Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Liberty Global Third Quarter 2020 Investor Call. This call and the associated webcast are the property of Liberty Global and any redistribution, retransmission, or rebroadcast of this call or webcast in any form without the expressed or written consent of Liberty Global is strictly prohibited. At this time, all participants are in a listen-only mode. Today's formal presentation materials can be found under the Investor Relations section of Liberty Global's website at libertyglobal.com. After today's formal presentation, instructions will be given for a question-and-answer session. Page 2 of the slide details the company's Safe Harbor statement regarding forward-looking statements. Today's presentation may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including the company's expectations with respect to its outlook and future growth prospects and other information and statements that are not historical fact. These forward-looking statements involve certain risks that could cause actual results to differ materially from those expressed or implied by these statements. These risks include those detailed in Liberty Global's filings with the Securities and Exchange Commission, including its most recently filed Forms 10-Q and 10-K 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 statement is based. I would now like to turn the call over to Mr. Mike Fries.

Thanks, operator, and welcome, everyone. There's quite a bit going on in the world, so we certainly appreciate you spending an hour with us. We'll try to make it worth your while. Charlie and I will handle the prepared remarks today, and then I'll get other execs involved in the Q&A as we normally do. I will be referring to slides as we walk through the quarters, so hope you can grab those off the website and follow along with us. And I'll kick it off on slide 4 with some key highlights from the quarter. This should get you level set on most of the main issues, many of which we'll come back to in this presentation. Let me start with the pandemic. As we've discussed throughout the year, while we're not immune to the effects of this global crisis, of course nobody is, we continue to deliver solid operating and financial results, largely in line with or in some instances better than our original expectations for the year. I'll talk about that a bit on the next slide. Obviously, this has been a busy year for us on the M&A front and we're excited to be on the verge of closing our acquisition of Sunrise in the Swiss market. You would have seen that around 97% of the shares were tendered to us, which is a great result and will facilitate the de-listing and merger process. We also just received all regulatory approvals, which means we're targeting completion of the transaction next week. In a few slides, I'll spend just a minute revisiting the strategic and financial benefits of this combination, which are significant. We're also making steady progress on the completion of our JV with Telefonica in the UK. The teams are working extremely well together and have already validated the £6.2 billion synergy estimate. They've developed strong commercial day one plans, and of course the transaction is now fully financed. I've got to tell you, we're even more convinced today that this will be a fantastic deal for customers, employees, and shareholders. All we're waiting for now is regulatory approval, which as we've said, should be by mid-next year. You can see some highlights of our Q2 results on the right side of this slide. We delivered strong customer growth in both fixed and mobile, which I'll talk about in a second. We saw modest declines in revenue, adjusted EBITDA, and operating free cash flow, and Charlie will drill down on those figures, but we are largely on plan for the year, which means we're managing through both the expected headwinds we identified at the beginning of the year and the unexpected impacts of COVID pretty well. That's one of the reasons we're confirming our original 2020 guidance today, in particular mid-single digit operating free cash flow growth and $1 billion of adjusted free cash flow, both of which are benefiting from continued declines in capital intensity. You no doubt noticed that we added $1 billion to our buyback program today. This will give us the flexibility to be opportunistic for the remainder of this year and also give us the capacity to continue shrinking equity and driving levered free cash flow per share in 2021. Finally, I just want to say how encouraged we all are by our employees and how well they're managing through this pandemic. We've consistently made their safety and well-being our number one priority, and as a result, we're seeing record engagement levels across our markets, which is a good segue to the next slide, where we talk a bit about the COVID-19 pandemic, which has in many ways highlighted some of our own strengths. Beginning, of course, with our networks, which have remained resilient in the face of increased utilization, both upstream and downstream, and have plenty of remaining capacity. I can't express how important this is for the families, students, hospitals, schools, and businesses that we serve. It certainly helps explain why we're experiencing some of the highest NPS levels we've seen across our core markets, and allowed us to support our customers with more data, more speed, and more content while at the same time supporting our communities with programs like Virgin Media's Essential Broadband and Telenet's Digital Lifeline services that are targeted to the more vulnerable among us for whom connectivity is even more important. I'd also point out that COVID has forced us to accelerate our investment in other areas of