Liberty Global plc Price & Performance (LBTYA)

These forward looking statements involve certain risks that could cause actual results to differ materially from those or implied by these statements. These risks include those detailed in Liberty Global's filings with the Securities and Exchange Commission, including its most recently filed Forms 10 Q and 10 ks as amended. 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 statements is based I would now like to turn the call over to Mr. Mike Fries. All right. Thank you, and welcome everyone to our year end investor call.

It's great to have you join us today. I've got the core team on the line as usual. So after prepared remarks, we'll get right to your questions. And as a reminder, we always post a slide deck, which has really good data and follows the narrative that Charlie and I will deliver right now. So I'm going to start on Slide three. Most of you know who we are and you know But it's always good, I think, to start with the big picture, especially now twelve months ago on this call, we presented a plan to generate and importantly deliver value to our shareholders. That's exactly what we did in 2024. With over $4,000,000,000 in shareholder remuneration delivered on a mark [indiscernible] of $7,000,000,000 just twelve months ago.

And as we'll talk about today, this remains our primary focus. So to kick us off, I think the chart here on this slide is the simplest least complex way to understand the business of Liberty Global today. We consider ourselves to be a dynamic team of veteran operators and investor committed to generating and delivering shareholder value through the strategic management of three platforms: W Telecom consists of our four remaining European telcos, you know these well, in The UK, Ireland, Belgium and The Netherlands. Serving 80,000,000 fixed and mobile connections and generating $22,000,000,000 of aggregate revenue and around $8,000,000,000 of aggregate EBITDA. Now I'll talk about our strategic plans, for growing and ultimately crystallizing the value of these mobile champions in just a moment. There will be growth represents our $3,100,000,000 portfolio of investments in technology, media, sports and infrastructure and we've grown this business substantially over the last five years. We've also been really disciplined about exiting positions at good returns and then repurposing that capital both into Liberty Telecom and additional growth investments And then Liberty Services on the right is a hidden gem. Over the last several years, we have successfully transitioned over two thirds of our central employee base into profitable revenue generating activities in tech and financial services.

These are valuable operating divisions with long term contracts, nearly $600,000,000 of annual revenue, third party partnerships, and really viable strategies to continue growing and ultimately monetizing these businesses for the benefit of shareholders. So why make it big deal of this you might ask? Well, when your stock is $11 and you have $350,000,000 shares outstanding, we become hyper aware of the fact that even small opportunities like this can move the needle. Which is a great segue to the next slide, And as I just mentioned on our year end call last February, we announced a clear strategic pivot, right? We outlined a game plan at that time focused on maximizing the intrinsic value of our Not surprisingly, the most important initiatives, which are summarized here on Slide four, revolved around Liberty Telecom, where the gap in value and the upside to shareholders was and remains The largest The big headline was of course our commitment to spin off 100% of Sunrise, our Swiss subsidiary to Liberty Global shareholders before year end. The logic and timing of that transaction was compelling. Sunrise operates in a rational market. The company had been delivering solid operating performance, driven principally by strong free cash flow and the potential for sizable dividends And we saw strong local investor demand to own the number one challenger to Swisscom.

Now trust me, this was a complex transaction. But these are the things that this management team really excels at. In fact, And the spin off was completed on time effectively delivered to our shareholders a $9 per share tax free dividend was at the time an $18 stock. And we did that by spinning off 20% of our proportion at EBITDA. I'll let that sink in. Now by all accounts, this was a success. Sunrise stock is trading well. With 70% of the ADSs now converted into local Swiss shares on how to unlock value. We also announced last year our intention to create a fixed NetCo in The UK market to accelerate and fund a portion of our fiber build out and to provide a vehicle for what we expect will be a rapidly consolidating infrastructure market. And I'm happy to report that we are making significant progress on this front. The operational and financial perimeters of The U. K. Neko have been established [indiscernible] But more importantly, as of last week, we are in receipt of proposals from a handful of the strongest infrastructure investors in the business. Have indicated an interest in participating with us in what will be I think the only viable long term competitor to BT Openreach.

So more on that to come. And then finally, we discussed the opportunity to focus our attention and resources on the Benelux region. And while the prospect of a combined Dutch and Belgian operation is intriguing, we spent most of our time last year ensuring that each business is achieving its strategic and financial potential individually. This included hiring a new CEO for Foto von Zago, Stephen Benroyin, who hit the ground running in September. And in Belgium, where we've already separated the network from Telenet, we've made substantial progress with the Belgian government to rationalize the fiber market through a network sharing and collaboration agreement between Wire, that's our Netco, Telenet and Proximus. Even prior to the conclusion of that transaction, treasury team just closed on a €500,000,000 standalone facility for wires fiber rollout. That just supports the attractiveness of this market opportunity. Now in addition to our objectives for Liberty Telecom, we also announced a series of other key goals last year and those are listed on Slide five. That we knew would anchor our value creation strategies At the Liberty Global level, we committed to buying back up to 10% of our [indiscernible] And we spent approximately $700,000,000 doing that As a reminder, we have now spent roughly $15,000,000,000 over the last eight years Now obviously, we believe in the multiplier effect of stock buybacks.

