Liberty Global plc (LBTYB) Q3 2026 Earnings Report, Transcript and Summary

All right, welcome. Good afternoon or good morning, wherever you may be. We certainly appreciate you dialing in to our third quarter call. I've got the broader team with me for Q&A, as I usually do, but I'm going to jump right in with prepared remarks that largely track the investor deck that we put together for you. Hopefully you're following along there on slide four. We continue to lead with this slide because we think it helps both frame our current operating model and separate us from other European telecom platforms. The first point here is that Liberty Global itself is an operator and investor across both telecom and other growth sectors, with $2 billion in cash, no debt, and a nearly break-even corporate cost center. Second, we sit atop two unique asset groups. A telecom portfolio you know well, national champions, where our primary focus has been and remains on unlocking equity value for shareholders. You know the playbook. We delivered with the Sunrise spin-off, which now trades at an equivalent of around $11 per Liberty share. It's paid dividends totaling $600 million since its Swiss listing in November 2024. As you know, we remain focused on doing the exact same thing next year with the newly created Ziggo Group in the Benelux. Meanwhile, Virgin Media O2 in the U.K. announced today a new strategic plan that will radically reduce costs and simplify its operating model to drive growth and cash generation. More on both of these developments in a moment. But we also control, as you know, a portfolio of growth assets, reasonably valued by external parties at $2.9 billion, where two-thirds of that value resides in five clear investments. Two things to remember about this portfolio. First, we have a track record of realizing fair value for these investments, typically at or above the marks you see each quarter in our filings. Just in the last five years alone, we've exited investments in this portfolio totaling approximately $2 billion, nearly all of them with positive return to shareholders. Secondly, this growth portfolio has largely funded itself as we've recycled that $2 billion of cash back into our growth portfolio, typically into more scale-based platforms or growth assets in infrastructure, sports, and tech. Each of those, we think, will yield better returns over time. Now, with that as background, we move on to slide entitled Q3 Highlights. I think there's just three core takeaways from today's call, and I'm going to dig into them both largely here at the top line level and then into more detail. First of all, we are on track to spin off the Ziggo Group in the second quarter of next year. I'll get into this in more detail, I promise. But our confidence is supported by significant progress at the transaction, leadership, and operating level. I reference the strategic plan that VMO2 published, which calls for, among other things, run rate cost savings of GBP 800 million within 36 months. Of course, we totally support, have encouraged the goal of becoming a leaner, more agile business to both drive growth and cash generation. By the way, this program is already underway, and it includes headcount reduction, a simpler operating model, and changes to capital allocation, which I'll discuss. Finally, we bought back 2.9% of the company in Q3, and we intend to continue at that pace in Q4. At current prices, that means the additional $100 million buyback would result in another 3.7% of the shares being retired, so nearly 7% in the second half of the year. It's difficult to not see the value here. For what it's worth, I will be in the market buying shares tomorrow when my window opens as well. I've seen this movie before. If you look at some of the parts analysis on the right-hand side of the slide, at $8 per share, plus or minus where we are, we're trading at a near 50% discount to the combined value of our unencumbered corporate cash and growth portfolio I just went through. Of course, by definition, that attributes zero value, perhaps even negative equity value, to the entirety of our telecom business. Just to make a couple of points clear here. First, we do not intend at this time to put any cash currently on our balance sheet into our telecom businesses, and why would we? These businesses are all free cash flow positive, have strong market positions, and are set up to manage their investment plans and balance sheets entirely on their own. That's why they were put together the way they were. So the notion that some investors might be applying negative equity value is misguided. Second, you don't need to make heroic assumptions to arrive at positive equity value for the Ziggo Group. We've previously guided you towards EUR 500 million of free cash flow and a 4.5x leverage multiple in 2028. We suggested that the Sunrise free cash flow yield of roughly 12% might be appropriate. By the way, that would result in a $13 tax-free dividend to shareholders at spin, implying a $21 stock price today, just adding our $8 on top of that. Just to be conservative, you assume EUR 400 million of free cash flow and a 16% yield to reflect either more leverage or less growth or market conditions, you arrive at an $8 tax-free dividend. Even with EUR 300 million of free cash flow, and let's get extreme, a 20% yield on that free cash, you're talking about $5 per share, a 62% premium to our current stock price. Just a reminder, this is not an IPO. Yes, we will host a Capital Markets Day in Q1. Yes, management will go on a global roadshow to generate awareness and interest in the stock, just as we did with Sunrise. We are not building a book or relying on banks to underwrite an equity offering. The new Ziggo Group stock will be distributed tax-free to shareholders and will trade at the outset wherever the market determines fair value resides. In our estimation, it will appreciate from that point as synergies, growth, and deleveraging continue to unfold. This is why we remain committed to the transaction and the timing. Let's dive into the Ziggo Group spin-off and the progress we've made thus far on slide 6. First of all, I'm excited about the leadership team. How could I not be? Stephen has done an incredible job at VodafoneZiggo, of course, and he's built a great team at Ziggo Group. Jany Fruytier is familiar to many of you, I hope, as the CFO of Sunrise. By the way, before, during, and after that successful spin, he is actually Dutch. Has returned to Amsterdam as CFO of Ziggo Group to work with Liberty on the pre-spin process, and importantly, execute the synergies. Rocío Lorenzo was a very senior executive at Liberty Latin America, most recently running the Panama business. She just started this week as CEO of Telenet, replacing John Porter, who, as you saw, announced his retirement after over 30 outstanding years with me and Liberty. John will be around till year-end, and undoubtedly an important source of advice for us going forward. Now, of course, there is a host of other senior executives rounding out a very strong Ziggo Group team, and it all starts with the people on the ground. From that point of view, we are in very, very good shape. Now, we have continuously updated you on all those building blocks, so let us cover a few more. First of all, we have finalized a lead banking team. Goldman Sachs, BNP Paribas, and ABN AMRO are all going to do an outstanding job for us. They provide really strong coverage across all equity markets, and each of them remains very encouraged and positive about both the deal and the timing. Second, we can report that due to several factors, we will realize over EUR 700 million in tax assets in the combined group structure. Those tax benefits will constitute a significant part of the synergies, which are now expected to be well in excess of EUR 1 billion. That is the target we previously provided. Third, the deleveraging of Ziggo Group continues. The sale of the VodafoneZiggo towers is expected to close imminently, delivering gross proceeds of EUR 670 million. That will delever VodafoneZiggo, and the Wyre sell-down will further deleverage Telenet to 4.5 times. Then finally, we