O2, and Giffgaff. • The UK market is experiencing very high competitive intensity described as a "street fight" from Alt Nets and MVNOs, but management has restructured the consumer leadership team (hiring Lutz Schuler as Consumer CEO) and is implementing new commercial initiatives to improve performance. These include expanding wholesale opportunities, launching new converged FMC products, and leveraging AI for efficiency and growth. • Both Liberty Global and partner Telefonica are fully aligned and committed to VMO2 long-term, with plans to bring leverage back to the 4-5x target range through a combination of organic growth, cost efficiency, and potential inorganic moves.

1. VodafoneZiggo (Benelux): Revenue trends sequentially improved as fixed customer volumes returned to growth. Adjusted EBITDA declined in line with guidance, driven by ongoing turnaround plan investments and one-off network resilience costs. Adjusted EBITDA less P&E additions were lower year-over-year due to higher CapEx. Fixed ARPU held steady at ~€56; mobile ARPU was flat sequentially at €17.60, down 2% year-over-year. The segment added 32,000 new postpaid mobile subscribers and achieved its first positive broadband net add quarter in 6 years, with 32,000 net new broadband subs. This segment contributes approximately 32% of total consolidated revenue.

2. Telenet (Belgium, Benelux): Revenue was impacted by the strategic non-renewal of Belgium football rights and a one-off VAT adjustment, partially offset by higher revenue from the new Wyre management services agreement. EBITDA grew driven by the new management agreement and lower wholesale fees to Wyre. ARPUs for both broadband and mobile were stable sequentially and year-over-year. Broadband and mobile net adds improved versus year-ago levels. CapEx has meaningfully stepped down as 5G upgrades are largely complete, and this trend will continue in 2027. This segment contributes approximately 15% of total consolidated revenue.

3. Virgin Media O2 (UK): Service revenue was in line with expectations, with headline revenue declining due to competitive intensity in fixed markets and portfolio rationalization, partially offset by growth in the MVNO wholesale business. Mobile service revenue trends improved sequentially. Adjusted EBITDA declined 2.9% year-over-year due to lower revenue, partially offset by ongoing cost efficiency measures. Mobile ARPUs were up sequentially and flat year-over-year; fixed ARPUs were flat sequentially but down 4.6% year-over-year, aligned with overall market pricing. Broadband and mobile net losses improved year-over-year but remained negative amid elevated competition. This segment contributes approximately 44% of total consolidated revenue.

4. Virgin Media Ireland: Service revenue declined modestly due to ongoing consumer fixed market competition. Adjusted EBITDA declined 4.7% year-over-year. Broadband net adds have remained steady over the last 5 quarters, supported by wholesale fiber growth. Mobile postpaid net adds remained positive. Fixed ARPU held steady at €61. CapEx continues to step down in 2026 as the ~1 million premise fiber upgrade is nearly complete, and the business is expected to become free cash flow positive in Q4 2026. This segment contributes approximately 4% of total consolidated revenue.

5. Liberty Growth Portfolio: The fair market value decreased to $2.9 billion in Q2 26, primarily due to the full exit of EdgeConneX and sale of UPC Slovakia, partially offset by modest new investments. The full exit of EdgeConneX generated $726 million in total proceeds from a $177 million total investment, delivering a 4x multiple and ~30% IRR. Year-to-date 2026, the portfolio has generated $1.2 billion in total monetization proceeds, exceeding original targets.

• All full-year 2026 guidance for adjusted EBITDA and operational metrics at VMO2, VodafoneZiggo, and Telenet is reconfirmed, matching prior guidance ranges.
• Corporate full-year adjusted EBITDA guidance is also maintained. The full-year end-of-period corporate cash target is upgraded from $1.5 billion to $2 billion, driven by higher-than-expected proceeds from EdgeConneX and the asset-backed loan on the Wyre stake.
• VodafoneZiggo is expected to return to year-over-year adjusted EBITDA growth starting in 2027, as the impact of current repricing headwinds fades.
• Telenet CapEx is expected to continue trending downward in 2027 following the completion of 5G upgrades and digital platform investments.
• Virgin Media Ireland is expected to achieve free cash flow positivity in Q4 2026, following the completion of its fiber upgrade program.
• The Ziggo Group spin-off is targeted for mid-2027, pulled forward from the prior H2 2027 target, with 4.5x net leverage and €500 million annual free cash flow targeted by 2028.

