Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global’s First Quarter 2021 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 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 slides details the company’s Safe Harbor statement regarding forward-looking statements. Today’s presentation may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including the company’s expectations with respect to its outlook and future growth prospects and other information and statements that are not historical fact. These forward-looking statements involve certain risks that could cause actual results to differ materially from those expressed or implied by these statements. These risks include those detailed 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. Fries.

Great. Thanks, operator, and hello everyone. I hope you are doing well. As always, we appreciate you joining our Q1 results call today. Charlie and I are going to run through what we hope are some abbreviated remarks, leaving a bit more time for your questions. I've got pretty much the entire team on the call and I will get them involved as needed. I'm going to kick it off on Slide 4 if you are following along, with some key headlines for the first quarter. But before I do that, let me just say that we continue to remain focused on our employees and customers first and foremost during what remains a pretty challenging period in Europe as it relates to COVID-19. Although we have seen infections in all of our markets coming down from peak levels, vaccination programs on the continent have had a slow start, as you probably noticed. As a result, travel restrictions and protocols are still pretty tight in Europe. Now despite these pandemic-related challenges, we are very encouraged by the operational progress we made during the first quarter of '21. The commercial momentum we experienced throughout most of last year has carried right into the new year. In Q1, we added nearly 40,000 new customers compared to a loss of 20,000 last year and over 225,000 broadband and mobile RGUs, that’s up over 60% from the same period in 2020. On a consolidated basis, we grew revenue. We grew operating free cash flow, and that’s despite COVID impacts and some merger- or synergy-related costs that Charlie will walk us through. And as a result, we’re confirming our free cash flow guidance today, which, despite continued investments in future growth, we expect to be up over 25% this year to $1.35 billion, and that’s regardless of when the Virgin Media-O2 transaction closes. Obviously, completing that JV will be a major milestone for us. And technically, the transaction is still under review by the CMA. But as you would have seen, they provisionally cleared the deal last month without remedy. So we are still expecting a June closing. Once that happens, we will have created fixed mobile champions in all of our core operating markets. And whether we bought the mobile asset like we did in Belgium or Switzerland or whether we join forces with the number one mobile operator, like we did in Holland or we’re doing in the UK, the benefits of fixed mobile convergence are powerful and they are supportive of what I have started to call, the 4Ss, for lack of a better term, and that means: scale; synergies; strength, particularly competitive strength; and strategic optionality. Let me walk through these quickly. From a scale perspective, these deals make us the number one or number two telecom operator in every market and just about every product. So beyond the benefits of convergence and nationwide customer reach, we gain the ability to shape the ecosystem from a regulatory, competitive and structural point of view. I just can’t tell you how important that’s going to be going forward. As we discuss often, the synergies in these combinations are substantial. It represent a built-in value accelerator for us. Our track record so far is outstanding on achieving fixed-mobile synergies. Those who have followed us would know that. And as we sit here today, there’s a future synergy NPV of over $12 billion in Switzerland and the UK. Perhaps most importantly, when you combine market-leading talent, product innovation, and convergence, our fixed-mobile champions have the strength, the competitive strength to drive long-term financial and operating growth. And then finally, the combination of scale, synergies, and strength opens up a whole range of strategic options in areas like content or ventures or new financing mechanisms or infrastructure. Now, I don’t have to tell anyone on this call what’s happening in the infrastructure or network space; you’re all watching it. But I have said many times that we’re in a great position to take advantage of that, whether that’s by monetizing tower assets, tapping into new capital sources to leverage our own networks, or generating new revenue streams. And I will get into that a bit more on the next slide. The last headline here relates to our current $1 billion buyback program, which has been progressing at a pretty rapid pace, you may have noticed. We spent around $450 million in the first 4 months of the year, really just to take advantage of the value gap on our stock, especially with the growth we’re delivering on the pending