expect to be filing initial confidential prospectuses with both the SEC and AFM in December, next month, which should provide more than enough time to meet the Q2 2027 spin timing. Now, as you can see, this is a full-court press, inspired in part by the confidence we see in the businesses themselves, but also by that sum of the parts chart that I just showed you, which is a great segue to the next slide, highlighting operating progress in Ziggo Group’s biggest market, the Netherlands. VodafoneZiggo is becoming a much, much stronger competitor in this market. That much should be clear to everybody. Revenue is back to growth for the first time since 2024, with the best broadband results since 2019. Perhaps the most exciting recent development is the world’s first major launch of DOCSIS 4.0, which is now delivering four and eight gigabit speeds today and will ultimately reach 8 million homes. Now, this strategy, I have to say, validates both the quality of our HFC networks and the decision not to build fiber in this market. DOCSIS 4.0 future-proofs the network for any demand scenarios. DOCSIS 4.0 avoids disruption to customers and communities since we are not digging up streets. DOCSIS 4.0 costs 10 times less than building fiber. So that means we are achieving this network-wide transformation, best-in-market speeds, within the current CapEx envelope, and that is going to provide greater flexibility for future capital allocation decisions around leverage and dividends post-spin. Now, moving to actual operating results for the Netherlands and Belgium on slide eight, you will see on the left-hand side what I have already said. VodafoneZiggo continues to deliver strong and improving broadband performance, so 12,000 net adds and its best quarterly result in over seven years. That was helped in part by an expanded footprint, but also by new loyalty programs that are making a big difference. Meanwhile, fixed ARPU improved 1%. That is despite lower front book pricing, because we saw price indexation kick in and an ESPN surcharge because Dutch football is now available on all TV packages. Mobile postpaid additions were strong, 31,000 in the quarter. That is driven by renewed tenure-based loyalty program, I think it is a very positive move for Steven, with strong early customer engagement and a new FMC proposition and faster broadband speeds. Telenet also had a good quarter, about 4,000 broadband net adds supported by strong base FMC growth, and residential mobile of about 4,000 net adds, and that is driven by premium handsets and a new mobile promotion on 15 gigabit tariffs. It is just the sort of momentum you want to see from both of these businesses going into Q4 in 2027. Now, let us switch gears to the U.K. I know this is a market and a topic on everybody's minds here. Let me start with some context on slide nine. I know we talk about it every quarter, and many of you are following the market as closely as we are, but the U.K. has been and remains one of the most challenging operating environments in Europe for telcos. Since the formation of our JV five years ago, retail revenue market-wide in fixed and mobile has declined over GBP 5 billion, or 13%. That is according to Ofcom. In fixed, this is explained by falling home telephony subscriptions and, more recently, intense price competition with the arrival of unsustainable fiber players. In mobile, we have seen rapid erosion in pricing with delayed MNO consolidation way too long and the arrival of MVNO and branded competitors. Despite these headwinds, as you can see on the chart, VMO2 has produced stable EBITDA, growing from GBP 3.6 billion in 2020, the year before our JV started, to GBP 4 billion in 2023, and then remaining largely steady since then at about GBP 3.9 billion. While Luke and the team have struggled historically to drive customer growth and revenue in this difficult market, they have been able to stabilize profitability with synergies and a commitment to cost efficiencies. It is also worth pointing out that, as the slide does here, over that same five-year period, VMO2 invested heavily in its networks, brands, and digital platforms, an investment that has produced four of the most recognizable brands in the market, a number one position in mobile connections, a strong broadband base with faster average speeds, far faster than those that are delivered by BT, and a number two position in B2B. So, two points here. While VMO2 is a strong, scale-based national champion, which in the face of serious headwinds has delivered a steady financial performance over the last five years, it has not been enough. Which is why we asked for, and management has delivered, the new transformation program announced today. You can see the core elements of that plan on slide 10, including EUR 400 million of run rate cost reductions next year, growing to GBP 800 million by 2029. That is funded in part by a leaner, simpler organization and a 30% headcount reduction. There have already been changes at the senior operating level here, including the appointment of Lyssa McGowan, who now oversees the entire B2C division, putting customers first, organizing around key brands, launching simpler products and propositions. She is off to a great start. Importantly, the team is already redirecting CapEx to clearer, higher return projects, which has prompted the decision, by the way, saying today that we are not going to build any more fiber on the VMO2 balance sheet, regardless of the outcome on the Netomnia. Instead, we see a big opportunity to upgrade nearly 70% of the HFC network to 2 gig speeds next year. That will have a huge impact and give Lyssa a tremendous asset to start marketing. Given the significance of this entire program, VMO2 is going to provide a capital markets update for debt and equity investors in the first quarter of next year, hopefully around our year-end results. That will certainly run through the progress on cost reductions and provide a deep dive into the commercial business. Regarding the Netomnia transaction, we remain committed to this deal, and we made a decision to keep our remarks today short and to the point. I am sure you have seen our public statements and are fully aware of the debate. All I will say is that we are deeply disappointed by the CMA's interim report. It is so fundamentally flawed, with conclusions and counterfactuals that do not reflect the commercial and financial reality of the U.K. market. In particular, the assumption that CityFibre, another operator, would have or will have acquired Netomnia is not a credible basis to judge our transaction. I think you are well aware of CityFibre's financial condition. Nor is the assumption that the billions of pounds of investment enabled by this deal would simply happen anyway. As I have just indicated to you, we are halting the fiber build on VMO2's balance sheet. So this is a big moment for the U.K. telecom sector, for sure, but I think it is an even bigger moment for the U.K. Investors are watching to see whether or not U.K. regulators are prepared to apply the law in a fair and reasonable manner, particularly one that does not pick winners or prop up failing bidders. So stay tuned. It is not over. Turning to Q3 operating results in the U.K. and Ireland briefly to wrap up my section here. VMO2 delivered year-over-year sequential improvement in both broadband and mobile net losses in the quarter, despite the highly competitive environment we just spoke about. Mobile ARPU has been growing, while fixed ARPU declines over the last few quarters reflect promotional intensity. Despite the headwinds, the team remains on its front foot. This is key. With improved AI-supported customer service metrics, we just extended the naming rights for the O2 Arena, a tremendous asset, and we have continued network investment, particularly in 5G+, where coverage is approaching 90%. Then finally, Virgin Media Ireland delivered its strongest total broadband result in seven quarters alongside continued positive mobile net add, so you can read about that. With that, I will hand it over to Charlie, and then the team and I will happily address any of your questions. Charlie, over to you.