our business like digital. We've talked about this. When customer care centers were disrupted and shops were closed, we needed to lean on our digital platforms to drive things like online sales, which are up 10% in most markets and now represent nearly half of our sales in the UK. We also ramped up our digital care and support platforms, which helped drive call volumes down 30% in markets like Switzerland. I'm sure you've heard from other operators that the COVID headwinds were less severe in Q3 than in the prior period. The return of sports, improved roaming traffic, and growth in both fixed and mobile subscriptions helped our results. More recently, however, we've seen a return to more stringent lockdown and social distancing protocols in Europe as infection and positivity rates have spiked. To be fair, this could impact our medium-term outlook. But I'd point out a few things. Most of the measures are intended to be short-term in duration, typically two to four weeks. Generally, they're more moderate and more targeted than last spring. And after six to seven months of this, businesses and consumers are more prepared this time around. My hope, as I said before, is to build on our improved relationship with subscribers, regulators, and politicians, and to ensure we come out of this period even stronger and more customer-focused, and I think we will. The pandemic has also reinforced the fact that our strongest customer proposition is connectivity—fixed and mobile, fast and reliable, and intelligent and adaptable connectivity, including the integration of incredible features, content, and applications. On slide 6, you can see that our broadband results reflect that with 71,000 net additions in the third quarter; that's up six-fold from a year ago. We saw strength across our footprint. Belgium had its best result in five years. The UK delivered solid growth on both the Lightning and the BAU footprint, and Switzerland had its first positive month in September in a very, very long time. We know that speed leadership still matters in these markets, and our investment in fiber deep, smaller node, and DOCSIS 3.1 is paying off. I remember the debates we all had around the question of who needs 100 megabits at home. Well, today, nearly 100% of our UK customers are taking 100 megabits or higher, with average speeds of 166 meg across the footprint. By the way, that compares to 46 meg in the rest of the UK among other operators. Across Europe, around 50% of our subscribers are taking products of 200 meg or higher. Adding to that the fact that we are gigabit ready across 32 million homes and actively marketing gigabit services to about 45% of those, we are in a very strong position here. There's no question that broadband is also positively impacted by our fixed mobile strategies across our markets, where convergence continues to grow. In Holland, over 40% of broadband subscribers take a mobile product from us after about three years. We'll talk a lot about the strategic and operating rationale of fixed mobile convergence in Europe. We've done that; we'll continue to do that. There's no better example than VodafoneZiggo in Holland. There's a chart on this slide that shows the complete turnaround in revenue and EBITDA growth that the team has achieved over the last three years. In 2017, the company's revenue and EBITDA declined 3.7% and 5.6%, respectively. Those numbers have improved steadily every year, with the revenue and EBITDA actually in the nine months of this year up 2.5% and EBITDA up 7.5%. Several factors contribute to this, including, of course, a significant synergy target that was achieved a year early. But equally important is the positive impact of higher NPS and reduced churn levels from fixed mobile subscribers, from anywhere to 50% to 80%. The scale that VodafoneZiggo has in the Dutch market is also critical—it's now larger than KPN in broadband, fixed voice and entertainment services, generating €400 million to €500 million of distributable cash to shareholders this year. The other major factor here is continuous innovation across our product and technology roadmaps. In Holland, VodafoneZiggo is rolling out a nationwide 1-gig network. They were the first to rollout 5G and embraced our Horizon entertainment platform. That sort of innovation is occurring across the European footprint. It all begins with network superiority in markets like the UK, for example, where Project Lightning has been a resounding success. In fact, we've included the latest figures in the appendix of this deck, so check them out. We continue to be bullish on the continued expansion of Lightning. We're also working on a clear path to 10G, or 10 gigabits per second, using a combination of HFC and fiber-to-the-home. The pace of innovation of 5G mobile is equally critical, with VodafoneZiggo and Sunrise leading the way in their markets. Robust and reliable network supports innovation and connectivity, which is where it all begins. We've led the way with smart, intelligent WiFi and better, faster, and cheaper CPE. Finally, our entertainment platform continues to delight customers with the best user interface, seamless integration of apps, voice control, and tons of other features. Importantly, Horizon has also laid the groundwork for our migration to an all-IP video services platform with our Apollo box. This is network-agnostic, app-centric, portable, and low-cost. This is where the entertainment business is headed, and we're leading the way again in Europe. Our success in Holland and Belgium really underscore our excitement about the Sunrise acquisition, which we've recapped a bit for you on slide 7. The main driver here is scale. UPC and Sunrise together create a clear number two to Swisscom in one of Europe's most