Good morning, ladies and gentlemen and thank you for standing by. Welcome to Liberty Global's first quarter 2014 results conference 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. At this time, all participants are in a listen-only mode. Today's formal presentation materials can be found under the Investor Relations section of Liberty Global's website at www.libertyglobal.com. Following today's formal presentation, instructions will be given for a question-and-answer session. As a reminder, this conference call is being recorded on this date, May 7, 2014. I would now like to turn the conference call over to Mr. Mike Fries, CEO of Liberty Global. Please go ahead, sir.

Hello, everybody, and as always, thanks for joining us. I want to make sure I introduce the folks on the phone this morning. We’ve got Bernie Dvorak and Charlie Bracken, our co-CFOs, in Denver and London; Balan Nair, chief technology officer; Diederik Karsten, EVP of operations in Europe; and several other folks who we may call upon, depending upon your questions. I’m going to hand it back over to the operator, and then we’ll kick it off.

Thank you. Page two 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 fact. 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 from time to time in Liberty Global's filings with the Securities and Exchange Commission, including its most recently filed Forms 10ka and 10-Q. 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 back over to Mr. Mike Fries.

Great. Thank you. Our agenda will be as it usually is. I’ll do some overview remarks about the quarter and then I’m going to hand it to Bernie, who will run through the numbers, and then we’ll get to your questions. We are talking from slides today. I’m going to begin on slide four with some operating and financial highlights. We know there’s always a lot of anticipation for this call, and the first quarter can set the tone for the balance of the year, so I’m pleased to report that we had a strong start, really across almost all fronts. On subscriber growth, we added 345,000 new RGUs, driven by our second-highest first quarter in broadband adds ever, and our lowest video sub loss for this period in seven years. Clearly, our one-two punch of superior broadband speeds and unrivaled digital video platform is working. Financially, we achieved 2% rebased revenue and 8% rebased OCF growth, or operating cash flow growth, in the first quarter, our best operating cash flow result in nearly three years. Bernie will walk through the details, but it’s important to point out that our underlying subscription revenue growth is actually 4%, and was negatively impacted by interconnect, install, and B2B revenue. And our adjusted free cash flow, a key measure for us, and we know for many of you, surged 47% to $350 million in the first quarter, largely driven by operating cash flow growth and a modest improvement in our capital intensity. A quick update on some M&A activity. We’re on track to close our acquisition of Ziggo in the second half of the year, in part based upon our expectation of receiving some news on the regulatory front. While no decision has been taken, we understand that the European Commission has nearly…

Thanks, Mike. Before I dive into the slides, a few housekeeping items. First, when we refer to our Q1 2013 combined results in this presentation, they include Virgin Media for the full quarter, although we did not own Virgin during that quarter. And second, the Chellomedia assets that we sold in January are treated as a discontinued operation, so our operating results exclude the impact of these assets for all periods. On slide 11, we provide a snapshot of our rebased performance, which adjusts the neutralized impact of acquisitions and currencies. The solid bar represents our overall rebates growth performance and the dotted line represents our total subscription and revenue growth, which includes our triple play and mobile subscription revenue. The gray bar shows our results excluding Virgin Media, with 3% revenue and 9% OCF growth, and in particular our Belgian, German, and Chilean operations were key markets for us in the quarter, as each posted double digit year over year increases in rebased OCF growth. The green bar depicts Virgin Media’s standalone performance. For Q1, Virgin contributed 35% to 40% of our consolidated revenue and OCF and posted 1% revenue growth and 6% OCF growth. In terms of revenue, Virgin Media delivered solid rebased subscription revenue growth of 4%, with cable at 4% and mobile at 5%. Offsetting this performance were year over year declines in such revenue items as interconnect, offnet, and handset sales. And finally, the blue bar highlights our consolidated growth rates. On a total company basis, we generated 2% rebased growth in revenue and 8% for OCF, which Mike has briefly discussed. It should be noted that our Q1 results were supported by a few nonrecurring items, the three most significant of which involve the revenue settlement in Germany and copyright fee settlements in Belgium…

[Operator instructions.] And we’ll take our first question from Tim Boddy with Goldman Sachs.