Thanks, Mike. Turning to our Q3 financial highlights, performance across our operating companies continues to be on track against our full-year guidance, which I will cover in more detail over the next few slides. As you have heard, VMO2 is focused on reducing leverage, and we are encouraged by the direction of the new strategic plan to simplify the business and reduce the cost base. At Ziggo Group, the balance sheet is supported by a long-dated maturity profile, with no material maturities expected until 2029. Deleveraging across the Ziggo Group credit silos remains on track, as we have demonstrated with the recently announced towers sale. The next slide sets out the Q3 financial results for VodafoneZiggo and Telenet. VodafoneZiggo returned to positive revenue growth for the first time since 2024, supported by price indexation, the ESPN surcharge, and customer growth, which more than offset the pressure from front book repricing and lower B2B mobile revenues. Adjusted EBITDA declined 6.9% in line with our guidance, reflecting the in-year impact of the How We Win plan and budgeted one-off investments in network resilience and security. Adjusted EBITDA less property and equipment additions also continued to be impacted by the one-off investments, reflected in higher CapEx during the quarter. At Telenet, revenue was broadly stable, supported by higher Wyre TSA revenues, increased handset sales, and higher programming revenues associated with the new Jupiler Pro League agreement with DAZN. Adjusted EBITDA declined, mainly due to lower subscription revenues and higher programming costs related to the new DAZN deal. Adjusted EBITDA less property and equipment additions benefited from CapEx phasing and lower 5G CapEx spend. Turning to the U.K. and Ireland, at VMO2, total service revenue was broadly in line with our expectations, driven by continued pressure in the consumer fixed market and the planned rationalizing of the O2 business portfolio to support long-term growth. Adjusted EBITDA declined 2.6%, driven by the lower headline revenues, offset by cost efficiency measures and certain one-off benefits during the quarter in relation to legal matters and a reduction in sales commission expenses. At Virgin Media Ireland, service revenues declined modestly, driven by lower Virgin Media TV revenue, and adjusted EBITDA was impacted by a EUR 9 million one-off adjustment related to Virgin Media TV content amortization, as well as the flow-through from lower revenue. Adjusted EBITDA less property equipment additions reflected the last major quarter of fiber CapEx spend as we near the completion of our fiber rollout program. Turning to capital allocation, our operating companies continue to invest in their networks and digital transformations, though broadly, capital intensity is moderating through the cycle. During the quarter, investment at Virgin Media O2 continued across the fiber upgrade program, mobile capacity and spectrum integration, as well as IT and digital transformation. VodafoneZiggo investment reflected DOCSIS 4.0 network upgrades and the CapEx one-offs related to the network resilience program. Telenet CapEx has stepped down as its 5G and digital upgrades complete, while Virgin Media Ireland is approaching the end of its fiber upgrade across approximately 1 million premises. Now, on the top right, the fair value of the Liberty Growth portfolio was approximately $2.9 billion at quarter end. The movement from Q2 primarily reflected modest investments in Formula E and Bloom. On corporate cash, we ended the quarter with around $2 billion. The biggest movements during the quarter related to the $1.2 billion payment to Vodafone for the 50% stake in VodafoneZiggo, the modest investments in Liberty Growth, and $100 million in share repurchases. We're now targeting to end the year with $1.8 billion of corporate cash, assuming that the full $200 million of share buybacks is completed. Now, moving to the treasury slide. We remain focused on disciplined refinancing and a higher-for-longer interest rate environment. Our siloed capital structures are fully swapped with a fixed cost of debt, and base rate hedges remain in place through 2030. Despite challenges with the macro environment, we've actually completed $11.5 billion of financings year to date, including approximately $10 billion across Liberty Telecom. This activity has materially reduced near-term maturities compared with our position at the end of 2025. At Ziggo Group, net of expected non-core asset disposals, we do not expect any material maturities in VodafoneZiggo or Telenet credit silos until 2029. Telenet recently closed a EUR 427.5 million Term Loan A, the proceeds of which will be used to refinance an existing facility and other near-term maturities. Finally, turning to our full-year guidance for 2026. We are reviewing our options with respect to VMO2's planned cash distribution to shareholders in 2026, and we'll provide an update in Q1 2027 when we announce the full-year results and know the outcome of the Netomnia transaction. Otherwise, we remain on track across all other guidance metrics across Liberty Telecom and corporate. Now, that concludes our prepared remarks, and I would now like to hand over to the operator for Q&A.