For example, if you own 1% of Liberty Global in 2017 Liberty, you ended up with 2.5% of Sunrise at the spin off date. We also committed to refinance all of our 2027 maturities in the Liberty Telecom debt silos and we did that with over $3,000,000,000 in refis at Vodafone and VMO2. Charlie will get into more detail, but our balance sheet remains rock solid. And we achieved all 14 of our financial guidance metrics with the exception of one, which is related to Vodafonezago revenue, where we had guided to growth but came in flat due to slower mobile net adds and a lower mobile handset sale number. To implement our strategic goals, we also committed to sell assets amounting to $500,000,000 to $1,000,000,000 in 2024. That number came in at $900,000,000 and together with free cash flow helped fund the buyback and deleveraging at Sunrise to maximize the equity value of the spin for shareholders And we articulated a clear preference to prioritize future investments in Liberty Liberty around scale based platforms with tailwinds and of course, the best example here is the acquisition of our controlling interest in Formula E, I'll talk about in just a moment.

Now here's the kicker. Despite hitting the mark on the East Street Liberty Global shares pro form a for the spin off of Sunrise remain significantly undervalued. I'll walk you through how we see it on Slide six, which lays out a pretty simple sum of the parts analysis Some investors like it when we just get down to the brass tacks as they say and this is how we run the business. So here you go. The first key point to make on this chart is that we think our stock today assigns zero equity value to Liberty Telecom. How do we get to that conclusion? Well, the first three columns here show our cash balance.

And the combined fair market value of our Liberty Liberty portfolio and that adds up to about $15 per share and then we assume an appropriate reduction for corporate $4 per share, which we'll dive into later. But with that, you essentially get to a market price of $11 per share. So what is the right value for Liberty Telecom? The blue bar there? There are many ways to approach this. As you know all too well. But the Sunrise spin demonstrated the potential uplift in trading multiples when you find the right transaction or market opportunity? Case in point, as part of Libby Global, Sunrise traded essentially at our combined and current multiple of 5.5 times EBITDA. As a listed company in Switzerland, Sunrise trades at eight times EBITDA or a 7%, 8% dividend yield. Now assuming every operating company should be worth 8x, that might be ambitious, right? But if you assume a conservative one multiple uplift, in the value of Liberty Telecom, say from five point five six point five times EBITDA, by the way, which is the EU telco sector average, and where most analysts have us, then you arrive at $14 per share for Liberty Telecom alone.

Now we've certainly shown you higher numbers for Liberty Telecom in the past, but given where we're trading today, we're happy to be conservative. Adding all that up gets you to $25 per share for Liberty Global Liberty that's before signing any equity value for Liberty Services. We're not putting a number on that today, but I can tell you it's greater than zero.

Then lastly, this compares to average analyst price targets of around $14.6 Now one of the big differences is the deduction of corporate, which is typically twice the number we're using, but completely neglects the fact that these net central costs are nearly 100% variable OpEx and should be valued on an EBITDA multiple. More on that from Charlie. At this point, the question you should be asking is how do we intend to continue bridging this gap? We've tried to address that on Slide seven. With a summary of our strategic plan for 2025 and beyond. And as you just saw, there is significant upside to improving the real or perceived value of Liberty Telecom Just one additional EBITDA multiple more than doubles our stock. So not surprisingly, we believe there will be opportunities to crystallize or monetize the value of Liberty Telecom's businesses over time.

Like Sunrise, this could include spin offs, Although as many of you know, this decision is dependent on several tax, legal and financial factors We could also consider tracking stocks, IPOs and of course, always remain open to M and A options. To achieve any of these though, we need to pursue three tactical steps. Number one, we have to continue to drive commercial momentum at the operating level. This is the primary objective of every local management team. They are all focused on expanding loyalty programs to reduce churn promoting robust flanker brands to drive market share, realizing the benefits of digital and AI accelerating B2B and rolling out new revenue streams Second, we'll continue to creatively finance our fixed network infrastructure, particularly in The U. K, Belgium and Ireland where our fiber plans are well underway. These infrastructure assets trade at higher multiples attract a unique type of investor and can absorb more leverage than what we are typically seeing on Servco. So we want to take advantage of these factors and we will.

And third, our ability to achieve greater value recognition at Liberty Telecom will a large extent, be dependent on generating free cash flow. Especially free cash flow that can be used for dividends. So the Sunrise model demonstrated this clearly. As a result, squarely focused on achieving this goal the next twenty four to thirty six months Now moving to Liberty Growth, our plans take two forms. On the one hand, we recognize that many of the assets we own today are non core and as we demonstrated in 2024 can be highly accretive sources of cash for more strategic opportunities. So as a result, we will continue to rotate capital into higher return Liberty growth assets [indiscernible] as well as into strategic Liberty Telecom transactions. Towards that end, we are committing today to sell between $500,000,000 and $750,000,000 of non core assets [indiscernible] And then finally, our cash balance of $2,200,000,000 is a significant strategic asset Our primary use here will be for buybacks, deleveraging and the investments described above. Specifically, we're committing to buying up to 10% of our shares out outstanding in 2025 as we did last year and we anticipate that our cash balance will be replenished with free cash flow and dividends from Liberty Telecom, asset sales and infrastructure financing.

And round it off, Charlie will talk about our Liberty Services platform and corporate spend in a moment. I'll just say watch this space. Both of these are expected to be meaningful contributors to our value creation narrative. Now turning to the next slide, I'll just spend a minute on our Q4 operating results. You would have reviewed these already and we do have the OpCo leads on the call. The punchline here is that we're seeing steady or improved broadband results with continued fixed ARPU uplifts in most of our markets And we also saw a small pickup in postpaid mobile particularly in The UK. Sticking with VMO2, The UK saw another strong broadband quarter at 12,000 Net adds supported by new homes in the next fiber territory and really good base management. All of this despite aggressive alt net pricing and what looks like a flat broadband market overall. It was also the third straight quarter of fixed ARPU growth in The UK. Reflecting material better retention as a result of our digital and AI tools And BMO2 also saw a significant turnaround to postpaid mobile throughout the year. We lost nearly 200,000 subs in the first half of the year and were essentially flat in the second half with a positive net add quarter in Q4.