attractive and stable markets, with around a 30% share across all services and a significant opportunity to grab meaningful share in B2B. Like our other FMC deals, the combination is anchored in best-in-class networks. Right out of the gate, UPC Sunrise will reach 90% of the fixed market with 1 gig services. They'll have leadership in 4G mobile and the largest and fastest 5G network in the country. The synergies are also substantial, with an NPV of over CHF 3 billion, about 80% of which is attributable to OpEx and CapEx efficiencies. The real opportunity here is to deliver the kind of combined financial growth profile we've seen in Holland. I'm not saying the numbers will be the exact same, but we're convinced that scale, market strength, and synergies will deliver stable free cash flow for a very, very long time. It's also worth mentioning that both operations had a strong Q3. You can see in the charts on the right, UPC continues to deliver improved subscriber trends, recording a sales month for mobile in September and consistent improvement in broadband. Sunrise released their results earlier today, also a very strong quarter with positive service revenue growth despite roaming headwinds, positive EBITDA growth, reflecting strong cost management. They also delivered their best quarter of postpaid mobile adds in a decade and really strong broadband and TV customer growth. So far, pre-merger integration work has validated the synergy estimates and clearly established the opportunity for Sunrise and UPC together to give Swisscom a run for its money. I'll end on slide 8 with a quick look at Liberty Global and what we look like pro forma for both the Swiss and the UK transactions. Most of you know this, but it's really important to continually reinforce the narrative of how we've transformed this company. After spending over a decade consolidating cable and chasing broadband market share, we saw the fixed mobile convergence story developing in Europe around five years ago. At that time, the incumbent telcos started prioritizing their fixed networks and broadband growth together with wireless, leaving the other three to four mobile operators struggling to compete without their own fixed infrastructure. That was the moment we pivoted. Where we didn't have scale, we exited the mobile-only operators like T-Mobile in Austria and Vodafone in Germany. Those deals were valued at double-digit multiples and represented huge returns on equity for us because of the value of the network and the value of the fixed customer base. You could argue today that those prices look cheap, given where infrastructure assets are trading. Where we had network and broadband scale, we decided to build our own FMC champions in four markets. We merged with Vodafone's mobile unit in Holland to form a 50/50 JV, which I just showed you the results of. We bought KPN's mobile business in Belgium, and Telenet today is the leading converged operator in the market. We announced the merger of Virgin Media and Telefonica's O2 in the UK to form a 50/50 JV that will be second only to BT in size and scale and poised for incredible strategic and financial upside. We're acquiring the best mobile company in Switzerland to create the clear number two to Swisscom. When you put it all together, we have tremendous converged scale in Europe, serving 84 million fixed and mobile RGUs and generating $26 billion of aggregate revenue. That's a strong platform for value creation. As we've shown in Holland and Belgium, each operation generates stable long-term free cash flow and represents a real opportunity for further strategic growth and potentially public listing. Certainly, Sunrise has shown us that the institutional demand for crown jewel assets on local exchanges is huge. Beyond that, we're focused on allocating capital as we have done thus far. We've announced a new $1 billion buyback program, which I mentioned. When that money is spent, we will have purchased around $4.7 billion of our stock since we closed the sale of Germany to Vodafone 16 months ago. It represents about 40% or more of those proceeds. We'll look for opportunities in our remaining cable markets—Ireland, Poland, and Slovakia. We'll see if there are opportunities to pursue similar FMC strategies or not. We'll continue to invest in adjacencies through our Ventures portfolio, which we conservatively value today at over $1 billion. Let me take a second to talk about that. We've had a really good track record with our venture investing and some recent wins. We were an early investor through our technology portfolio in Skillz, a mobile gaming platform that just got bought for $3.5 billion—a 10x for us. The crown jewel of our sports portfolio is the Formula E race series, which we conservatively value at $0.25 billion. We have small but important content platforms in our largest markets. Our infrastructure portfolio was an early investor in EdgeConneX, which was just acquired by EQT in a multi-billion dollar transaction. We're actively pursuing ways to monetize or grow our own infrastructure and property-related assets, which is an exciting space right now. Looking forward, we're mainly focused on four things. Firstly, delivering stable and long-term free cash flow in our core fixed mobile markets—I just talked about that. Looking for ways to close the value gap on those assets, which we think are real and tangible opportunities. Investing in our equity story through buybacks, of course we've just added more to our buyback program. Selectively, and only when appropriate, investing in adjacent and attractive opportunities; that's the strategy. I'm happy to take questions on any or all of my remarks at the end. But for now, I'm going to turn it over to Charlie. Charlie, to you.