I wanted to ask Mike a bit about your comments around content production, how that would fit into your broader portfolio. You seem to be calling that out more clearly than previously, and I wondered what you had in mind, and if there’s anything more you could share on that front, I guess particularly in terms of scale, whether you’d be willing to make a really material content acquisition. And then just as more of a follow up, I just want to confirm that the $50 million headwind in the U.K. for the remainder of the year, that presumably just rolls off and goes away in 2015, because the customers who’d bought those kind of prepaid line rental products, presumably all of those things just come to an end. And so that $50 million drag should go away medium term?

I’ll hit the content question, and then Tom or Bernie or Charlie can address the headwind question. There’s nothing to announce today, of course, or we would have, but as we look ahead the broader opportunities in content, as I mentioned, production could be one of those. The opportunity to really get closer to the creation and origination of important content is something that we’ve talked about, other people have talked about, for a long time. I don’t have anything specific to add to the general strategic point, except to say that for us to do that, we would have to be convinced that there’s a financial return in whatever asset we were looking at, that we were doing it probably with a partner or somebody who understood the business better than we do, and probably, and most importantly, on a marginal or relatively small basis. So I wouldn’t expect that we’re going to go out and acquire a studio or things of that nature. I would say these are more tactical and incremental steps to build that four pronged content portfolio, if you will, that we know can be more strategically beneficial to the core distribution business. So I know I’m being vague, because there’s not much more to be specific about, but the key message is, anything like that would have to have a strong financial return, would ideally be done with a partner who understood it better, and is probably going to require relatively small amounts of capital in the context of our balance sheet because we’re not in a position to put large amounts of capital into those types of assets that are not really in our wheelhouse operationally. On the headwind point, Bernie, do you want to take that? Or Tom?

Yeah, I will. The costs don’t go away next year. It’s a prospective change that we’ll continue to incur that. But from a growth perspective, we’ll lap those kind of Q2 next year. So that’s the way you ought to think about it.

We’ll take our next question from Vijay Jayant from International Strategy and Investment.

Just want to focus on the wireless strategy a little more, if you could. Is that going to be a [unintelligible] MVNO with complete flexibility on pricing and how you sort of sell the product? Is it like a 30% margin business? And given a rollout in 2014, is there any drag we can expect from that? And since Balan’s on the phone, I was sort of hoping, really from a technological perspective, really talk about how we could mesh wifi and wireless, and is that a seamless product that consumers can have going forward?

I think the important point that we’ve tried to make in the past about our MVNO contracts is that they essentially give us control of pretty much everything having to do with marketing, managing, and operating and billing a mobile customer, with the exception of ownership and control of the actual physical radio network. By that, I mean we do, in our full MVNOs, have control over HLR, customer data, BSS, OSS, and for all intents and purposes, they are our customer, integrated into our systems and our bundles and our billing. We’re renting, essentially, the physical network from the MNO. I hope that clarifies. In terms of margin, the margins vary, but you would be able to determine this, just from looking at other operators, but we think gross margins in the mid-30s are achievable. It has a lot to do with your strategy, and how you go about marketing handset versus SIMs, and that’s information that we’ll clearly give you more clarity and transparency around as we move on down the road. But from our point of view, the revenue uplift is positive, the margin benefit is constructive, and the ultimate value that we gain in terms of retaining customers and improving customer experience is the real reason to be in it. And Balan, you want to hit the technology point?

Sure. You know, we are quite lucky to have these MVNOs, because they’re really good MVNOs that we have across Europe. And we really see a future where the combination of wifi and having MVNO outside four walls makes a lot of sense. We are currently working on something along those lines where we may have a trial by the end of this year in one country, where you optimize for wifi in the home, in your office, in public transportation areas, but while you’re in the car, you would revert back to 4G voice. But it’s something in our future, for sure.

Our next question comes from Jeff Wlodarczak with Pivotal Research.