You contribute this to two things. I think strong results from Gif GAAP our Flanko brand and success in underpinning the premium position of O2. Now some quick remarks in Ireland. This is a small operation. With largely stable results, but we want to start adding this to the narrative here. Virgin Media Ireland is the farthest along on the fiber transformation with around half of our 1,000,000 premises already upgraded, almost 50,000 fiber customers on our network, including Vodafone and Sky wholesale customers. Now our CapEx will remain elevated in 2025, we should be largely done with the bill by the end of this year early next year and like many European telcos, the decline in CapEx should drive meaningful free cash flow over the long run.

Turning to The Netherlands, we saw intense competition in the Dutch broadband market continue with Lossless mostly price led in Q4, Vodafoneziga remains focused on value over volume, with largely flat ARPU in the quarter. On the positive front, UEFA rights are driving uptake across different channels including through Zingo Sport The Dutch mobile market is more rational, but has seen lots of price competition in the No Frills segment. Nonetheless, we have delivered stable net adds as the impact from B2B port outs stabilized and FMC SIMS penetration continued to increase. And then lastly, on Telenet, they returned to positive broadband net adds for the first time in two years in the fourth quarter. And that was underpinned by successful fixed mobile convergence campaigns. Including the new base proposition, which is exceeding expectations the fixed ARPU growth continued to be supported by the price rise earlier this year and mobile postpaid decreased modestly in the quarter driven by challenging market dynamics. So two more slides on Liberty Group before I turn it over to Charlie. Understandably, we get a lot of questions about the portfolio and hopefully our disclosures this quarter and in future quarters will demonstrate that we are committed to providing greater transparency and information to you especially as this becomes a bigger part of our valuation story.

Towards that end, Slide nine provides two important pieces of data. First on the left, you'll see our investment activity over the last five years in the aggregate the end of twenty nineteen, so five years ago, our investment assets totaled around $900,000,000 in what we now call Liberty growth. Between 2019 and the end of twenty twenty four, we invested an additional $2,400,000,000 in our tech, media and infrastructure verticals, plus some strategic holdings. During that same period, however, we also exited investments that returned $1,200,000,000 to us including dividends with a weighted average IRR of 25%. Now this includes the good and the bad deals. So this is a true measure of those disposals. That left us with net invested capital in the portfolio at the end of last year, 2024 of $2,100,000,000 compared to a fair market value in our 10 ks of $3,100,000,000 That valuation by the way is independently reviewed by Deloitte and breaks down between tech, media, infrastructure, etcetera as shown in the color legend at the bottom. So we're sitting on $1,000,000,000 of unrealized gains in the portfolio today. I already mentioned that we intend to generate between $50,000,000,750,000,000 dollars in sale proceeds this year.

A significant portion of which will likely come from Liberty Group Now Liberty Growth is a diversified portfolio with investments in upwards of 70 different companies. I get that, that creates some complexity for you, But on the right hand side, we make the important point that 75% of our and we list those here. This includes three media holdings Formula E, [indiscernible] three infrastructure investments Atlas Edge, Edge Connects and Next Fiber, and our stake in Vodafone. Now we're not discouraging you from focusing on the balance of our investments, but I do think it makes it simpler when we present it like this. These are the assets that you'll be hearing about, we'll be talking about. And that more often than not will be driving our returns. Now I'll end on a super high note. I think everyone knows we increased our stake in Formative E to 66% last year when we bought out Warner Brothers Discovery and I have to say, I couldn't be more excited about that transaction and where this championship is going. Slide 10 just hits a few of the key points, the key highlights beginning on the top left with the car itself.

When we first invested in Formula E, we we made a bet on technology innovation and that bet is paying off. The first generation car topped out at 140 miles per hour and really couldn't drive very far. We are now in what we call the Gen three EVO car and it is a rocketship. At speeds capable of 200 miles per hour and the car accelerates, 30% faster than an F1 car zero to 60 in just one point eight two seconds.

And we have the Gen four car coming out in just eighteen months' time which aims to double the power. I think the point is that these cars are lightning fast, no pun intended, and the racing is more and more exciting Every year, As you can see in the top right, we already raised some of the most iconic cities in the world, places like Sao Paulo, Mexico City, Cheddar, Miami, Monaco, Tokyo, Shanghai, Jakarta, Berlin and London. With a faster car and longer races, we expect to gain access to even more tracks and venues. Even though we've been net zero since day zero, this is all about the racing. Right? It's no surprise to me, shouldn't be to you that we've attracted some of the world's greatest racing brands, including Porsche, Jaguar, McLaren, Maserati, Nissan, Penske, Andretti and others because they see the future and the potential. By 02/1935, nearly 70% of global car sales are expected to be electric vehicles. And we have an exclusive on this racing series with the FIA, who by the way are great partners of ours for many, many years to come. And then finally, word is getting out We're now at roughly 400,000,000 fans globally.

And that's growing 23% You'll also see on the bottom left that while there are two championships with bigger audiences today, F1 and MotoGP, neither is growing as fast. Remember, we're a very, very young championship, at least compared to Formula One, is 75 years old, but the ceiling feels, seems unlimited. So stay tuned for more updates on what is now a consolidated asset Formula E And Charlie, with that, I'll send it over to you. Thanks, Mike.