Thanks, Mike. Turning to our consolidated numbers, I'm starting on a page entitled 'underlying revenue stable.' Total group revenues declined by 1.3% in Q3. On the right-hand side of the page, we set out our estimates of the impact of COVID and what it has done to our underlying revenue growth, which as you can see accounts for more than 100% of the Q3 decline. In Q3, we estimated COVID reduced revenues by $41 million compared to $110 million in Q2. Of the total, premium sports accounted for around $13 million, B2B revenues were also impacted by $13 million, and mobile revenues were reduced by $9 million, predominantly from roaming revenues. Broadcaster revenues accounted for around $6 million of the drag. Many of the affected revenue streams are either relatively low margin or have other compensating operating expense impacts, which is why our adjusted EBITDA growth was not significantly impacted in the quarter. On the next slide, we provide details of our adjusted EBITDA. The rebased adjusted EBITDA growth was minus 5% in the quarter, which means year-to-date growth is minus 3%. Now, we're confirming our full-year guidance of mid-single-digit rebased adjusted EBITDA decline, which implies a significant year-on-year decline in Q4. Why is this? Well, 2019 saw a material step up in adjusted EBITDA in Q4 versus Q3, whereas in 2020, we expect Q4 EBITDA to be broadly flat to Q3. We've deferred the UK price rise that we typically execute in Q4, resulting in a $26 million delta, and in response to the demands of COVID, we're ensuring certain customer care operations and making accelerated investments in a number of digital initiatives. Together, this results in an increased spend year-on-year of $17 million. We expect these investments to deliver long-term savings going forward, but these come after these initial setup costs. Finally, in both the UK and Switzerland, we expect to incur pre-merger integration costs of $8 million and $9 million due to the pending transactions. Turning to our capital intensity, year-to-date, we've continued to reduce our CapEx spend compared to previous years due to the completion of many of our investments in capacity and roadmap projects, as well as decreased spend resulting from upgrading our customer premise equipment on new platforms. In Q3, we reported a CapEx to sales ratio of 22.3% or 19.9% on a pre-Lightning basis. There was a reduction in new build spend in the quarter, but we still succeeded in building 125,000 homes in the UK and Ireland, contributing to a year-to-date total of 311,000 homes. We're looking to complete a further 100,000 homes in Q4, assuming our plans aren't affected by the upcoming lockdown. In Q4, we do not expect CapEx to rise as it did in 2019, so for the full year, we estimate CapEx to sales pre-Lightning will be around 20%. Because of this reduction in CapEx, we remain on track to grow our OFCF mid-single digits in 2020, as we set out in the next page. For Q3, we reported OFCF of $552 million, and on a pre-Lightning basis, that's $623 million of underlying OFCF. All our markets, except Belgium which was flat, show underlying growth in OFCF versus the Q3 2019 numbers. The Netherlands in particular saw very strong growth, rising from $247 million to $348 million year-on-year. We expect this underlying growth to continue in Q4 across our markets, targeting $500 million of consolidated OFCF for Q4, including the impact of our Lightning investments, up from $433 million the previous year. Turning to free cash flow, we confirm our guidance of $1 billion of free cash flow for the full year, increasing from $542 million year-to-date. Turning now to key drivers to achieve this. We expect no further material interest payments in Q4 in line with previous years, and tax payments will be minimal. We expect to receive the balance of the shareholder distributions with VodafoneZiggo, which we expect to be 50% of the upper end of their €400 million to €500 million target range. Year-to-date working capital is positive $31 million, and we expect it to be broadly flat for the full year. Our underlying year-to-date pre-Lightning adjusted free cash flow was $789 million, demonstrating the continued strong cash flow generation of our businesses. Turning to our capital allocation on the next page. Group liquidity remained strong. We reported full company liquidity of $9.3 billion at the end of Q3, including $6.8 billion of cash and SMAs. Pro forma for the Sunrise transaction close, this will be reduced to $5.4 billion, including approximately $2.9 billion of cash and SMAs. If you overlay the close of the Virgin Media O2 transaction, pro forma cash is expected to be $4.7 billion. With that transaction, we will deconsolidate Virgin's revolving credit facility, leaving remaining revolvers of $1.2 billion, predominantly at the UPC credit pool, resulting in total group liquidity of $5.9 billion, which will continue to provide the group with excess capital to invest. We continue to repurchase our stock and have repurchased $1 billion through the end of October. Since Q3 of 2019, we've repurchased 29% of our market cap and continue to repurchase further stock. As Mike indicated, we're looking to opportunistically buy back a further $1 billion through 2021. Telenet has firmed up its dividend distribution model, committing to a dividend floor of €2.75 per share going forward. We see this current dividend distribution policy as a template for our future FMC companies as we explore local listings over time. In terms of leverage, we remain committed to our 4 times to 5 times leverage targets and are very comfortable at the top end of the range, as there is clear near-term visibility on EBITDA growth as we realize FMC synergies, allowing us optionality to delever towards the middle of the range and below over time. Both our existing FMC champions, Belgium and VodafoneZiggo, are on this path; both have long-dated debt with an average life of around eight years and low borrowing costs fixed at 3.4% in Belgium and 4.2% at VodafoneZiggo. Belgium leverage remains at 4.4 times on a US GAAP basis, following the execution on the synergies of its fixed mobile consolidation. VodafoneZiggo is continuing to execute the synergies from this merger and to delever further from its current 5.25 times. We completed a number of financings in the quarter, including attractive financings in advance of closing our UK and Swiss transactions. In both the UK and Switzerland, the companies will be levered 5 times before the benefit of any synergies, with average lives around eight years and the cost of debt in the UK of 4.4% and 3.8% in UPC, benefiting from the lower underlying Swiss rates. Given the completion refinancings, we do not anticipate having to allocate any of our excess capital to further deleverage these or any of our other credit silos. In conclusion, Q3 saw strong customer and broadband performance with high NPS. The Swiss transaction has been approved and will close around mid-November, and the UK transaction remains on track. Our underlying cash flow generation remains strong, with capital intensity established below 20% of sales excluding Lightning. We're reconfirming all our 2020 guidance metrics, mainly mid-single-digit adjusted EBITDA decline, mid-single-digit OFCF growth, and adjusted free cash flow for the full year of $1 billion including Lightning construction CapEx. Finally, we are announcing a new $1 billion buyback authorization. And with that, operator, over to questions.