In the U.K., you all had a nice first quarter acceleration in EBITDA, certainly earlier than I expected on 1% revenue growth. What are the prospects for a material experience in U.K. revenue growth off that 1% level for the balance of the year? You’ve got the price increase, you’re returning RGU growth and the rebound in S&B, and now the VAT tax. Is there a possibility of any kind of retroactive payment associated with that? Or does that just affect forward results?

Well, I’ll kick it off, and then Tom, I’ll hand it over to you. I don’t know whether we’ve forecasted it clearly or not, but revenue growth is a huge focus for us in the U.K. and it’s clear, though, that this is a large machine. And accelerating a large machine takes a lot of horsepower, and we’re now in the process of revving up that engine, if you will. And I’m mostly excited about a few things. One, the great success we’ve had in the first quarter with mobile, in particular SIM-only mobile strategies and iPhone. Secondly, our return to net add growth in the key products. Third, though, the brand new bundles we’ve rolled out, like this week, which are cleverly branded and are going to simply for our U.K. customers and I think make very clear to them that we are the one-stop shop for broadband, video, and other services. The Big Kahuna is our biggest, best bundle, and has pretty much everything in it, 150 meg, and EVO. And from our perspective, I like the way Tom and Dana and the team are crafting these bundles to reinvigorate energy around Virgin and our products and services, and I feel we’ve got the horsepower behind them to really make a difference in the latter part of the year. And then of course the other piece is the B2B, which as I indicated in my comments, we think has some tailwind, if we keep doing what we’re doing, which is focusing with this new management team on the right stuff. So, Tom, did you want to address anything else there?

Well, thank you for those remarks, and particularly about the new bundles, which we are very positive about. They were rolled out to the base just in these last few days, and already we’re getting positive interest from existing customers, and then we roll it out to new customers at the end of this month. And the other area which I would mention is B2B. We are in a turnaround story. We do see the commercial sector as having growth prospects going forward. So as Mike mentioned, it’s a big business to turn around the momentum, so I wouldn’t overstate the pace of what we do going forward, but unquestionably, we will do better than this 1% number this quarter. In terms of the tax decision, it’s worth noting that the government changed the law in order to change the tax treatment. So the fact that the law was changed would lead us to believe that what we were doing in the past was consistent with the law, so therefore, we would assume that it’s not going to be an issue for us going forward in terms of retrospective adjustment.

And then Mike, big picture, do you feel like OGI is starting to get more pricing power in markets besides the U.K., especially given your distance that you’re creating between yourself and your peers in regards to your data services?

I think a few things have happened. One, organizationally and philosophically, we have committed ourselves to maintaining discipline and taking advantage of opportunities to enforce pricing power. And that’s a lot of words. What I mean is there’s dozens of opportunities across products and services in all markets to ensure your pricing is right. And so you’ll find us talking more and more about small price increases here, price stability there, and so to answer that first question around pricing power, I think it’s yes, philosophically, we’re committed to it. And secondly, there’s no question in my mind that the strength of Horizon and 150 megabit bundles are putting farther and farther distance between us and our next best competitor, and that over time, our ability to command a premium for that value will solidify. So we feel good about it, and I think our RPU per customer continues to grow. We’re actually adding customers in many markets. So the days of negative RPU and massive customer erosion, I think, are behind us.

Our next question comes from James Ratcliffe with Buckingham Research Group.

First of all, following up on the U.K., what inning are we in in terms of capturing the synergies in that market? Because it sounded like they would be flowing more toward the back half of the year, but have we turned the corner where the synergies are significantly outstripping the integration costs at this point? And secondly, with the Horizon footprint and also the Tivo footprint continues to expand, have you looked into electronic sell through as an opportunity, and can you talk about what the potential might be on that front?

On the synergies in cost savings, clearly in this number there is significant benefits on the cost line. That’s how the greater part of the OCF gain has been delivered. But there is ongoing benefits going through the year. Already, the business is operating with approximately 2,000 fewer people than it was this time last year, across both inside the business and outsource. But we continue to derive efficiencies across the served area, truck rolls, a whole range of things across the business, and then continued synergies with the rest of the Liberty group. So we’ll continue to drive that line and build margin. It’s a very strong focus for the business.