• Elevated competitive intensity in the UK fixed and mobile telecom markets is driving ARPU declines and higher subscriber churn, with further competitive pressure possible if new Openreach promotions are approved by Ofcom and take effect in October 2026.
• Virgin Media O2 leverage currently exceeds the 4-5x long-term target range, and credit spreads for the business are currently elevated.
• While early AI results are positive, full realization of large-scale AI cost and revenue benefits depends on successful organizational and operational transformation, which is a multi-year journey with uncertain timing and final magnitude of gains.
• The Ziggo Group spin-off and associated deleveraging through asset sales depend on successful completion of ongoing transaction processes and favorable market conditions.
• All forward-looking statements, including growth and synergy targets, are subject to inherent risks that could cause actual results to differ materially, as detailed in Liberty Global’s SEC filings (including recent 10-Q and 10-K reports).

Q: The caller asks if UK ARPU declines are now driven by ongoing front-book price competition rather than just legacy revenue declines, if we are at trough declines, and if management would consider proactive aggressive re-basing of customers to cheaper tariffs (like the successful strategy used in VodafoneZiggo) to stabilize the subscriber base. / A: Management confirms the observation is correct; current market competition is very strong, with average market selling prices down 4% year-over-year in Q2, and current 4.6% ARPU decline is mostly driven by targeted customer retention/prevention pricing. The company will not do broad radical re-contracting; instead, it uses a sophisticated targeted retention model with over 80% of customers on long-term contracts, and will continue this strategy. It is hard to call a trough because competitive intensity could increase further if new Openreach promotions are approved in October.

Q: Following BCA approval of the Proximus fiber sharing agreement, what is the timeline for Telenet/Wyre separation, Wyre stake monetization, and will the transaction close this year or next? / A: BCA approval unlocks all next steps; Telenet and Wyre have already been reported as separate businesses for Q2, and approval now allows debt rebalancing between the two entities. The Wyre stake sale process is well underway with advisors hired, and management will proceed diligently through year-end. A deal could conclude as early as year-end 2026 or as late as Q1 2027, and the approval accelerates the timing of the ultimate Ziggo Group spin. The Wyre financing process is scheduled to launch the following week.

Q: What factors drove the stabilization of VodafoneZiggo's broadband base, when will broadband service launch in the Delta fiber footprint, and can positive net adds continue into the second half? / A: The Delta footprint launch is planned for H2 2026, with the first subscriber contributions expected in Q4 2026. Stabilization of the broadband base is the result of a combination of sequential changes: bringing front-book pricing in line with the market, investing in core network upgrades (including 2-gigabit service available across most of the country), adding differentiated features like Wi-Fi guarantee and the new ESPN bundle, and shifting marketing to focus more heavily on connectivity quality. Management expects to continue positive net add growth through the second half of 2026.

Q: What makes VMO2's current pricing level sustainable long-term given it is priced above BT and altnets, and was the comment about inorganic opportunities referring to buying assets to reduce leverage, or selling assets? / A: VMO2 has three strong brands targeting different customer segments (Virgin Media, O2, Giffgaff), with Giffgaff Broadband recently launched and gaining traction. Half of all UK households are already VMO2 customers, on average purchasing only one of three possible product lines, leaving significant room for cross-selling. The combination of full converged connectivity, strong service, and good value for money will support pricing long-term. Inorganic opportunities include any transaction (buying or selling) that improves competitive position and free cash flow, with the Netomnia fiber acquisition as an example of a recent beneficial inorganic purchase. Both shareholders are fully committed to investing in long-term competitiveness, and will provide an update on the next strategic phase in February 2027.

Q: How sustainable are AI cost benefits long-term, and when will a meaningful inflection in net benefits occur? What is the outlook for AI-driven revenue benefits? / A: AI benefits are coming from both internal efficiency initiatives and cost reductions passed through by third-party suppliers, who are passing along their own AI gains to secure early contract renewals. Only 20-25% of Liberty's operations are currently on the cloud, leaving very large room for further efficiency gains, and the trajectory of improving AI capability and falling costs is clear, so benefits are expected to grow sustainably over time. Benefits will come gradually rather than hitting all at once, as implementation requires organizational and operating model changes, but an inflection in material net benefits is expected by 2028-2029. Revenue benefits (from personalization, churn reduction, and new offerings) are tangible and already being rolled out, though management is focusing on one priority at a time and has not published formal targets for revenue gains. Token cost increases do not pose a material issue, as all AI projects are required to clear net positive business cases before implementation.