The next slide sets out a summary of the quarterly revenue and EBITDA performance in our key markets. Telenet reported a revenue decline of 0.4% year on year in Q4, primarily driven by a decline in customers, which was partially offset and the continued shift towards higher tier broadband plans. Virgin Media two reported a revenue decline of 2.8% excluding the impact of Next Fiber Construction, driven by de decreases in mobile revenue due to lower handset sales and B2B revenue. Encouragingly, underlying mobile service revenues were stable. And residential fixed revenues increased in the year. Vodafone Zigger reported a revenue decline of 2.5% in Q4, primarily due to a decline in the consumer fixed customer base lower out of bundle revenue and a decrease in low margin handset sales. This was partially offset by growth in Zygote Sport Total subscribers and continued growth in B2B revenue. Moving on to our Q4 adjusted EBITDA performance, we adjusted EBITDA decreased 3.9% in Q4, driven by wage increases and higher programming costs, and BMO2's adjusted EBITDA in Q4 decreased 5.9% excluding the impact of Nextiva Construction.

In addition to the revenue impacts, the decrease was impacted by increased marketing investments on the NEX Fiber footprint, and reduced year on year growth in the B2B segment. Vodafone ZIGA reported an adjusted EBITDA decrease of 4.8%, driven by the decrease in revenue higher programming costs related to The U. A. For broadcast, wage increases relating to the collective labor agreement an $8,000,000 one off impact following the sale of certain handset receivables Turning to our next slide, we continue to remain committed to a strong capital allocation model. In terms of cash generation, we surpassed free cash flow guidance at Telenet and achieved our target for Liberty Services and Corporate adjusted EBITDA less P and E additions. At Burger Beta two, we successfully delivered £850,000,000 of cash distribution to shareholders in 2024, with full year free cash flow of £500,000,000 supported by a working capital benefit of approximately £200,000,000 Vodafone ZIGO delivered €228,000,000 total cash distributions, which are modestly lower than the full year 2024 free cash flow, after allowing for spectrum payments during the year. Majority of cash distributions from VMO2 and Vodafone ZIGO were received in Q3 as in previous years. We ended Q4 with a substantial cash balance $2,200,000,000 even after the $1,600,000,000 capital injection to Sunrise before its Q4 spin.

Total cash inflow from operations and JV dividends was around $500,000,000 We executed a further $200,000,000 in buybacks this quarter bringing the total to $700,000,000 for the year and resulting in approximately $350,000,000 shares remaining at the end of twenty twenty four. [indiscernible] to our CapEx trends, we continue to invest in our fixed and mobile network in line with our capital intensity targets. A reminder, last year at VMO2, we highlighted over £500,000,000 of spend in 2023 on five gs capacity and fiber up which has continued in 2024 and will continue in 2025. At Telenet, the step up in CapEx will support an additional 375,000 homes passed by year end 2025 at wire and will also ramp in five gs digital CapEx of Servco. We expect capital intensity in the Telenet Servco to decline in 2026 as the major investments in the mobile network will be completed in 2025. While CapEx will also be fully debt financed, through an agreed CapEx facility, meaning no equity requirement from Liberty Global or Telenet. And lastly, our investment into AI initiatives are anticipated to drive $200,000,000 to $300,000,000 of annual benefits across Liberty Telecom over the next three years. Initial focus areas are using AI to better manage customer, for example, with agent assist to provide real time support, [indiscernible] for example, improve in house customer experience through preventative care and diagnostics, and in customer workplace experience, for example, in our This is equivalent to approximately 2% of telecom OpEx with roughly 70% of the benefits focused on cost savings and 30% helping to drive revenue through customer acquisition and retention initiatives.

Moving to our balance sheet, our siloed debt stacks have an average tenure of approximately five years, Our aggregate debt is split equally between bank debt and bonds with the bonds typically issued with a longer duration of ten years as compared to the bank debt at eight to ten years our variable bank debt is fixed using swaps which are independent of the underlying debt. This allows us to refinance near term maturities and extend the tenure but also benefit from the underlying swaps. Now in general, we look to manage our debt maturities so that there are no material refinancing commitments in the next three years In 2024, we successfully refinanced all debt maturities [indiscernible] for Vodafonezigo as well as a $500,000,000 term loan extension in VMO2. Now all of these refinancings were secured in line with our historic credit spreads, and we continue to see strong appetite for our debt securities. We also use the bank market to finance large CapEx builds. We just agreed a €500,000,000 standalone CapEx facility for Wire and during 2024, we also secured similar bank financings for our growth assets, for example, EUR $273,000,000 of project and land banking facility for Addus Edge.

On the next page, we lay out the key financials for Liberty Services, [indiscernible] Our corporate group provides management and advisory services focusing on financial and human capital as well as technology expertise but we also have two other revenue generating units Liberty Bloom and Liberty Tech, which I'll talk about more in the next slide. Now on the right hand side, we've deconstructed services and corporate. To illustrate how we think about this pillar internally. We see our two services companies Liberty Bloom and Liberty Tech as leveraging our group scale and expertise to develop third party opportunities and cost effective solutions to our internal and external customers. We believe both these divisions have significant equity value and should grow over time. 1,300 of the 1,900 employees in Central work for these two services companies.

The 600 people in our corporate group provides strategic and operating management and advisory services. Now this covers a number of areas including key organic and inorganic capital allocation to developing and executing key strategic acquisitions and disposals, financing and legal support to our public and private debt and equity providers and fund raisings developing senior and junior talents and culture to support our companies, and providing specialist technology advice, particularly in fixed and mobile network strategies such as cyber and AI services. We believe that these services add significant value to our portfolio of companies And in many cases, we receive market tested management fees, for example, from Sunrise following its spin. Going forward, we will look to secure appropriate management fees from our companies whether on currently none, particularly in our growth assets as well as other fully owned companies. And over time, we expect the negative EBITDA associated with this segment to be significantly reduced through this as well as ongoing operating efficiencies. Turning to a deep dive on Liberty Services, we've highlighted the value propositions for Bloom and TET. Both of which capitalize on long term contracts and talent that we already have at Liberty Global.