The question-and-answer session will be conducted electronically. And we will take our first question from Vijay Jayant with Evercore.

Good morning, Mike. Two questions—first, in the UK you've been reconnecting with your customers and sort of contacted them on modification of their plans as part of a repricing of the base. Can you just talk about how much was done, what's been the customer impact in terms of dollars, and any sort of outlook on what that could be going forward? Second, more sort of a bigger picture question. Obviously, your fixed mobile convergence strategy is showing a lot of success in Holland and Belgium. We expect that to come in the UK and Switzerland over the next year. Can you sort of talk about structurally or competitively or culturally, is there any real reason those two markets, the new markets will have similar success and we can get back to pretty healthy EBITDA growth and KPI growth? In that context, is there any way to even sort of quantify what sort of margin benefits you're getting? I know the churn is down and NPS is better, but any sort of profitability measure on this convergence would be very helpful. Thank you.

Sure. Thanks, Vijay. Look – Lutz is on and I'll let him address the end-of-contract and annual best tariff issue. But we've said in the past, and I think we would repeat here, though, that we're not giving specific – we're not disclosing specific numbers to who we've contacted and how many here. We've said publicly that so far the effect of that end-of-contract notification process has been better than we expected, which means that while our churn from that process was largely in line, we have not had to provide any level of discounting or changes to ARPU that we thought would occur. In the end, we believe that the end-of-contract notification process thus far has been better than we expected. I'll let Lutz dig into that. Why don't you just answer the second question if there's more to add to that, Lutz? Go ahead.

Yeah. What I can add to this is that overall you have seen strong net adds in the UK. Therefore, you see that the churn number or the end-of-contract notifications are not really material. Overall, year-over-year, we are doing much better on churn. On ARPU, we are 1% down, but a year ago we had the price rise starting September 1 and October 1, half and half across the customer base. Therefore, you see that the impact is not too high. However, there is an impact, and this will also obviously flow through into 2021, so that we have fully absorbed the impact in a negative way by 2022.

Yeah. And the annual best tariff has really just started, so it's too soon to know.

It has just started.

On the FMC question, listen, I do believe to answer your question in a general way, we do believe that both the UK and Switzerland can show similar trends in terms of both financial trends and operating trends to what we've seen in Belgium and Holland. There are a couple of things that are the same, of course. We look at the synergy estimates there in both markets—they're within the range of what we've seen in all the other transactions we've been involved with. We have been involved in over eight different country mergers whether we're a seller, buyer, or a partner with FMC. There's a lot of data on synergies. Just in the case of Holland and Belgium, it was about a €5 billion synergy estimate, and we hit it out of the park on both ends. We’ve got experience; we know the synergy experiences. I believe the estimates have been validated—no, I know the estimates have been validated in both transactions by both sides of the equation. We feel really good about those estimates, the $2 billion number in Switzerland and the $6 billion number in the UK. Those provide a lot of tailwinds financially, obviously. On the operating side, the benefits of FMC are hard to argue with. Structural reductions in churn, consistent and regular improvements in NPS. In a competitive market, having these quad-play bundles – you've seen it in Belgium, you've seen it in Holland where the quad-play bundle matters. Being able to provide a full package of products and services around connectivity matters, having a mobile operation to cross-sell broadband, having a broadband platform to cross-sell mobile matters. The statistics and opportunities are quite similar in both countries to what we've seen. I can't share the long-range plan. But if I could, you would see similar profiles. VodafoneZiggo has upped their guidance on EBITDA this year to mid-single-digit. I just showed you that three years ago, it was negative 5%. We believe those same kinds of characteristics, both operating and financial, are achievable. Again, I can't share my plans, but you should assume that we see that opportunity similarly as our partners in the case of UK and I think the Sunrise management team as well. Of course, they were on the other side of the transaction for a long time. Everybody seems to be aligned here, and we're anxious to get started.

Thanks, Mike.

We'll take our next question from Michael Bishop with Goldman Sachs.

Yes. Hi. So I have just one question, which is also on UK pricing. I just wanted to understand how you think the price versus volume equation has worked this year, not taking price into account. That's with a view to potentially what you're thinking about next year, given BT's move and some of the moves on UK mobile we've seen as well. The pricing environment feels like it's got quite a bit better despite COVID.

I think that question is...

Yeah. Go ahead, Lutz. I'll add to it if I need to. Go ahead.

We have only postponed the price rise for this year, Michael. We wanted to ensure that we continued with the momentum we've built up in especially broadband net adds. But as you have recognized, the market seems to be getting more rational on the price increase side. Obviously, we cannot disclose what we are going to do, but overall, I see that it's pretty positive.

I think the decision made to defer the price rise in 2020 was the right decision. It had a marginal impact on volume, although I think reduced churn, the pandemic, and the essential element of our products and services probably had more of an impact. As you pointed out, Lutz, the market is clearly expecting from other operators that they will be taking price rises in 2021. So, we'll decide internally what our best move is, but we think the decision in 2020 was right, and for sure it set us up for a stronger 2021.

And we will take our next question from Ben Swinburne with Morgan Stanley.

Thanks. Good morning and good afternoon to the folks overseas. I wanted to stay in the UK. If we could, two questions. One, you guys have had some programming cost pressure, I think, over the last couple of years, probably largely tied to sports. I’m wondering if you look out from here if you see the curve there bending one way or the other. I'm partly bring it up because Sky is talking about some real opportunities in terms of driving down, I think, entertainment expenses. So I'm just wondering if you see that in your outlook as well. And then sticking with video, I know we don't talk about video much anymore, but this Virgin TV 360 platform, is this a big deal for your position in the market? I don't know how to compare that to Sky Q. I don't think it's a new set-top box and feels like it’s not a big CapEx deployment. I want to just make sure that's the case and get a little more color on that product, which launched this quarter.