Remember, we didn’t expect to be at our full level of synergy realization until 2016, so we’ve still got a couple of years or more to bed the rest of them down. But I can tell you, from my perspective, I’m impressed and extremely pleased with the pace of the integration work, the quality of the organizational approach to that integration work, and the general support that it’s getting, not just at the senior levels of Virgin, but throughout the organization. So I’m encouraged by everything that’s happened to date. And on electronic sell-through, we don’t have a lot of activity on that front, but we do understand the sizzle and the excitement around that opportunity. I can tell you, it’s something we’re currently looking at, but today it’s been a relatively small piece of our puzzle. But could be exciting.

We’ll take our next question from Matthew Harrigan with Wunderlich Securities.

I guess also, maybe even further out there than EST, you know, Comcast and EA are supposedly doing something for console-level gaming through X1. I’m curious if you have the same capability on the horizon. I assume that you do. It seems like it’s something that could be a decent ancillary business at some point. And then I don’t think this probably affects you all that much, but some of the discussion on WhatsApp and Facebook doing an outright voice service, I think you’re very favorably positioned relative to some of your peers on that. I suspect it’s just incidental, but I had questions about it. I’d love to get your thoughts on that.

On the gaming part, we have a bunch of parlor games that we have already, but intense gaming, I think Comcast did that work with EA and X1, and you can look at the numbers there. But the numbers that we look at, we’re not too terribly sure that that’s the right place to put intense gaming, multiplayer gaming, on a set-top box. The world is moving on gaming right now to other devices. But we’ll continue to look at that area. On voice service, you know, our sense is that the impact to us is actually quite minimal compared to what’s happening to the mobile operators in all these different applications. The smartphone has really turned it upside down for them in some of their core revenue streams that really don’t impact us at this point.

Our next question comes from Ben Swinburne of Morgan Stanley.

Just sticking on the Virgin theme, Tom, you and Sky both had good quarters on the subscriber front, and I’m just curious if you have any reaction to that, if that is a reflection of a strengthening U.K. economy, consumer, or just two companies just sort of successfully executing. And I just wanted to confirm, I think you answered this in James’ question, but it sounds like you expect the synergies to continue to grow as in the actual cost savings are going to grow from the Q1 level through the rest of the year. I just want to confirm that that was you were indicating.

On the first question, certainly I noticed the Sky results being up, but I think as has been observed before, I think of course there’s competition in this market for the consumer end, and I think that’s generally a positive thing for growth, that all major operators are out there stimulating the market. I think you’re seeing Sky go back to its roots a little bit and really focus on its programming side, just as maybe we’ve gone back to our roots and really focused on being the broadband leader. Of course, in the period we rolled out the 152 megabits, twice what you can get off of BT. So I think the competition and the bundling in this market is a positive thing for growth. And remember, there’s still more than 25% of homes in the U.K. that don’t have broadband, so there’s upside for us, just in getting new people on, besides the competitive market. We gain people off Talk Talk and other operators as well. So the market is generally good. On the cost side, I think your point is correct, that we, of course in the very, very early period with some very substantial one-off reductions in headcount, took some very significant gains. But the objective is to increase efficiency going forward, and I think we’ve got some very good projects underway inside Virgin when Liberty acquired it, and in addition with the knowledge of Liberty, we’ve got more synergies going, and I think you’ll see progressive synergy and efficiency running through the business, which will be very helpful to our margin.

Our next question comes from Frank Knowles with New Street Research.

I had one question just on some markets that are smaller and don’t get that much attention. There seemed to be a bit of a slowdown in Ireland and maybe Austria. Just wondered if you could comment a little bit on those two territories, notably has Sky’s launch of broadband in Ireland in the second half of last year had much of an impact on your business? And then I did just wonder if Bernie, you could just clarify, you talked about the one-offs of $35 million. Could you break those down by country possibly?