Liberty Bloom is the newest addition to Liberty Services leveraging our scale and in house expertise to deliver back office solutions that enhance efficiency, primarily by leveraging technology and scale to reduce costs for customers, notably in Financial Solutions, particularly around working capital insurance device financing and energy management products. Procurement solutions, including category sourcing management and tech platforms and business solutions, including finance, HR, legal, tax and construction shared services. We're already generating over $100,000,000 of revenue here and breaking even on an adjusted EBITDA basis. Which includes approximately $15,000,000 of growth investments. Beyond the Liberty Global Federation, key clients include Tesco Mobile and Zeyo Europe, with further building of the customer pipeline to come in 2025. We see an opportunity to grow revenues in Liberty Global's existing $1,000,000,000 plus back office spend as well as with third parties. We also see accretive incremental acquisition opportunities to build out our portfolio. For example, in insurance services, At Liberty Tech, we are transforming our cost center to marginal profitability by commercializing our best in class entertainment and connectivity platforms, which already serve over 12,000,000 households across five European markets. This is underpinned by multiyear tech services agreements and commercial agreements already in place across Liberty Telecom.

While Liberty Tech is generating approximately $50,000,000 of annual revenue and making a positive EBITDA contribution, We are proactively making investments in new areas such as AI, cybersecurity and strategic partnerships to drive further value creation. Turning to guidance for 2025. Providing guidance by operating company including free cash flow. For Virgin Media A2, we expect growing revenues excluding handsets and next fiber construction revenues, driven by continued pricing benefits, and further Next Fiber penetration. Growing adjusted EBITDA excluding Next Fiber Construction supported by revenue growth and a step down in the impact of one off OpEx investments that occurred in 2024. Stable property and equipment additions of around £2,000,000,000 to £2,200,000,000 excluding ROE additions due to continued elevated five gs and Liberty to the home spend. Notably Liberty up Adjusted free cash flow of $350,000,000 to £400,000,000 for the year, which will support cash distributions to shareholders of GBP350 million to GBP400 million. Now this is lower year on year despite EBITDA growth expectations as we do not expect the same working capital benefit in 2025 as we experienced in 2024. For Vodafone ZIGO, we expect broadly stable revenue growth supported by price indexation in both fixed and mobile low single digit decline in adjusted EBITDA growth impacted by strategic customer initiatives, UEFA rights and continued impact from collective labor agreements, Property and equipment additions to sales are between 2022%, as five gs and CPE investment continues adjusted free cash flow of around €300,000,000 again in 2020 which will support cash distributions to shareholders around €300,000,000 For Telenet, we expect broadly stable revenues with FMC revenue of setting the pressure from the standalone mobile segment.

A low to mid single digit rebased adjusted EBITDA decline impacted by deferred revenue in 2024 of €17,000,000 which creates a challenging comparison and mandated wage indexations property and equipment additions of around 38% of revenue driven by accelerated investment in five gs and digital which peaks in 2025, whilst thousand fiber to the home premises to be passed in 2025. Adjusted free cash flow will be negative $150,000,000 to €180,000,000 Given the heavy network CapEx, with Wah being debt financed through the new committed CapEx facility. And at corporate, we're introducing new guidance. Now as you know, historically, we've guided to over the past five years on an operating free cash flow basis. However, we feel it's time to update this guidance to an EBITDA basis primarily as we now expect very limited central CapEx going forward. This is because fact that all our corporate expenses are basically operating expenses And this is not least because if you look at the services companies like Liberty Tech, converted CapEx into OpEx through things like the Imphasis deal.

Going forward, we're targeting EBITDA for Liberty Services and Corporate to be no more than negative $200,000,000 under our new disclosure. This will be driven by the telecom MSAs, such as the one we've agreed with Sunrise, as well as increased revenue from third parties for services delivered by Liberty Tech We'll be investing in the growth of our services companies in particular in AI initiatives by Liberty Tech on behalf of the broader Liberty Telecom assets. We're targeting up to 10% buyback of shares outstanding for 2025, to further deliver value back to shareholders supported by non core asset disposals during the year, Finally, you will note that our new disclosure now shows Liberty Growth, Privilege Ventures, split out separately for growth assets we fully consolidate such as Formula E, Slim Acura and Egg.

Our home EV charging and energy storage business, It's worth noting we pick up the equity value for these investments within our Liberty Growth fair market value. And that concludes our prepared remarks for Q4. I'd like to hand over to the operator for Q and A. The question and answer session will be conducted electronically. Our first question comes from the line of Steve Malcolm with Redburn.

Your line is now open.

Yes. Hi there. Hope you can hear me guys. One question, it's Ricky. I just wanted to sort of a general free cash flow question beyond 2025. I don't want you to guide on EBITDA beyond this year. I know you can't group wise, but it feels like it's another transition year for Liberty. We've had a few this year feels particularly transitional. But as you look into sort of 2026 and beyond, maybe just give us a flavor of your outlook for CapEx across the major regions. You talked about Belgium, that's going to be down. I guess Ireland will be down as well. Where we are on five gs CapEx in The UK. Some quite big moving parts on tax as well. The demand for repatriation tax, when that ends, you've done a lot of refinancing, all the interest costs outlook is beyond 2026. It would be very helpful to get sort of sense of direction free cash flow beyond this year below EBITDA level. You can sort of draw that light and that'd be very helpful. Thanks a lot. Yes. Thanks, Steve.