Thank you. The question-and-answer session will be conducted electronically. If you would like to ask a question, please do so by pressing the star or asterisk key followed by the digit one on your phone. In order to accommodate everyone, we request that you ask only one question. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We'll pause just for a moment to give everyone an opportunity to join the queue. Our first question is from Robert J. Grindle with Deutsche Bank. Please go ahead.

Hi. Hi, everyone. My question is about the U.K. You are suspending the U.K. fiber build and saving a good chunk of money there. Does that imply anything with regard to your ambition to wholesale on the existing 10 million or so fiber footprint, 10 million homes? Do you have the CapEx capacity within your target to connect either VMO2 or wholesale customers to that existing fiber network? Thanks.

I will let Lutz chime in here. I think the main takeaway, Robert, from our decision to halt the fiber build on the balance sheet is that we remain opportunistic. Number one, the HFC network, as we are demonstrating in Holland, is a powerful network, and with 2 gig, we will be in a great position across the market. By the way, the 2 gig upgrade is tiny in comparison, a 10-20 kind of number to get the entire footprint ready and able to deliver 2 gig speeds. That is a huge step in the right direction. We will see how the fiber situation unfolds, but we see no reason to be upgrading fiber today on the footprint that we operate. That does not mean we will not use other people's fiber, does not mean we will not wholesale where we have fiber, does not mean we will not access fiber, our own or others, where it makes operating or economic sense. It simply means we do not see the need at this point to follow along, if you will. Fiber is a valuable asset, but not the only way to deliver broadband, and in our case, not the best use of capital today. Lutz, you want to add anything to that? Lutz Schüler: Yeah. So far, we have the opportunity to sell our existing fiber network, which is together with nexfibre, around nine million homes. Final decision how to progress with it will be done when the new plan is decided by the board end of November. But so far, the technology is there, the platform is there, and the cost could be handled in the plan for the next three years, Robert.

Thank you, gentlemen.

Thank you. Our next question is from Andrew Lee with Goldman Sachs. Please go ahead.

Good afternoon. Just a follow-up to Robert's question. Obviously, you are presenting a good counterfactual argument to the CMA today that may cause it to adjust its view, but that rental scenario needs to be credible for that. Just wanted to dig in a bit deep on the rental scenario. What changed to make you decide building is not the best use of capital and that HFC upgrades will be enough? Just in terms of renting, would the rental rather than building scenario, which you are positioning as a hypothetical approach should Netomnia not go through, would renting give you the confidence to deliver and guide to service revenue growth on a medium-term basis? Thank you.

Sure. I will just say on one point, Lutz, then you take the question. Remember, renting versus building is not the only question. We are always looking to extend our footprint, and that by definition will require renting. So, the idea that we will use other fiber networks where available to extend the reach of our brands is a foregone conclusion. So that is something we should do that would obviously drive marketable homes, revenue, and opportunity for the core business. Lutz, you want to address the first question? Lutz Schüler: Yeah. So, our assumption was always that our HFC network will serve customers in a very good way for the time being. When the question is, and this is more in the perspective of in the next 10 or 20 years, when are higher speeds than DOCSIS 3.1 required, which will give us the 2 gig. For that, we have started to build fiber, and for that, we have also entered the wholesale business. It is very simple that during the course of the years when we built fiber, we could clearly see where you see three fiber networks, it is not economically viable for any of them. Therefore, we have already before stopped to overbuild altnets, and now we have stopped it entirely. The question now is, for the next couple of years, we are safe with HFC, and then off-footprint, it is a huge opportunity. On-footprint, we might get on other networks, or there are lots of inorganic opportunities still around the corner, and we will find a way to roll out fiber with partners where there are no two existing fiber networks. This is very important. We would never build anywhere a fiber as a third fiber network. Of course, we cannot give you at this time an outlook of service revenue. Mike announced that we will have a Capital Markets Day in Q1 next year. Be assured we are having a plan that is also considering the development of the service revenues that is showing growing operating free cash flow, but the details around that first need to be approved by the board, and then will be shared with all of you in Q1.