I’d say starting with Ireland, indeed, Sky kind of reacted to our strong position in the triple play with the first triple play last year. I think our retaliation with higher speeds and Horizon was a success. There’s indeed a somewhat flattening, if you talk about the ease of just fishing in a bigger pond. But that was anticipated, and particularly Horizon is a huge success, which is the next step, also still, for this year. And we’re now trialing, also, the wifi, piloting the wifi, which means that we don’t expect any further negative trend or so whatsoever. For Austria, we also have next steps about the innovation and possibly an MVNO move also, before the end of the year. So from that point of view, I’d say, where Austria also been a stable performer for most of the years, we don’t see a change in the trend there.

I would simply say, in both cases, they’re adding steady net adds, if that’s your focus. But in the case of Ireland, with 24,000 net adds in the quarter, that’s one of their best in two years. So that country continues to amaze and astound us, really over the last six or seven years, and I think we all feel really good about the launch of Horizon there. Its ability to impact and affect the Sky competitive position, and I’m not worried about it at all.

And one more comment on Austria, if I may. Austria is actually two businesses. We have a business called Inode that we bought many years ago, which is a DSL reseller, and that has been a major drag on the business. If you look to the underlying cable assets, they’re actually growing reasonably nicely, 3% to 4% type numbers. So I think particularly as the rollup effect of that DSL business starts to be reduced, I think you’ll see underlying growth coming through there, perhaps not this year, but certainly going forward, I’d be more optimistic about Austria, which is still performing reasonably well, if you take out the effect of this drag.

On the one-off side, three countries, essentially. Germany was $11 million, Belgium $17 million, and Poland $7 million.

Our next question comes from Carl Murdock-Smith with JPMorgan.

Going back to the theme of Virgin Media, I was just wanting to ask, on the television revenues, they appear to have slowed from plus 9% in Q3 to plus 7% in Q4, and now plus 0.4% in Q1. I suppose, looking at the price increases year on year, the [M+] and XL packages, both had price increases in February that were higher than last year. And the L package was only slightly less. And as such, what is the main driver of the revenue slowdown in that particular revenue line? And then I’d also like to just ask about your quad play ambitions in the medium term. In the U.K. we do appear to have hit some kind of level at around 16% quad play penetration. Do you think the new packages you’ve just launched could help push that penetration upwards? And what would be your medium-term ambition for quad play penetration, both in the U.K. and across the group more broadly?

On the quad play question, absolutely. The whole point of the new packages is to really drive quad play and to qualify for, similarly at UK5 per month, which is obviously a very competitive price, you’ve got to be a triple play customer on the rest of the cable business. It’s a true quad play offer, and our very, very early indications are, among our existing customers, it’s proving attractive, and of course we’ll be promoting it hard on that basis. So we unquestionably will build that quad play ratio. I won’t venture today about where it will go. But I think the point being that our mobile business, Virgin Mobile, which we found in entering the company is maybe a little bit distant from the core cable business, the whole point is to integrate it and make it entirely supportive of the cable business. And really, our whole point of having the mobile business now is to focus on quad play customers and not try and build [unintelligible] the independent that’s out there with the much larger operators.

And just before you get to the revenue point, the rest of Europe, the goal is to duplicate that strategy for the most part. I mean, mid-teens quad play penetration is good. We think it can be better, and of course, we’re starting from a very low base I the rest of Europe. So any movement towards 15%, which I think we’ve exceeded a bit in Belgium but nowhere else, because we’re just getting going, would be very positive for our revenue in that market. And I would tell you, just anecdotally, that where we are selling quad play, the vast majority of our mobile sales, 90% plus, are to existing customers. So it is, as Tom says, the main focus to support and attract our current customers to our mobile products.