Listen, as I said in my remarks, and by the way, we appreciate you being so patient this morning, but year end, we have a lot to say.

I mentioned that free cash flow, as you're indicating, is the key metric here that we're driving towards in every March I'm not going to go one by one by one, but obviously Charlie showed you in his guidance that we're generating free cash at VMO2 and Vodafone ZIGO as we have in the past and as we expect to in the future. So I think in those two instances, clearly, with and especially with the Netco separation in The UK, we expect that free cash flow is a a critical metric for us and one that we anticipate growing. In the case of Belgium and Ireland, I mentioned that Ireland is coming through its CapEx funnel, if you will, and ought to be finished largely in early part of next year with its fiber build and can't give you the numbers, but obviously we expect that a marginally negative free cash flow figure this year becomes a meaningful free cash flow figure over time. So that trajectory mirrors more of what you're seeing brought more broadly in European telco sector, which is reduced CapEx over time, that should generate free cash flow. So those three assets, I think, are pretty clear, should be pretty clear.

Belgium a little more complicated because they're we're still consolidating the Netco and that Netco has at least billion euros in front of it, some of which we financed, some of which are partner financed, some of which will be debt financed. And what we haven't yet done there is really engage the market or sell a stake to be more blunt about it in the wire asset. There may come a time, will come a time where that is the right move. Wire is arguably going to be the most interesting attractive infrastructure asset in Europe given what we're trying to do there with utilization rates at 80% or more in a big chunk of the network. So we fully anticipate that asset could either be deconsolidated or certainly reflect a value contribution to our value creation narrative that's substantial and over time reduce the focus on CapEx and really put the attention back on Servco.

And the Servco and Belgium has some five gs CapEx, which we've discussed and others, but that trajectory also looks positive.

So I'm answering your question more indirect than directly, but I'd say market by market, we absolutely believe that free cash flow trajectory of these businesses [indiscernible] Good. That's why we're investing the CapEx. That's why we're being creative as to how we invest the CapEx.

That's why we're establishing Netcos in two instances.

I think you're going to like what you see longer term. Thank you for your question, Steve. Our next question comes from the line of Joshua Mills with BNP Paribas.

Your line is now open.

Hi, guys. I'll use my into a bit more detail on Slide 14, please.

If I understand this right, I think what you're saying to us is Going forwards, you want to illustrate the value of the Central Services business.

And part of the way you're going to do that is by increasing the MSA fees and trying to get more money from the OpCo levels. I guess my question is, how do you think about the balance there? Because on the one hand, yes, potentially neutralizes negative cash drag, which is clearly a headwind from a valuation perspective. But it's also going to reduce the EBITDA and the free cash flow out of those businesses which in some cases are already under pressure. And you're talking about spinning off or doing IPOs within the next few years. So maybe just a couple of commentaries on how you get that balance right so that you can still get what you deem to be fair value for those businesses when they come to market? Whilst upstreaming cash in an appropriate way to Liberty would be helpful? Maybe just part B to that question, we talking here mainly about the businesses within your 100% ownership? Or have you had the conversations with Telefonica at VMO2 and Vodafone Zico they should be paying you more effectively from the JV level up to Liberty of the services you provide?

Thanks.

Mike, are you there?

Yes, sorry, I was on mute. That was a great question. Josh. I'm going to let Charlie address most of it. I just want to say quickly upfront, While we definitely mentioned MSAs, the out as to a source of net corporate spend reduction there is an additional source, which is of course just simply reducing costs. And I would not be surprised if we take a good hard look at the operating model and the expenses and size and scale of the corporate group at the same time. So it's not simply laying off costs to OpCos as you point out who are already having their own issues and quite frankly, which we want to maximize the value of. It's also rethinking the operating model as we move forward. So you should expect both things to occur. Charlie, you want to address the MSA question?

Yes. So look, I think, Sunrise is a good test case. What services make sense to scale and where we have expertise that is expensive to replicate at the OpCos and what doesn't. But I'm not going to go through each of the key levers. I tried in my remarks to do that. But to give you an example, treasury would be a good example. Right along we think we have a very, very good treasury who are well experienced on managing debt facilities and bank balance sheets. And they just, for example, did actually a very good refinancing for Sunrise since its spin, which materially reduced the cost of its capital and extended its its average life. Now it doesn't make sense for Sunrise to build its own treasury or less regular transactions. And also they'd find it hard to replicate the level of expertise we have. So in getting that balance right, that is the kind of thing we're trying to get right. I think it's also worth pointing out that we have obviously charged these companies for many years. MSAs, but they've always been below the EBITDA line. So there's nothing new going on here. What we're now when we spin them is making what proportion of that should be above the line.

And just to confirm, what I'm talking about here is specifically related to those corporate advisory services. Liberty Tech and indeed Liberty Bloom are genuine arm's length businesses.

Where they win or lose according to third party contracts And in the case, for example, of Zayo, we were competitive enough to win from a third party and the same thing applies with each of these OpCos.

On your question around JVs, we do fees, MSA fees from VMO2 that was established at the outset along with TEP And Charlie is working very hard at on our growth portfolio where we are providing meaningful services to control and minority owned positions there. So this isn't an extraction exercise. This is a value creation exercise, but it's also ensuring that the extraordinary value we think we provide is being properly recognized But also as I'll repeat, we'll look at the operating model as well. This This is not just offsetting, this is going to be rethinking the operating model as the shape of the business changes. Thank you for your question, Joshua. Our next question comes from the line of Karl Murdock Smith with Citigroup.

Your line is now open.

That's great. Thanks very much.