[Crosstalk] Rob, let me just add one thing. It is a bit of a wake-up call to us, this regulatory posture that we are faced with here. Never did we anticipate that this transaction with Netomnia would encounter such fierce resistance. It is a reflection of, as I mentioned, deeply flawed perspective and understanding of where this market is going. We have, to some degree, been pushed into this direction as well. It is unclear to us how this market evolves over the long term, and I am certain that the powers that be in government have no idea how it is going to unfold. This is a bit disconcerting for us and for Telefónica, which is why we need to buckle down and do what we can do what we know we can do, and drive growth in the business, which Lyssa and Lutz believe a 2 gig product is going to do wonders for us, and there is so much untapped opportunity.We cannot wait around for the government to figure itself out. Go ahead for the second question.

Yeah, I think share price and bond prices show that people did not anticipate the CMA response either. Can I just ask one quick follow-up? Do you think that this new approach in terms of, or this clearer, maybe more straightforward approach in terms of ceasing fiber build makes it more or less possible that you could sell assets to help reduce your debt pile? Is that on the agenda at the moment? Thank you.

Well, we have referenced in the past the remaining tower portfolio that we have an interest in. That is something we have always considered. Other transactions involving our HFC network or fiber network, we always remain opportunistic, and you should assume we are looking at all sorts of opportunities here to raise cash, and that is on the table. We just cannot speak about it today.

Thank you.

Yeah.

Thank you. Our next question is from Matthew Harrigan with StoneX. Please go ahead.

Thank you. Especially with the commonality on the HFC side now between the U.K. and Ziggo Group and the very dramatic reductions in the cost plan that was submitted, is there a fair amount of sharing in terms of the strategic planning and the technology roadmap? You talked a lot about AI, pretty substantial cost reductions in the prior call, but just curious as to whether there's a lot of talk between the two companies. Thanks.

Thanks, Matt. Absolutely. That's always been our approach to running these businesses, whether we own 50% or 100%. There's an open dialogue. Enrique and the team, whether it's AI or network decisions, the CEOs of the various operating businesses are together frequently with me and our team. So there's as much information and knowledge sharing as can happen. When it comes to something like DOCSIS 4.0, there are very few people in the world as up to date on that as we are in Comcast and Charter and Vodafone. Probably the four of us would be the most knowledgeable companies on the planet on this technology, which has proven to be robust, remains robust, and I think as the Dutch market will demonstrate that eight gig, is outstanding product for customers and very effective and efficient to build. Yes, lots of sharing, lots of common planning, and that's what makes, I think, our approach to this pretty special.

So, obviously, you are seeing a lot of new usage growth with the new 2 gig product.

Sorry, go ahead, say that one more time, Matt.

I assume you are seeing a lot of usage growth and functionality with the new 2 gig product.

Yeah, I mean, look, whenever we have raised, and Lutz can address that more specifically, but whenever we have increased speeds or sort of made technological leaps in the quality of broadband, we see more usage, that is for sure. I mean, even today, VMO2, given the size of its broadband base, the average speed received by a VMO2 customer is multiples what the average U.K. customer is getting today, because our network has always been the most robust. And whenever we have leaps in speed offerings, of course, there is more usage and just happier customers. So there is a marketing component to it as well, no question, but there is also a fundamental technology component to it, and we can continue to expect to see that.

Great. Thanks, Mike. Thanks, Lutz.

Yeah.

Thank you. Our next question is from Ulrich Rathe with Bernstein Société Générale Group. Please go ahead.

Yeah, thanks very much. I wanted to ask about the VMO2 cost-cut announcements. Could you talk a little bit how this came about in terms of, did you identify inefficiencies and decided therefore it's time now for this, or is it driven by the situation in the debt stack? And how would you position your thoughts at the moment about the situation, how the debt is trading with regards to the possibility of debt restructuring? Thank you.

A lot of questions there. I'll let Lutz speak a bit more about the organic evolution of this plan. I'll just add that from a shareholder point of view, and as I said in my remarks, I think the team has always been quite good at managing an efficient business in the face of headwinds, revenue headwinds, and growth headwinds. So, looking out and understanding the market as we do, it seemed to us to be a great opportunity and a great moment to rethink the operating model. Now, what's driving that? Lots of things, just running a more efficient business, bringing in new senior leadership, benefits of AI, et cetera, et cetera. I'll let Lutz address that more concretely, and Charlie, you can take the last question. Go ahead, Lutz. Lutz Schüler: Yeah, I think three things came together, Ulrich. One is, we hired Lyssa, our new Consumer CEO, and she clearly came with a new strategy coming from the brands and a clear prioritization. We have found the few things that will make the biggest difference for customers and aligned our resources behind that. Lyssa also has started already earlier than the rest of the company to dramatically simplify our consumer operating model, and now we are enlarging this across the company. That's one. The second thing is, of course, as Mike said, our shareholders told us over summer to come up with a plan to generate a certain cost saving. This came quite nicely together, and we challenged us across the company in operating model and other costs. Then thirdly, as discussed before, we made a strategic decision on fiber, which is also helping on the cost thing. I would say these three things came together.

Charlie?

Just on the debt, look, I think we recognize that the debt is, as a multiple, is trading above our 4x-5x target, and we also are committed to getting the leverage down towards our targets. I think we have to wait to see what the plan bottoms out at. I think Lutz has done a lot of good things with the cost savings, with lots of other elements, and he's still working through his budgeting cycle. So, I think we'll have more news on the debt and how we plan to refinance it in February around the Q4 results. I mean, again, I would reemphasize, there is no maturity before 2029, so we have time to see how the market conditions evolve over the next few months and obviously how the company's performance evolves. So, stay tuned, and we'll come back to you in February, March.