Yeah. I'll let Lutz again. I will just say a couple of things and I'll hand it over to you. The 360 platform really is a new user interface, the Horizon 4 user interface. We think this is a game changer in this market where everybody continues to watch video quite significantly on television, but it also integrates all the apps and has a full—this is why it's called 360—the full integrated OTT experience built in. We do think that this is a game changer later this year when it rolls out. It has been in other markets in Switzerland and is just rolling out in Ireland. NPS is, in Holland, rising materially. People see it as the next-generation video experience, which we need to be part of, and our customers are as well. On the programming point, without being specific about any particular programmers, I think it's fair to say that across Europe, not just in the UK, we anticipate a different type of discussion with linear providers, whether it's sports or entertainment. You're seeing that in most of our markets. We're not disclosing it. Why is that occurring? For the same reason you’re seeing it here in the US perhaps. While viewership and many metrics remain pretty robust in Europe compared to the US, it is clearly moving in the other direction over time, and we’re seeing some modest losses in video subscribers. The idea that we will continue to pay more for linear programming in Europe at flat rates is not something that we will pursue. In all of our negotiations with these providers, we're finding that their desire to go over the top—and together with the headwinds we feel in the video linear business—will result in better margins over time on the video product. Most importantly on that issue, we aren't waiting around for that transformation. We are integrating apps into our boxes today. Our IP box is rolled out in Poland— that's app-centric, network-agnostic. You can roll it out anywhere we have IP rights. Europe is heading in the same direction with innovation of OTT applications and aggregation of over-the-top content, seamlessly entertainment experience, and we will lead the pack in Europe in that roadmap. So similar trends to the US, not quite as progressive or quickly appearing, but I think programming cost pressure ought to lessen for us over the longer term, which is natural, given where the market is evolving.

Yeah. I think you said most of it, Mike. Virgin Media TV 360 is better than Sky Q, right? It has some functions that Sky Q doesn’t have. It's an over-the-air software update our customers will get, therefore, not high cost. It will lead to lower churn because we know from other markets that NPS is extremely high and that leads to lower churn, and we will factor that in. On the programming cost side, when comparing programming cost in 2021 to 2020, obviously the cost increase has flattened a lot, but this is more due to COVID. In the long term, we are doing exactly what Mike has explained for the overall European market. We want to get much more to variable costs, right? So we help all our partners on their way to direct-to-consumer apps and have a lot to offer there from prominent data and so on. On the other hand, we are keen on getting more on variable content costs for linear viewing. We've already mentioned, we've closed some of these contracts and in some others, we have to negotiate.

Don't underestimate the leverage we bring into those conversations today. Years ago, we didn't have any mobile customers. Today, if you include the MVNO subs, we have around 15 million mobile subs. The OTT guys are looking for us out—they’ve seen how well Verizon got the Disney+ and how the OTT guys produce. We're positioned in the core markets to play that role. O2 is already the launch partner for Disney+ in the UK; we'll be in that position in all these core FMC markets with the mobile platform, which gives us additional leverage in those negotiations.

Right. Got it. That makes sense. Thank you both.

Okay, Ben.

And we'll take our next question from Steve Malcolm with Redburn.

Yes. Good afternoon, guys. I just want to come back to that question on programming costs and just clarify, if that's okay, and then one more quick question after that. You basically have two large premium sports providers in the UK, BT and Sky. The BT deals are largely fixed, and the Sky deals are kind of fixed and variable. From what you're saying, I think it's reasonably clear, but should we assume over time you are making every effort to make those fixed costs from those two large suppliers more variable and give them kind of more access to a larger base and ability to go OTT? So I guess that's question one. And then secondly, just on the local listings point, Mike and Charlie, I did ask this last time around. When I look around Europe, there are two companies of that ilk, Telenet and OTD, both trading at very high dividend yields and pretty low multiples. So I guess the question is what's the market missing? Why would Switzerland be that different? Is it just a better market? Would you consider something more radical, say a full demerger to your shareholders in an effort to create value? Thank you.

Well, I'll take the second one and Lutz, you can think about the first one, and Charlie can chime in here too if he wants. There are lots of reasons why Telenet is where it is. We think the dividend they've announced, the long-term free cash flow profile, and their competitive position in the marketplace are winning characteristics. But I think there are some concerns unique to Telenet among shareholders there, specifically related to strategic issues like the conversation on capital expenditures. I don’t think when you look at Telenet and read across the rest of Europe and say, because they trade here, a swift IPO or a UK IPO won't trade well. If you just look at VodafoneZiggo and compare KPN, VodafoneZiggo leads KPN across core metrics. Last three months or year-to-date results for both companies—it's night and day—and that also could present an opportunity for reasonable valuation. Lastly, I’ll say that while you could be right and valuations won’t be as robust as perhaps hoped for, they couldn't be any lower than our own valuation. Creating local listings with local following and local energy in that marketplace gives us the opportunity to manage the balance sheet correctly and the dividend profile correctly for long-term value creation, which apparently we're not able to achieve at the opco here for reasons you would know better than I. So from my point of view, creating value at the opco, whether it's the way we serve Germany or the way we manage Telenet, or the value we create in Vodafone, that's central to creating value for us. We’ll look at all options. We’ll do whatever’s necessary to create fundamental value and shrink the value gap in our opcos, whatever that might look like.

Mike.

No. You go ahead. Go ahead.

