LBTYA

Overall Corporate Strategy and Value Creation

• Liberty Global’s core business is anchored by European telecom assets generating $22 billion aggregate annual revenue and $8 billion aggregate annual EBITDA. Management believes the current stock price implies zero value for these core telecom assets, driving the focus on unlocking intrinsic shareholder value. The corporate structure has been restructured to be more agile and efficient, reducing net corporate costs by nearly 75% over two years, with a target of reaching break-even corporate costs as early as 2027.
• The company exceeded year-to-date asset monetization targets, raising $1.2 billion from Liberty Growth disposals and asset-backed lending, above the 1.2-1.4 billion euro targeted for deleveraging in Benelux. This drove an increase in the year-end pro forma corporate cash forecast from $1.5 billion to $2 billion.

Ziggo Group Spinoff Progress

• The planned spinoff of Ziggo Group (combining Dutch and Belgian operations) is progressing ahead of schedule, with the target moved from H2 2027 to mid-2027. All required regulatory approvals have been received, including Belgian regulator approval for the fiber sharing agreement with Proximus that will create a single fixed network covering 75% of Flanders. The acquisition of Vodafone’s 50% stake in the Dutch VodafoneZiggo JV is on track to close at the end of July 2026.
• Leadership for the new Ziggo Group has been announced, and the internal synergy estimate for the transaction has been increased above the previously stated 1 billion euro NPV. The spinoff is structured to deliver deleveraging to 4.5x leverage and 500 million euro in annual free cash flow by 2028, supported by 1.2-1.4 billion euro in planned asset sales that are already underway.

AI Transformation and Growth Investment Strategy

• Management views European telecom as a major net beneficiary of AI, due to the sector’s ownership of required infrastructure (data, connectivity, data centers), large labor and operating cost structures suited for automation, and customer touchpoints for personalization.
• AI initiatives are already delivering operational improvements, including 65% coverage of VMO2’s customer base with AI personalization engines and 75% automation of customer care calls. Third-party analysis indicates 20-40% long-term cost savings across core operating expenses, with up to 70% savings possible in customer care. AI cost savings are coming from both internal implementation and AI-driven cost reductions passed through by key software and outsourcing suppliers.
• Liberty Growth has pivoted to target AI-related investments that align with the core telecom business, including voice AI for customer service, cybersecurity, network automation, and AI infrastructure via the Atlas Edge data center platform. The existing tech investment portfolio has returned $600 million in exits and distributions on $700 million total invested capital, with a current market value of $400 million on $100 million net invested capital, and new AI investments are funded via existing exit proceeds.

Virgin Media O2 Strategic Positioning

• VMO2 is the only scaled challenger in the UK market, reaching 19 million homes with nearly 50% already fiber-enabled, with 88% 5G coverage and 1G broadband available across most of the market. It holds three strong brands (Virgin Media, O2, GiffGaff) with over £10 billion in annual revenue. Both majority shareholders (Liberty Global and Telefonica) are fully aligned and committed to the long-term future of the business, and are pursuing organic and inorganic initiatives to improve operating performance and reduce leverage over time.

• All 2026 full-year guidance metrics for core operating segments (VodafoneZiggo, Telenet, VMO2) and corporate adjusted EBITDA are reaffirmed, in line with prior guidance.
• The full-year 2026 corporate cash target has been upgraded from $1.5 billion to $2 billion, driven by higher-than-expected proceeds from the EdgeConnex exit and the asset-backed loan on the Belgian WIRE stake.
• Telenet is expected to return to adjusted EBITDA growth starting in 2027, with capex continuing to trend downward as major upgrade projects are completed.
• Virgin Media Ireland is expected to reach free cash flow positive in Q4 2026, following completion of its fiber upgrade program.
• The Ziggo Group spinoff is now targeted for mid-2027, an acceleration from the prior target of H2 2027, and is planned to reach 4.5x leverage and 500 million euro annual free cash flow by 2028.