Next question.

Thanks very much.

Thank you. Our next question is from James Ratzer with New Street Research. Please go ahead.

Yes. Good afternoon, and thank you for taking the question. I mean, hard to keep it to just one question, but the one I would have today, if possible is, I mean, Mike, for equity holders in Liberty Global, you've made a pretty powerful statement today that you would put no cash from the top co into the telecom assets. So just to kind of reconfirm that, I was wondering if I could kind of stress test two potential scenarios. One is, it becomes clear before the Ziggo Group spin actually happens that it's going to be difficult to reach 4.5x leverage target. And the second one is, I mean, given where the Virgin Media bonds are trading, clearly everyone on the credit side is expecting some kind of debt restructuring to happen there. So, there could be an amend and extend proposal, and that can often involve sponsors potentially putting capital into companies as part of that process. So, just to be crystal clear, could you kind of confirm that in either of those two scenarios, you still wouldn't be putting any cash from the corporate company down into the telecom assets? Thank you.

Well, yeah. In the first instance, we stand by the statement, obviously, and I think it is the right thing for us, right position for us to have. In the first example where there is a spinoff pending, and as I mentioned about that spinoff, it is happening. I should make that clear again. It is happening, and if it We are not waiting for all the stars to align. There is no need to wait for all the stars to align with the stock where it is today. It is all good. So, it is happening. The only reason we would consider potentially putting money into a spinoff, not into the company to reduce, or to keep it humming on any other basis, is it is essentially a dividend to shareholders. In the case of Sunrise, we put money in there, but that was an effectively a dividend to shareholders, tax-free. It was as if we were handing cash to shareholders. That is a different scenario. That is a very optimistic, positive moment where we are unlocking value, unleashing value for shareholders. We may think about that, but that is not on the table because I think this business is trending in a manner that it does not require any boost or kick in the pants. On VMO2, no comment. We made it clear, Charlie just made it clear, we have nothing to add to where we sit today. The business is generating free cash flow. Yes, it is up and above the high end of our leverage marks. Yes, I think Lutz and the team are making extraordinary efforts to bring operating free cash flow, meaningful operating free cash flow to the business. Yeah, we need to wait and see where the market sits. Our interest rates are low with base rates rate hedging through the 29 period. This is, in our minds anyway, not a crisis. I am not prepared to address that hypothetical at all. I think there is no need to. On the first one, I view that as a very positive moment. The only reason we would do that is if we thought we could get the stock out at 12 instead of 10 or something. You should view that as a dividend to shareholders, not as an investment in the telco business per se, because immediately the value of that equity injection would be realized for the benefit of shareholders, which we all like. So, that is how I would answer that question. I do not know, Charlie, if you want to add anything to that, but I think I have made the point.

No, I would not. I mean, well-

But Mike, on that point, Mike, wouldn't I mean, given you're trying to steer the market to value the Ziggo Group on a cash flow yield basis, wouldn't cash in the Ziggo Group on a cash flow yield basis be valued at a lower value than cash that sits in the corporate company? So, I'm wondering why you would consider doing that.

The only reason is, you're right, and that's why it's not a very likely scenario. The only reason might be that the yield itself would come down, right? So, if the business is trading at a certain leverage ratio, the yield might be closer to KPN's yield of 5%, right? Sunrise is up at 10% or 12%. So, to me, it's less about the actual economic result or accounting result within the P&L or the balance sheet. It's about market perception of what is the right free cash flow yield. Having said that, trust me, this spinoff, absent some force majeure we can't control, is happening. Shareholders will have a share of stock with Ziggo Group written on it in the second quarter, and they'll value it where they choose to value it. So, the main answer is we don't think it's necessary and probably unlikely to do it, but you should perceive it as a, if it were ever to happen, as a very positive day, very happy day for investors, and only on that basis would we consider it.

Would there be any kind of threshold that would make you consider that? Is it if it's kind of I'm just trying to think about, because I think this is an important scenario for shareholders to consider, so I'm just trying to think about what could be those variables that might make you put a cash dividend into the Ziggo Group before the spin.

I don't want to get into those, James. I appreciate the question, it's a right one, but I don't think it's appropriate for us to get into all those scenarios. We got Capital Markets Day; you got six to eight months to see how this unfolds. You're going to have plenty of time, I think, to run the scenarios. That would be my response.

Got it. Many thanks.

Yep. Thanks, James.

Thank you. Our next question is from Polo Tang with UBS. Please go ahead.

Yeah, hi. Just a question for Steven in terms of VodafoneZiggo. Operationally, the company is seeing a turnaround, that is clear. Can you maybe talk through the deleveraging profile and the moving parts to get to 4.5 times leverage from six times currently? I think most investors, in terms of their Maths, they are going to get down to around about five times. But can you also talk about the bridge and the moving parts to get to EUR 500 million of equity-free cash flow in 2028? And is this number, EUR 500 million, sustainable longer term, given you have got longer-term debt maturities, but the bond yields are higher than your current cost of financing? And maybe a quick follow-up for Lutz, if that is possible, on VMO2. You have outlined plans for significant cost savings, but can you give some detail about the measures you are taking to improve subscriber trends and revenues? Are you looking to grow VMO2 longer term, or alternatively, is this turnaround plan more focused on having a stable top line and boosting operating free cash flow from cost savings? Thanks.