transaction in the UK. But I expect we’ll have more to say about that on the second quarter earnings call. Now Slide 5 just runs through the logic and rationale of the Virgin Media-O2 combination through the lens I just walked through: scale, synergies, strength, and strategic optionality. So first, we’re creating the clear number two operator in the market after BT, with 42 million fixed and mobile subs, £11 billion of revenue, and nearly £4 billion of EBITDA. But we are also combining two best-in-class infrastructures, including the largest and most admired mobile platform with 40% of the market and the UK’s fastest broadband network, serving over half the country with 1 gig speeds by year-end. By the way, our broadband and pay TV market share is also about 40% on the Virgin footprint. Synergies in the deal are the largest I have seen, amounting to an NPV of £6.2 billion, or around £540 million on an annual basis. I think it’s important to remind everyone that 80% of these synergies are cost-driven and should be achieved in roughly 3 years, and that assumes a £700 million integration cost. I will also add that these numbers have been vetted multiple times by both Virgin and O2 and the clean team working together. So we really hit the ground running on synergies. By the way, this is a great moment to congratulate our very own Lutz Schüler on his anticipated appointment to the CEO role upon closing. And as you all know, Lutz has been with Liberty for over 10 years now, most of that time building our highly successful German business that we sold to Vodafone for 12x EBITDA and then since then, reinvigorating growth at Virgin Media. What you may not know is he spent the 10 years prior to joining us working for Telefónica in their German mobile business. So he is uniquely qualified in terms of fixed-mobile convergence, transformation, value creation, and strategic accuracy. It’s a terrific knowledge base for both shareholders. The balance of the leadership team, including incoming CFO Patricia Cobian from O2, have been selected and will be announced as soon as we get final clearance. So Virgin Media-O2 will start out with real advantages, including a winning team, strong product offerings, two premium brands, the best connectivity, and entertainment bundles in the market, and the opportunity to create the UK’s first fully converged and digital platform. The last one I will address here relates to a question many of you ask us, and we often address proactively. I’m referring to the strategic optionality the JV will have on Day 1 to both expand, upgrade, and monetize its fixed infrastructure. We have already talked publicly about the opportunity to extend Virgin’s 1-gig network to an additional 7 million homes, allowing us to tap into new revenue streams like wholesale, of course, retail convergence and B2B, and perhaps giving us access to new sources of capital on really attractive terms. And we will quickly explore strategies to maintain our significant speed advantage on our existing 15 million homes using new technologies like DOCSIS 4.0 and even XGS-PON to our existing ducts. I think we are all excited about the options here, which are meaningfully more attractive as a combined fixed-mobile champion in this market. And clearly, our confidence in those fixed network strategies is emboldened by Virgin Media’s recent performance. As you can see on Slide 6, Q1 was another strong quarter for Virgin Media with our best revenue performance in over 2 years, and that was driven by record low broadband churn, strong top line growth in B2B, and new FMC bundles. Customer additions also fueled revenue. Despite the price announcement, which is typically a tough quarter for us, by the way, we actually added 31,000 new customers and registered our fourth straight quarter of customer growth in our BAU markets. Broadband is a great story here in the UK, with a fourfold increase year-over-year in net broadband adds. In fact, over the last four quarters, this is a great stat: Virgin Media added over 170,000 new broadband subs in the UK. In the four quarters prior to that, that number was 20,000. Now, there are significant drivers behind this acceleration, including the launch of Intelligent WiFi with Plume, acceleration in FMC bundles, the launch of 5G in January, and sustained investments in gigabit network expansion, digital transformation, and customer service, all of which are instrumental components in establishing a stronger and nimbler business for the future. This all bodes really well for the JV with O2. Now, I will end with the chart on Slide 7 that summarizes some of the key operating highlights for Liberty Global on a consolidated basis and then for the big 4 opcos: Virgin Media, Sunrise UPC, Telenet, and VodafoneZiggo, moving left to right. I think it provides a good perspective of how each business is evolving side by side. And I can probably spend 20 minutes on it, but instead, I’m going to spend about 2.5. And I will start with three general comments about the group. First of all, if you just scan the net add data at the top of the chart, first three lines, you will see a lot of green arrows pointing up and that reflects strong improvement year-over-year in customer broadband and