Yeah. My comment was more across all programming costs. You were only referring to the sport premium programming cost side. So therefore, take this view a bit more broadly across all our content costs, not only the trend. When it comes to the sport premium, obviously, we have those partners, BT and Sky, still in existing contracts. The yields will come up in 18 months from now. We need to find a way, on one hand, to help our partner to have a secured revenue stream, but on the other hand, to sit on something more valuable. This is something we will figure out in the next 18 months, and obviously we will share that with you then. Our goal is to strategically move to more variable costs. On the other hand, if it comes to variable, we will use all our efforts to get to a proper volume plan.

Exactly. Don't underestimate the leverage we have. Those conversations today, we have more than we did a year ago. It's essential.

And we will take our next question from Matthew Harrigan with The Benchmark Co.

Well, thank you. Mike, in your comments at the cable tech, you highlighted some of the differences between your position and that of the US operators—a lot more fiber competition over in Europe—and I thought you also suggested you were pretty explicitly saying that you thought the headroom in DOCSIS 3.1 was a little bit less than what the US operators were saying. Clearly, that requires a need for deeper fiber and DOCSIS 4.0, etc. Do you think that's a fair characterization? And do you think that with all of this capacity being brought on by 5G and DOCSIS 4.0, you're going to finally see some better app development that you can monetize? There are some cool things that cables have, like the light field holographic hopping frog and all that, but it feels like you could see a definite acceleration in your perceived value and price potentially even beyond what we're seeing with Zoom and conferencing and all that. Thank you.

A couple of points there. The value of our networks is undeniable. You could look at what's happening in the European infrastructure space. We know our networks are valuable today, well beyond being valued for all kinds of good reasons. The path to continued speed enhancement in our fixed networks, we've got multiple paths. Today, we're getting the most out of 3.1, which we've already trialed, with 2.5-gig speeds with 3.1. That's something we can do if we choose to. We've trialed that in the UK. We're really focused on 10G or 10 gig. Honestly, when I mentioned 1 gig five or six years ago, everybody was like, what the heck is that needed for? Trust me when I say that the 10 gig conversation will be starting pretty quickly. When we look at our networks, we've got several ways to get there with DOCSIS 4.0, as you mentioned, where we would fall in line with the US operators, Charter and Comcast—both of whom would be pursuing a strategy like that. We could also use fiber-to-the-home, CSPON, where we think we have the economics to support that kind of 10G roadmap. So, stay tuned. There’s a lot to talk about there. As you pointed out, lots of cool things with faster speed and lower latency—tons of cool things we can do with both our fixed and mobile networks. We just talked yesterday as a team about some of the ideas around the Internet of Things. Being in the mobile space for that IoT opportunity is also advantageous; it’s beneficial to partner with companies like Telefonica and Vodafone leading the charge in IoT revenue development. We believe there’s lots of opportunity to monetize our networks. Fixed and mobile continue to expand speed and capacity and reduce latency with 5G and 10G. The sky is the limit. I think that's really why these networks are valued where they are.

Thanks, Mike.

And we'll take our next question from James Ratzer with New Street Research.

Yes. Thanks very much indeed. Two quick questions, please. The first one was just regarding your UK KPIs. I mean, the customer adds this quarter really looked to me like one of the standout figures in the release. I was wondering if you could kind of just talk us through a bit more what helped drive those adds up even further than we saw in Q2. Is that solely down to being more price competitive? I thought not having a price rise might have only impacted September. So on a strong performance there, I was wondering what you can say about how you see that in future quarters as well. Then secondly, just interested to get your updated thoughts on the ITV stake. I believe that color position you have is now unwinding. I think about 30% unwound in the quarter. So you're now running an economic stake with equity exposure on the ITV stake again. Just interested in your thoughts on the rationale for continuing to hold that and what you want to do with that stake longer term. Thank you.

I'll take the second one first. Lutz, you can take the first one. On ITV, as you know, James, when we originally acquired our position some time ago, our average cost was well over £2. Fortunately, we colored that position and had virtually no economic exposure to the ups and downs of ITV. As those colors are expiring, we had a choice to make. We decided to average down our price, around 70% or more. We essentially own the shares that the market thinks we owned anyway at about a 70% reduced price. In our minds, that was worth exploring, and we are doing that from time to time. We think that's smart. We have no intention of doing anything with the stake. We have no intention of doing anything with ITV, but our view is that being the second largest telco in this market, second only to BT, a small stake in the largest broadcaster could be strategically defensive and offensive; I don’t know, but there's an opportunity to own that stake for 70% less than you thought we owned it, and we think that's a good trade. We might look at that; we might not. We could hedge the position again once we unwind it, and we could also hedge it again. Expect us to always be financially astute and take advantage of any opportunities that may present themselves to average down and be in a stronger position than last year on that strategic stake. Lutz, do you want to take the KPI point?