Mike, do you want me to talk about the financials?

Can you talk about the leverage point? Yeah, go ahead, Charlie. You do the leverage point.

Yeah, sorry. I mean, Steven, obviously, you are the master who is deriving all this. Look, I think, first of all, we have given this medium-term target. We are going through a detailed budgeting process. Mike just indicated that our synergies are actually looking substantially higher than the EUR 1 billion we told you about, but we are just not in a position to give you the integrated numbers. You should assume that we see a roadmap to the four and a half and the EUR 500 million. You should assume that is there. In terms of the actual details and the bridge, clearly there will be some EBITDA turnaround. I think that has been pretty clear, and Steven set the foundations. I think he has guided there is a very strong chance of EBITDA growth next year, but let us wait for the final budgeting and synergies to come through so we can give you the exact number there. We are still getting our feet. Garcia has just started on exactly what the final plan is for Telenet, but based on the plan we have today, we feel pretty good about that. In terms of the cash flow, I think we have indicated these synergies are pretty material and would underpin a big part of that EUR 500 million. I am not trying to doubt the question, but I think it is a little bit early for us to give you a line-by-line bridge, but I can assure you will be seeing that in the Capital Markets Day, come whenever it is. We recognize that is a key question on everyone's mind.

Yeah, and CapEx reduction, particularly at Telenet, where the mobile upgrade is complete, and you are going to see a big turnaround in free cash flow in 2027 and 2028 at Telenet. That is a big chunk of the EUR 500 million. Steven, we did not give you a chance to say anything there. Do you want to add anything?

I think that was. Firstly, thanks, Polo, for the question. I think it was handled pretty well by Charlie. All I would do is I would reemphasize, as you have seen our turnaround take root through this year, that my expectation is that the financials, which are a lagging indicator for the commercials, start flowing through next year. Charlie is there with the budgeting process, but I fully expect us to see the EBITDA line start improving, which goes some way alongside the synergies towards getting to that target.

The CapEx reduction.

VMO2.

Yeah.

Lutz? Lutz Schüler: Yeah. I mean, Polo, we are not giving top-line guidance today. We are also having our Capital Markets Day contribution around in Q1 next year. But I think clear is, we see not really a short-term recovery of the market, so we are not planning with that. Number two is, of course, midterm, we see a stabilized also top line. We will give you details for that. So, it's not that we are only working on cost saving and we forget about gross margin and top line. Both things will come together that we can show you sustainable growth in operating free cash flow. We will give you details for that in Q1.

Thanks.

Thank you. Our next question is from Joshua Mills with BNP Paribas. Please go ahead.

Hi, guys, and thank you for the questions. First one is for Steven. Obviously, a lot of the focus this year has been about turning around the negative subscriber trends in broadband, which you have now done for 2 quarters in a row. I was just wondering if you would comment a bit about how you think about the balance between value and volume in commercial strategy as you push into next year. You have raised prices already, de facto, by putting the ESPN product in. Is that the kind of pricing move we should expect to see more of going forwards? Or do you still believe that volume gains and the necessary price discounts, which they entail, would be your focus? Then maybe if I could squeeze a second one in quickly. You have made the point very clearly on the call that you disagree with the CMA decision and will be challenging it. Can you just explain to us the mechanisms by which you will be making that challenge? Because based on the CMA disclosure, I think they said you had until last Tuesday to submit remedies. You did not, and now you are challenging them on the basis that their methodology is flawed. So, what is the legal route that you can explore there, and when should we expect to get an update on whether that route is successful? Thank you.

Yeah, so let me see if I can. Yeah, hi. So, let me see if I can respond to the first part of your question and hand to Lutz for the second. So, look, you are right, we have spent the balance of the last 18 months focusing on getting the decay in the broadband base, which contributes significantly to the financials, back to positive growth. And we have achieved that for two quarters in a row, and my expectation is we will be able to continue to see that for a while. Our plan longer term is, once we are in positive territory, which we are in, is to sustain it at a reasonable level. I mean, the market is mature. There is only so much growth that comes from the market. And so, getting positive and staying positive is where we like to play. I think a healthy business is a growing business. Having said that, I think you will see a lot more focus on working on yield. I mean, a couple of things on that. So, number one is, we will be lapping the repricing that we did pretty soon. We put that through almost two years ago now, so that will trade out of the numbers. We have introduced the highest speeds. We have got tiering plans on the highest speeds, which come at a slightly better yield. We have further plans, like the one that we have executed for ESPN, to find new ways of growing revenue through our existing base. And you see that in the fixed ARPU that you have got, that we delivered today. We have been able to execute the repricing change as well as getting back to growth without disturbing ARPU as much as most people would have expected when we put through an entire repricing. I see more of a balance coming between the volume, which we have now achieved, and positive volume growth, which we have achieved, and managing the financials through the product portfolio that we have, and I think more that we can do on optimizing the product portfolio that we have still got. I think you will see that play out in 2027.

On the CMA process.

Absolutely

On the CMA process, obviously, we submitted to the CMA our view of their interim report, as did most of the market. There is a hearing this week where we will have an opportunity to engage with CMA, understand what they are saying. We have also asked them to issue a supplemental interim report. It is not unprecedented. Asking them to revise their report may or may not happen. Either way, we expect some kind of final report from them mid-December, and we will react and have an update once that occurs.