postpaid mobile growth across our opcos. So it’s not just Virgin Media that’s accelerating; it’s happening pretty much across the board. You will also notice that we’ve ramped up our 1-gig networks, with Switzerland and Belgium now reaching 100% of customers with a 1-gig offering and the UK expected to be at 100% in Holland and 80% by the end of this year. So when we show this chart in early '22, those numbers will all read at or around 100%. None of our peers can say that. Then finally, a comment on fixed-mobile convergence ratios which continue their steady rise of about 150 to 300 basis points. Belgium and Holland are now at or above 45%, and Switzerland is at 55%. That reflects high convergence at Sunrise, but only 25% at UPC, so large untapped cross-sell opportunities in Switzerland and in the UK. I have already talked about Virgin Media, so I am just going to add a few quick comments on some of the financial data. First, a quick explanation of the ARPU decline of 4%. This was impacted negatively by three things: number one, only 1 month of price rise contribution that was in March; number two, the headwinds of end of contract and annual best tariff action, which we talk about every quarter; number three, a decline in other revenue like phone usage and pay-per-view. And then on EBITDA, which is down 1.9%, I think it’s important to point out that the figure includes a nearly 1% drag from merger-related charges associated with the joint venture. So if those costs were excluded, the EBITDA loss would have been closer to 1%. Those same costs, by the way, had about a 2% drag on operating free cash flow growth. Turning to Switzerland briefly, the new Sunrise UPC is off to a great start. André and the team delivered a strong Q1, with 56,000 broadband and postpaid mobile adds, that’s up 50% year-over-year and that was fueled by sales momentum across both brands and record NPS at both Sunrise and UPC. They also rolled out, you may have noticed, a commercial they want to offer to new and existing customers that’s called, Together more Wow. That’s a program that rewards existing customers with benefits like a free SIM and discounted sports and security package, essentially similar to what we’ve done in markets like Holland, and then motivate new and cross-sell customers with giveaways like laptops, iPads, and TVs. And the reaction so far has been very strong. And you can expect regular updates on the integration process in Switzerland, which at this stage is going really well. The first positive synergies materialized last month, and you might have noticed that the headcount restructuring was just announced. Financially, revenue was largely flat in the quarter, with EBITDA down 7.3% and operating free cash flow down 6.2%, but those numbers include about $11 million and $20 million, respectively, of what we call costs to capture. Those are the cost-to-capture synergies. So the organic result, if you will, was better. And Charlie will cover those numbers in a moment. Telenet also had a strong quarter, with robust operational performance in both broadband and mobile, adding 9,000 broadband subs and 15,000 postpaid mobile subs. They also grew fixed ARPU 1% as customers migrated to higher-tier broadband and multi-play packages. Now look fixed-mobile convergence continues to be – has always been the main focus of Telenet. They added 19,000 new converged customers in the quarter, and they’ve launched a new innovative fixed-mobile package that they call one you can read about. Charlie is going to cover financials, but with 3% and 5% EBITDA and OFCF growth, Telenet is off to a good start to the year. Lastly, VodafoneZiggo had a mixed quarter to be fair. We continue to feel a bit of pressure on broadband. But at the same time, fixed ARPU was up 4%, and postpaid mobile subs were strong. Jeroen and the team have really leaned into a number of programs to drive broadband growth, including SmartWiFi and broadband speed increases across the entire customer base. They’re also on track, as I just mentioned, to double the gigabit footprint to about 80% by the end of the year and then nationwide coverage in early '22. On the mobile front, convergence continues to deliver low mobile churn, which helped drive 61,000 postpaid adds in the quarter and push fixed-mobile convergence penetration up to 45%. So it’s good to see VodafoneZiggo deliver another good financial quarter, with revenue up 2%, helped by double-digit B2B growth, and their 11th consecutive quarter of positive EBITDA growth with 3% in Q1, and that’s despite COVID impacts. So, wrapping it up, a strong quarter for us operationally, with continued momentum in customer broadband and mobile growth and all guidance confirmed. Our strategy to build FMC champions in core markets is weeks away from our biggest milestone yet with the completion of the Virgin-O2 deal. Meanwhile, the benefits of fixed-mobile convergence continued to materialize around scale, synergies, competitive strength, and strategic optionality. We remain committed to our levered free cash flow growth plan this year, anchored around a steady buyback program that seeks to take advantage of what we all feel is a meaningful value gap in the stock. So, with that, Charlie, over to you.