I'll ask A shares versus C shares question please regarding the buyback. Just an update on how you're thinking around that? All of the buyback last year, I think, was done on the C line. Despite it being more expensive and now having lower liquidity than the A shares. So I was just wondering on what your thoughts are around the buyback going forward? And in terms of which line to do it Thank you.

Yes. Thanks, Carl. Listen, I think we are we do this on a relatively dynamic basis. So I don't know that we have at this very moment great we're willing to disclose. I will say we haven't been buying any stock through the course of this year. We did not have a 10b5-one plan in place at year end. So through February 19, we haven't bought a single share, but we anticipate obviously doing that. And as you'll see what we do as time goes by as we disclose it, but I'm not going to give you the expectation at this point. Thank you for your question, Carl.

Our next question comes from the line of Matthew Harrigan with Benchmark Company.

Your line is now open.

Thank you. Thank you. There is a sense of CES this year and some other forms that you get a acceleration in the handset replacement cycle. Right now, it's about four years. It's been the longest it's it's ever been.

Some of that could be prompted by AI functionality of the phones. The facial recognition and transcription, maybe it's better integrated, so you don't have to have to fumble around with an app. How do you think an increase in switching activity on the high end of the market could affect your mobile operations in The UK. And Benelux? What are the opportunities [indiscernible] And would you expect to gain share if that finally happened? Obviously, everyone this call is well aware that five gs in Europe propellant for your business. Thanks for taking the question. Thanks, Matt. Lutz, you want to address that in The U. K?

Yes.

You might be on mute. Can you hear me?

Hello? [indiscernible] Okay. So as you rightly point out Matt, Right. O2 has really the majority of premium customers.

So we are the home of iPhone. And also we have recently launched the flagship innovation from Samsung. But with all of it, we don't see any acceleration based on AI on these demand for these kind of phones. Yet. So therefore, we are very cautious factoring this in the future. I mean, if you are forecast is right, it's upside, but it's not really in our guidance. So we don't see that. But I agree with your question and hopefully you're right. Thank you for your question, Matthew.

Our next question comes from the line of Orest Graft with Bernstein Societe Generale Group. Your line is now open.

Thank you very much. Thank you so much.

Have clarification questions on the on The UK.

What was the nature of that working capital benefit in the fourth quarter that's now weighing in a way sort of on the year on year trends for free cash flow.

And also what is the nature of these postpaid net adds in terms of the acquisition ARPU? I think you mentioned Givgas.

A particular driver, which suggests that this could be ARPU dilutive recovery of the net adds. And if I may, just to clarify, one thing that was left open in the guidance was was the next fiber impact, which has been either way in the past? I mean, how do you actually expect that to unfold in 2025 in The UK? You so much.

Thanks. Charlie, you want to take the working capital capital question and maybe the next fiber question and then Lutz, you can handle the postpaid ARPU. Yes.

So on the working capital, just to remind you, we try and we believe telecom companies run their working capital broadly flat. Because of our customer cycle board of the customer pays us real time, and to the extent to which your cost stay flat, you broadly have a payables cycle that doesn't really finance. Now within that, there are obviously seasonal variations Q4 variation makes a big difference. And we do do some optimization of it, for example, around realizing a much lower cost of capital by what they call factoring receivables. We do handset receivables as many people do.

And in the case of our payables, we try and take the pressure off our suppliers by doing what's called vendor financing, which I think we've talked about over the years.

I would characterize the 2024 swing as within broadly flat because it's a big company. €10,000,000,000 of revenue, but it was slightly positive there. And I think what we suggested in 2025 is that we are just reverting back to a pure flat number to be honest with you, the only certainty is it will be plus or minus around that. It could be a bit more positive or it could be a fairly negative and it will depend a lot on the seasonal nature and also the timing of certain CapEx. Do you want to [indiscernible] What was the question on next one? We have a pig pump.

I can do this.

I mean on we are not guiding next fiber. Yes.

So maybe then I'll start with the next fiber question. I mean, as you know, we are not publicly differentiating our net debt growth between our existing coverage and next fiber. So therefore, you get the blended number think underlying Of course, shouldn't be a surprise for you that in the BAU coverage we are losing customers, small amount, but we are losing it And in Next Fiber, we are growing because we are penetrating a new network. Now what I can tell you is that Our losses in our existing coverage significant less to other big markets players. This is This is what we believe. But aggressive augments, yes, with very aggressive prices, are getting some customers also away from us. The question is, for your models, what do you factor in? How long will this last? How sustainable is this? On the postpaid question, so first, I think it's very important to understand we've taken a conscious decision to approach the market in postpaid, so in pay monthly with two brands. [indiscernible] So therefore, deliberately we are not lowering prices on our two too much because this is our premium brand And if we are going in acquisition, to aggressive we also would offer that to our existing base.

So therefore, there are two markets we are playing in.

The classical MNO market this is O2 and here we look clearly more after ARPU than after volume. Giftgov is the volume brand Here we look more after volume. And less after ARPU. And if you added both ARPU, you can see on Page eight of the deck that the postpaid ARPU in Q4 has been shrinking minus 6%, but the a year ago, it was a tough competitor. As you know, we are doing the price rise in Q1 I think you know the level of price rights we are doing. So we have a much less [indiscernible] previous year comparator out of price rise last year, and the price rises are quite interesting for us. So therefore, going forward, We are pretty confident that right, ultimately what we are interested in is to grow mobile service revenue out of P times Q out of both brands and we are confident Thank you for your question, Ulrich. Our next question comes from the line of David Wright with Bank of America.

Line is now open.

Yes. Thank you, and thank you for taking my calls. I'm just going to come back to Slide six, your sum of the parts walk.