1. Benelux (VodafoneZiggo and Telenet): VodafoneZiggo delivered its strongest consumer broadband net adds in 6 years, adding positive net broadband subscribers for the first time since Q4 2022, plus 32,000 new post-paid mobile subscribers. Fixed ARPU remained stable year-over-year and sequentially at ~€56. Telenet reports results excluding the separated WIRE fiber business: adjusted EBITDA declined in line with guidance due to the 'How We Win' transformation plan and one-off network resilience investments. Revenue was impacted by the non-renewal of Belgian football broadcast rights and a VAT dispute, partially offset by higher revenue from the new WIRE management services agreement. Adjusted EBITDA less P&E additions was lower year-over-year due to higher one-off capex. Capex at Telenet has meaningfully stepped down in 2026 as 5G upgrades are largely complete, and is expected to continue declining in 2027.
2. UK & Ireland (Virgin Media O2 / VMO2): VMO2 service revenue was in line with expectations, with headline revenue declining due to ongoing intense fixed market competition and portfolio rationalization, partially offset by growth in wholesale MVNO revenue. Mobile service trends improved sequentially, with mobile ARPUs up sequentially and flat year-over-year. Fixed ARPUs were flat sequentially but down 4.6% year-over-year, in line with overall market pricing. Adjusted EBITDA declined 2.9% year-over-year, partially offset by ongoing cost efficiency initiatives. Virgin Media Ireland saw a modest service revenue decline due to consumer fixed market competition, with adjusted EBITDA declining 4.7% year-over-year. Capex for VMO2 remains elevated, driven by mobile capacity investments, ongoing fiber upgrades, and IT digital transformation. Virgin Media Ireland capex is stepping down in 2026 as its 1 million premise fiber upgrade is nearly complete, and is expected to reach free cash flow positive in Q4 2026 for the first time since the upgrade program began.
3. Liberty Growth: The fair market value of the growth portfolio decreased to $2.9 billion in Q2 2026, driven by the full exit of EdgeConnex and disposal of UPC Slovakia, partially offset by new investments in AI, Formula E, and Nextfiber. The segment realized $726 million in total proceeds from the full exit of EdgeConnex, representing a 4x multiple of invested capital and a 30% IRR, marking a successful outcome for the growth portfolio strategy.

• Intense competitive pressure in the UK fixed and mobile telecom market, with elevated churn, net subscriber losses, and downward pressure on ARPU from Altnet, MVNO, and incumbent price competition. Proposed new Openreach promotions that are awaiting Ofcom approval could further increase competition in H2 2026.
• Leverage at VMO2 is currently above the 4-5x target range, with credit spreads currently elevated, requiring ongoing investment and performance improvements to deleverage back to target over time.
• While long-term AI cost savings potential is significant, full implementation is a multi-year journey that requires changes to organizational structure, talent, and operating models, and near-term benefits are expected to be gradual.
• The timing of the WIRE stake monetization and final Ziggo Group spinoff remains subject to market conditions and regulatory processes, and could be delayed from the current targeted mid-2027 timeline.

Q: Regarding UK ARPU trends, is the current decline driven by new front-book price competition rather than just legacy revenue declines, are we at a trough for ARPU and subscriber losses, and would VMO2 consider the aggressive customer re-pricing strategy that stabilized VodafoneZiggo?

A: Management confirms the observation that recent ARPU declines are driven largely by current market competition. Average market selling prices are down 4% year-over-year, and VMO2's 4.6% ARPU decline is mostly driven by targeted preventative re-contracting to retain customers, with 80% of customers now on long-term contracts. Management will continue this targeted approach, and notes that if the proposed Openreach promotions are approved, competition will intensify further in H2 2026, so it is hard to predict if we have reached a trough.

Q: With BCA approval of the Proximus fiber agreement now complete, what is the timeline for monetization of the WIRE stake? Will a transaction be completed in 2026?

A: BCA approval unlocks the next steps for the stake sale process, which is already well underway with advisors hired. Management expects to complete the transaction by the end of 2026, though a close in Q1 2027 is also possible. The $4.35 billion WIRE financing process will launch next week to fund the required debt rebalancing between WIRE and Telenet.

Q: What drove the stabilization of the VodafoneZiggo broadband subscriber base, when will broadband launch on the Delta fiber footprint, and can positive net adds continue?

A: Broadband launch on the Delta fiber footprint is planned for H2 2026, with impact expected to show up in Q4 2026 results. Stabilization was the result of a combination of initiatives: aligning front-book pricing with the market, increasing speeds, product bundling including premium sports content, improved marketing focused on network quality, and more aggressive competition. Management expects to sustain positive net adds through the second half of 2026.

Q: Management cited potential long-term AI cost savings of 20-40% across the business. Are these benefits sustainable for Liberty Global's bottom line, or will they diffuse across the industry?

A: Management sees AI benefits as sustainable and accelerating, coming from both internal organic efficiency projects and cost reductions passed through by third-party software and outsourcing suppliers. AI model capability is improving and costs are declining over time, and Liberty Global still has most of its IT infrastructure on-premise, leaving significant room for improvement. Management views it as a multi-year step-change transformation of operating models that will deliver sustained longer-term bottom-line benefits.