And on the television revenue side, I think it’s just worth noting that we put our price rise through in February. It’s mid-February on average, so you really won’t see the full benefit of that until you get to Q2. And like a lot of people in this marketplace, we are finding selling premium channels more of a challenge than it used to be in the past. A lot of that, here in this country, was the price of football, which of course has gotten very expensive. Still an essential product as far as we’re concerned, but we’ve got to price it at a level where we are recovering the investment we make in it. And we’re conscious of that in our new bundling too. As we move forward with this new bundle, we think we can make the TV programming more accessible to customers and fundamentally work on the volume of it in terms of the way we package it. So I think that’s another issue that we will be addressing going forward.

And our next question comes from Brian Kraft from Evercore.

I had a couple of questions. One, just wanted to see if you could quantify a couple of things related to business services, specifically can you talk about the capital investment you expect this year for it, how that compares to last year? And also, how much revenue outside of the U.K. are you generating from business services? And then separately, wanted to see if you could talk about the roadmap for Horizon on the hardware side. I know you mentioned rollout in Poland is going to use the RDK version. Just wanted to see if you could elaborate on that a bit.

I’ll take a crack at the B2B numbers, but somebody please check the math. I think our aggregate B2B revenue on an annualized basis is somewhere on the order of $1.7 billion or $1.8 billion. And Virgin would be our largest market. I think you’re about UK600 million, Tom, so gross it up. So over half our B2B revenues coming out of the U.K., the rest of it will be coming out of Belgium, Holland, Austria, and Switzerland. And hopefully, increasing, over time, Germany as well. But the B2B picture outside of the U.K. looks a bit different than it does in the U.K. In the U.K. it’s about growing the main enterprise business and tangentially driving a SoHo strategy, whereas in the Continent, SoHo is the fastest-growing revenue stream. It’s a little less capex intensive, and there’s a lot of low-hanging fruit. So I mean, I don’t know if we’re disclosing specific capex numbers on B2B. I doubt we are, but that’s a general revenue breakdown.

On the capex numbers, the percentage to revenue is much higher in the U.K. given the fact that we’re targeting large enterprises. So you can imagine a number slightly north of 20%. The rest of Continental Europe, the number is much lower as we target SoHo and now looking at [unintelligible] enterprise.

We don’t give guidance, but I would disclose this, that on the U.K., to be fair. A lot of the capex is prepaid. You recognize it over time, so from a cash point of view, the capex ratio is more around that 20% area. So it’s hard to allocate it perfectly, but I think we feel that the business that we’re focusing on in B2B, particularly the focus on SME and SoHo, is very good growth, and pretty good returns at pretty attractive margins. And we are very comfortable with the double digit targets we’ve been giving out on that.

On Horizon, we started Horizon with middleware from NDS, and we have now evolved that and we’re slowly migrating off to the RDK stack that we’ve been working with Comcast and Time Warner Cable, as Mike indicated earlier. We will launch in Poland, and then that’s a version called 1.2, and then there will be another version of RDK that we’re looking at for next year that brings even more functionality to the device. But it’s a good path, and it’s good cooperation between the cable entities.

And a platform like Horizon, our [unintelligible], they are the answer to the question, gee, what are we going to do with online video and over the top services? Over time, with that UI in the cloud, the ability to migrate it and evolve the UI, and adopt and integrate new services and applications, gives me great confidence that we have bridged that gap that has been exposed a bit by OTT. And as with the DVR, when we adopt, even if we’re second to the market with some great idea, when we adopt it well and execute it well, and reinvent ourselves with it, it’s a very positive moment. I think we’ll wrap here guys, so I’m going to close it off and say we appreciate your support again, as always. We feel really good about the start to our year. I think you can sense that. You know, 8% OCF growth bodes well for our guidance and I think you would appreciate it. And I feel like we’re in a great strategic position with broadband speeds and Horizon and our mobile launches and our content strategies. I really feel confident that our competitive position, especially B2B telcos, as our primary competitors, is great. And because innovation is going to continue and our speeds will continue to ramp, and our mobile products will hit them where it hurts, I’ve actually never felt more confident about our competitive posture. So appreciate your support again, and I look forward to talking to you in our second quarter. Thanks for joining us.