I'm starting on the slide titled, returning to revenue growth. The group saw revenue growth of 0.2% in the first quarter despite continued restrictions in the pandemic impacting our growth rate by an estimated 60 basis points, with drags predominantly related to year-on-year reductions in roaming. Our operations with more substantial mobile businesses endured greater impacts in the quarter, and we saw a $9 million drag in Switzerland, but trends continued to improve with underlying results positive. We estimate headwinds of $8 million in Belgium and $16 million in the Netherlands. The 1.8% growth at VodafoneZiggo represented eight consecutive quarters of top line growth, with strong performance across both consumer and B2B segments in the quarter. On the next slide, we provide details of our adjusted EBITDA, where cost-to-capture synergies weighed on results. Despite strong revenue performance, Virgin Media EBITDA declined 1.9% due to pre-merger costs to capture and, as previously highlighted, the ongoing investments in digital and customer care on-shoring, leading to increased operating expenses. As the benefits of these initiatives continue to materialize, trends will improve in the second half of the year. In Switzerland, a 7% headline decline is explained predominantly by impacts from COVID and $11 million of costs to capture, with the first synergies starting to materialize from April onwards. Our more established converged assets delivered a very strong performance. But Telenet growth rates benefited from the acceleration of programming rights in the prior year period as live sporting events were paused in March 2020, and that’s an impact that will unwind in Q2. Focusing now on OFCF, where despite the headwind of $30 million of costs to capture, the consolidated group delivered 5% growth. The strong results across the UK and Ireland and Belgium were predominantly due to the in-year phasing of capital projects. The Netherlands achieved 17.5% year-on-year growth, with capital intensity of 19% CapEx for sales and an OFCF margin of above 27%, with aspirations for further digital and systems efficiencies despite having completed their synergy program. Focusing on our core Liberty Global performance metric of free cash flow, we delivered $93 million of free cash flow in Q1 despite the phasing of interest payments, predominantly falling in the first and third quarters of the year. We are on track for our full-year guidance of $1.35 billion, which represents 26% year-on-year growth, with growth accelerating even more on a per-share basis, as we aggressively retire our stock. Turning to our capital allocation dashboard, we ended the quarter with nearly $3 billion of cash, having allocated $447 million to buybacks across the first 4 months of the year, representing nearly half of our current $1 billion authorization. Looking to leverage across our portfolio, we continue to operate long-tenor, fully hedged credit silos. At our UPC credit pool, we refinanced the Sunrise acquisition debt, reducing our cost of debt to 4.2%, securing $18 million of annualized interest savings going forward. These efforts included an issuance of sustainability-linked notes, with embedded commitments for improved energy efficiency and the use of renewables. Finally, we value our ventures portfolio at $2.5 billion, reflecting the full color on wind of our 9.9% stake in ITV, the step up in value of our Univision stake, formally announced merger with Televisa and the partial monetization of our Skillz investment. To conclude, we continue to innovate to bring the best products to our customers and our convergence strategy is delivering. Following a strong start to the year, we are refining our Virgin Media guidance, improving our EBITDA outlook from low single-digit decline to broadly stable. It’s a small change but ensures investors have the best sense of the underlying trends as we seek to close the O2 merger in the second quarter. We’re confirming all other previously announced guidance metrics. And with that, operator, over to questions.