Thank you for your question, Josh. Lutz Schüler: The only thing I would add to that is, right, that also during the process now, TalkTalk got acquired by BT. The entire underlying market assessment of the CMA has to be reviewed, right? It's not a really straightforward process, and there are some questions also coming from that.

Thank you. Our next question is from David Wright with Bank of America. Please go ahead.

Hey, guys. Yeah, thank you for the question. So yeah, just back to the U.K. Given that the fiber build has halted, what sort of more sustainable CapEx could we be thinking about? Also, whether you think there is a need for a little bit more expenditure on mobile, given the clear momentum or investment Vodafone is making. I just wondered, you mentioned about the U.K. HFC upgrades, but it's not DOCSIS 4.0. Can you just confirm why it's not DOCSIS 4.0? Actually, in the Netherlands, how many DOCSIS 4.0 customers do you currently have? Thank you.

I'll let Lutz answer all the questions, but DOCSIS 4.0 customers in the Netherlands, Steve, I imagine we have a handful. We just launched, essentially, so I don't think there's much there. Go ahead. Enrique, if you want to jump in on the why not DOCSIS 4.0 in the U.K., you're welcome to. Lutz, go ahead. Lutz Schüler: On fiber and up investment, I think we disclosed before a number that we are, right, paying a bit more than 100 pounds per homes passed. I think, David, you can run the math yourself. On mobile, we are the fastest-improving network in Europe, so we are the ones who have done big steps. We have close to 90% 5G standalone coverage, the highest in this market, and we are putting now all the spectrum to work that we acquired on the back of the merger of VodafoneThree. We are sitting on a very good mobile network now again. Took a long time, but we are, and we have the money in our three-year plan to really have that position. On why don't we build DOCSIS 4.0? Here, it is simply cheaper to build fiber because a difference to the Netherlands is that this country is ducted, so therefore, to build fiber is much cheaper. But we talked about it, right? There has been built so much fiber that it will be either whole buying or it will be any inorganic way of merger, whatever, to get to a higher fiber coverage than the nine million we have.

Unless I'm wrong, you're not upgrading, or are you upgrading the residual HFC to DOCSIS 4.0 in the U.K. or not? Lutz Schüler: No, we are not. I tried to say, David.

Not at this point. Lutz Schüler: That is pretty much same cost like building fiber in our case, not in the Netherlands case, because our network is ducted. Therefore, we will not do that.

I see. Thank you. Thank you, Lutz.

Thank you. Our next question is from Maurice Patrick with Barclays. Please go ahead.

Yeah, thanks for taking the question and for the presentation. Just a quick one from me. On the U.K. market, sorry to come back to it, your fixed ARPU is down 5% year-on-year. Just curious to understand how much of that is driven by the front book pricing pressure versus the back book repricing. I saw some press article earlier this week talking about how you were more going after the back book customers and repricing them maybe more than you were beforehand. Just curious as to, of that 5% ARPU decline, how much of it's front book, back book, whether it should continue. Then maybe just a very quick sort of follow-on. I do not think you have really given your views on the BT TalkTalk acquisition yet in terms of the extent to which you can, would challenge it, or your views about it. Thank you.

Well, I think Lutz just mentioned it. We obviously are surprised, to say the least, that that transaction is being rushed through. It would not be a surprise to you to know we were also looking at that asset, as were many others. So, the idea that there was only one buyer or one solution for those customers, or that those customers were truly at risk, we think is wrong. So it should require the exact same scrutiny as any transaction, including ours. All they are doing here, as far as we can tell, is strengthening the incumbent and their monopoly position without review. That has got to be a concern to anybody in the marketplace. Lutz, you want to address the ARPU question? Lutz Schüler: Yeah. I mean, the only TalkTalk, the decision has not been taken finally, right? So, I mean, the state secretary now has to decide, will the CMA undertake a clear review process or not? And that decision is due in the next coming weeks. We agree with maybe a quick decision was needed to ensure business continuity for vulnerable customers and others. We strongly disagree with the fact that that means that now not a process and some actions can be taken. And so we are waiting for that. And of course, we are interested in customers where we have a network. On your ARPU question, I think it is hard to say, so to quantify. I mean, high level, we are doing both, right? We have to be competitive in acquisition pricing, and of course, the acquisition price, especially for higher speeds, has gone down. And the other one is that we have done a lot of prevention. So, we have identified segments with a higher likelihood to churn, and we have proactively lowered the price and invited them to stay for another two years with us. Therefore, I think the overall amount of customers who are now within the minimal contract length with us is very, very high. And I think maybe the second one has driven, directed the ARPU a bit more. I mean, you have not asked for the outlook, and it is hard to give. What I said before is, we do not expect that the market will recover in the near term. We are not factoring that in. But Lyssa is coming with a strategy that for sure will stabilize value for customers using video, using higher speeds, and using adjacent services. So we are going to share that with you in Q1.

All right.

Bye, Kevin.

I think we are at time, everybody. So, thanks, Lutz. We are at time. So just a quick thank you from all of us. Appreciate you jumping on. Lots of information to process. Obviously, we are around to chat. Stay tuned for in early next year, some moments to engage with both VMO2 and Ziggo Group directly in an extended period. I think that will be very helpful for you. We maintain our laser focus on driving value for shareholders. That should be clear. So, thanks for joining us. Speak soon.

Ladies and gentlemen, this concludes Liberty Global's third quarter 2026 investor call. As a reminder, a replay of the call will be available in the investor relations sections of Liberty Global's website. There, you can also find a copy of today's presentation materials. Thank you all.