Yeah. On—predominantly, your question was around fixed net adds. I think it’s two factors: the churn is down; this is not only due to COVID. COVID has helped, especially in Q2, as Openreach had no installation teams out there and we had, but that was not the case in Q3. We've done a lot for our customers. We have onshore global call center resources. We’ve offered a lot of digital functionality to customers. We have offered 100 Mbps speed as a minimum for everybody without charging more. We’ve offered a lot to them, and NPS has increased 10 percentage points from the previous year. That leads to lower churn. This is an effect we see is not only in Q2, Q3—it's more mid-term. Obviously, we are making up for the churn of end-of-contract notification. It’s a long explanation, but the short story is it’s not that we have done anything special—more commissions or lowered acquisition prices enormously or huge retentions that we can only do for one quarter. It’s an automatic effect of long-term levers, better digital capabilities, better NPS for customers, and lower churn.

Thank you. So that would kind of suggest that the rate you've seen in Q3 could probably be sustained into Q4 as well.

Stay tuned.

And we'll take our next question from Andrew Beale with Arete Research.

Hi. Just following on from Steve's earlier IPO question. I mean, I guess I understand the point versus the current Liberty Global equity valuation. But what are you thinking is the rough timeline for local listings? And given the state of the European sector valuations, why do you think this is a better mid-term value creation path than private market or corporate transactions, given your unique footprint and the fact there seems to be a pretty wide gulf between public and private, both for the operating assets and also the underlying infrastructure? Also, if I can just ask, Mike, what do you mean by strategic investments in adjacencies? I’ve seen the fiber and target in current geographies indicated, but what about geographic expansion, exclusive content? Is there anything you can rule out?

Yeah. Good questions. On the IPO question, the reference to public and private multiples, you know us, we’re always going to be opportunistic. It isn’t like we have one path and we will pursue it at all costs. We will look at all sorts of opportunities. Sometimes it could be dual traction, who knows? But we do know that taking action and being on the front foot when it comes to value crystallization is the right posture for us. You’ll see us look at these opportunities. We may not take advantage of them, we might. We are always focused on creating value. In terms of adjacency, yes, we can rule out certain things. The focus is principally in Europe; that's where we think adjacencies reside. For the most part, the adjacencies would be in Europe. Technology, content, and strategic platforms that enable our core fixed mobile converged platform are all factors. These are investments made in our tech platforms and the things that enable our content team through investments. We are strong in this space, and our expertise in managing investments and partnerships will be a significant value driver for us. So that’s how I see it.

Okay. Thanks. And just on the timeline for local listings, is there anything you can say without breaking the rules?

I don’t think so. Yeah, I don’t even want to get into that right now.

And we'll take our next question from Christian Fangmann with HSBC.

Yeah. Hi. Thanks. I have actually a question on the Swiss business. It looks like the UPC effort is finally stabilizing at RGU trends. But financially, obviously, we have not seen a substantial improvement. What’s the structural issue that the EBITDA is weaker than the top line performance? Are you still investing in the digital infrastructure? I was expecting a bit more, let’s say, closing the gap between the revenue trends and the EBITDA trend. I know going forward now that you will own Sunrise, things will materially change anyway. I’m just trying to understand the short-term dynamics with respect to Q4 and maybe Q1 next year. Thanks.

This is Baptiest. We see now in the quarter that in-quarter momentum really comes, positive broadband net adds in the last month. But like always in the cable business, you're a trend business, so your last 18 to 24 months of net adds and price effects flow to your P&L. We have promos, and we’re able to stabilize the free cash flow; again, a strong free cash flow quarter. We see the momentum for turnaround in the coming year as well.

Yeah, you are right that there are obviously investments in digitization across the board, where COVID has accelerated good return investments. The only question we should bear in mind is there's a switch across our cost structure from CapEx to OpEx, which is a good thing. For example, if you provide cloud-based services, which is obviously a more efficient way of providing IT support, that's OpEx; in the old age, you would have counted that as CapEx. That’s one of the reasons why it seems counterintuitive that our OFCF is growing so much while our core EBITDA or OFCF is declining; it might have a bit of an accounting effect we usually don't quantify for the group as a whole at the year-end.

Okay. And then I have one follow-up regarding the UK deal. It looks like your scheduling or expecting a full close of mid-next year. That implies that you think it’s going to the UK level rather than staying at the EU. Is that a fair assumption?

Well, it's outside of our control, really. That timeline could also be consistent with longer-term evaluation from the EU. But it's in the hands of the commission, they will determine whether to thoroughly decide the case or refer it back. We're prepared for a longer-term process if that goes there and will happily engage with CMA and, principally, CMA, but to some extent Ofcom on the transaction, which we think is a positive for the UK consumer and business environment, and has virtually no competitive issues at all. We're excited to keep this process moving forward, and I think the next year is the timeframe we've always talked about. So we will hopefully make that timeframe.

Okay, thanks. Good luck.

I want to thank everybody for joining us. We're just over an hour, unless you're still on. So I appreciate it. To point out, the IR teams in London and Denver are always available for more questions and they're on standby. So feel free to reach out to them or to me, Charlie, or anybody that you'd like to chat with about this. We always appreciate your input and questions, and we look forward to talking to you in three months or so. Please stay safe and well.

Ladies and gentlemen, this concludes Liberty Global's third quarter 2020 investor call. A reminder, a replay of the call will be available in the Investor Relations section of Liberty Global's website where you can also find a copy of today's presentation material.