Which I think there's an element of there's a lot of debates around this, of course, if only the fact that obviously the market is not agreeing and that's your derivation of the undervalued assets. I guess my question is U. K. Related, but is a derivative of this, which is you talk about there being zero equity value for the telecom assets.

But obviously, what we are observing in telecom, I think we know very clearly is that the equity infrastructure assets are valued at a much higher multiple than the Serco assets. So if you do go down the route in The U. K, or in [indiscernible] Are selling off infrastructure within the Netcos or Wire or whoever it may be, Is it not the case that the value of the mix of the telecom asset will be on a lower EBITDA multiple. Because you've got less infrastructure and more Servco. And that's coming to, I guess, my Key question here is what potential equity Did we lose you?

Well, sorry, we lost the last little bit of your riff off of what I think you're getting at. Look, there's lots of ways of answering that. I would say, number one, whether it's one turn on the integrated EBITDA or it's three turns on the Netco and half a turn on the integrate on the Servco there's no question that we're trading at the value of our debt. And that's where Sunrise was trading as well as an integrated operator.

If you look at the telco average across Europe, which is a mix, of Netco, Servco's integrated companies at 6.5. Does it seem extraordinary to us to think that getting people to appreciate [indiscernible] value of our infrastructure, the value of our free cash flow potential over time is worthy of a higher multiple. And by the way, I'm not going to wait around for you to get there. Meaning, if the market doesn't appreciate it, we'll just have to prove it. And that's really the difference. The strategic pivot twelve months ago was we ain't waiting around anymore for you to figure it out. Just going to prove it. And we did that with Sunrise.

So to me, it's not a question of will it or won't it. We'll demonstrate that it's there We'll show you with transactions, with strategic opportunities, that it's there. And the people who stick around will get the benefit of it. It. I mean, we certainly want research analysts, yourself included, to see the value in what we're doing. We want you to appreciate the free cash flow potential of our businesses. We want you to understand the network infrastructure strategies. That's no question. But we know that over time, a combination of these things will absolutely be reflected in the value of these telecom businesses. That if I went to my partners, if I went to an investment bank to list something, if I went to a private equity shop to sell it, They're not giving me zero. [indiscernible] not giving me zero. So the fact that we think it's zero, I think is the starting and we can debate whether it's one turn, two turns, three turns. Whether it's free cash flow, dividend yield strategy or network infrastructure premium multiple strategy or a combination of all of those. But we're convinced that over this to thirty six month timeframe, we're going to demonstrate that.

And that is [indiscernible] To buy this stock. That's the bottom line.

Whether you get there or other analysts get there, I don't really care.

We're going to get there. And It'll be delivered through external independent transactions or opportunities as opposed to analytical research. Dave, we didn't get the end part of your question, but I hope that's Thank you for your question, David.

Our phone question comes from the line of James Ratzer with Anush Research, Your line is now open.

Yes, Mike. Good morning. Thank you very much the areas interested in focusing on today please was just the spectrum position that you have in The U. K. S. Asset with Virgin Media So obviously with the Vodafone three, transaction, they build a pretty dominant spectrum position. But to us [indiscernible] buying some spectrum from them to strengthen your own position.

So I was wondering if you can give us some more insight into the moving parts here. Can you let us know for example, how much spectrum you will be purchasing can you give us some steer on what the cost of that will be we see the cost of that in 2025 or is it going to be phased in over a few years, And then with this new spectrum position, how secured do you feel about, for example, the Sky MVNO on your network and whether they could be lured across with a stronger spectrum position at Vodafone three? When does that contract with Sky next come up for renewal?

Yes, lots of really good questions there. I'll let Lou dig in. I don't believe we disclosed much in the way of detail, Lou, on price and the megahertz spectrum and the bands we're buying, but I'll let you address that as well as the Sky contract length. Yes. Thank you. Yes, James, as Mike said, right, we can't really disclose neither the concrete spectrum nor the price The deal is also not closed on Vodafone three yet. I think the spectrum will be disclosed by off Com, if I'm not mistaken, after the deal has been closed. And also to share with you the price, we need agreement from our partners there. So unfortunately, we cannot say that. I think what I can say is, you know that our market share is significantly higher today compared to the spectrum we hold. And we fixed that with this kind of deal. So we put ourselves in healthy position I also don't want and I'm not allowed to disclose with you the term of the deal with Sky. But what I can tell you is that the spectrum we are sitting on, the investments we are doing in our mobile network we have done especially in 2024, which was significantly higher, we will do going forward puts us in the position to really stay in a long term relationship with Sky.

Thanks, Lutz.

I think that's time, operator, or did it was there one more?

No, sir. That concludes today's question and answer session. I would now like to pass the call back to Mr. Fry.

Appreciate. Yes, thanks everybody. And David, try to get animated on your question. I didn't get the end part of it. So I hope we were responsive. But listen, appreciate you joining us a little longer remarks today, but I think appropriate given year end.

And as far as we're concerned, we think 2024 was a standout year. We hit 13 to 14 guidance metrics.

On off Sunrise and more or less achieved all the strategic goals. We're setting ourselves up for an equally ambitious 2025. And beyond. So, we feel like this is nothing but upside here and of course the buyback will help us benefit from that and you hopefully over time. So we're excited about where we're headed and we always appreciate your questions and your support and you know where to find us. So thanks everybody.

Ladies and gentlemen, this concludes Liberty Global's Liberty Quarter twenty twenty four Investor Call. As a reminder, a replay of the call will be available in the Investor Relations section of Liberty Global's website. You can also find a copy of today's presentation materials. Thank you and have a wonderful day. [indiscernible]