Thank you. Our first question will come from Polo Tang with UBS.

Yes, hi. Thanks for taking the question. So, I just want to come back to your comments about strategic optionality in the UK. So, can you maybe give us your latest thoughts in terms of cable wholesale and the potential fiber JV in the UK? So, where are you on talks with potential partners? And are you mainly talking to financial partners or strategic partners? And then also, can you maybe talk about your 50% stake in Cornerstone and if this is strategic or non-core?

Sure. Hi, Polo. Listen, I can’t get into too much detail on who we’re talking to and who we’re not talking to, you can respect that. I will say, though, that the opportunity from our point of view looks very real. Today, if you look at the 2.6 million homes that we’ve built already on Lightning, as we go forward, the vast majority of those are fiber. We have great experience and construction of fiber. We have a ready-made operating platform to go out and build fiber. And so our ability to ramp up quickly and have behind it a brand and a product and a bundle to penetrate the market with is pretty attractive. So I’m not going to get into specifics today except to say that we are gearing up, if you will, to present that opportunity to potential strategic and financial partners to expand our footprint. Of course, if we did that, then the question we have to ask is, well, are we going to exploit that opportunity ourselves and leave it for Virgin alone or will we provide wholesale access? And that is a negotiation in some respects, with your partner and what’s the best return to both the core business as well as to investors, if we had some. So it’s ongoing. The cost to build has come down. Our ability and effectiveness of building has gone up. Our knowledge of the markets and where we would build is terrific. So I think those 7 million homes are really ours for the construction, if you will. But who and when and where and why, I think we’re going to keep that to ourselves for now, except that you should expect it to be a fiber build that Virgin Media is likely to be the core customer of that network and that wholesale access to that network will be a commercial negotiation. But likely, just to ensure that we are getting great utilization – because while we may be able to penetrate 30% and we have shown that over and over again on our 2.6 million homes we built with Lightning. If you got to 40%, 50%, 60% penetration on that new construction, that’s obviously a better return for everybody. So stay tuned, I guess is all I can say. And then what was your second question, Polo, sorry?

It was about cable wholesale, but also your Cornerstone tower joint venture, because obviously, that’s part of your – I think the perimeter of your UK business, how do you think about that and cable wholesale?

I think we will – look, we will address that when the transaction closes. We will sit down and look at that tower asset strategically. Obviously, we are in a position to if we wanted to monetize it as a JV. You should assume that there is a possibility we would look at that favorably. So, let’s wait for the transaction to close. It’s a decision we would likely make jointly with our partners, Telefónica, but we are obviously in a position to monetize that if we felt it was appropriate and we either needed or wanted to get the capital out to do some of these strategic things.

Thanks.

Thank you. Our next question will come from David Wright with Bank of America.

Yes, thank you very much for taking the call – the questions. And I guess it’s just a subtle follow-on from the question before. I think your current run-rate, build rate or so on Lightning is sort of 400,000 to 500,000 – 400,000 to maybe 450,000 per annum. I think that’s where you have been running and where you have possibly indicated you could continue. Do you think there is an opportunity with your current resource to raise that run-rate, Mike? Do you think there is an opportunity to kind of do what BT did and double down and with the capital behind it from whatever source to double that run-rate into a 1 million per annum build? Thanks.

I think there is. And I will just – I will let Lutz provide a little color on that. I will simply say that the 400,000 to 500,000 homes was a balance between what our capacity was and what our desire to generate free cash flow is. So, I think we were trying to optimize the build. Lutz has always been banging on the table to build more, but we are saying, well, we can build more. We should build more over time, but let’s try to optimize the financial results as well. But Lutz, why don’t you address the build capacity?

Yes. So I mean, you compared a bit with Openreach as well. Now they are currently using predominantly PIA, right, using their own duct. At the moment, we have this only at a percentage below 20%, and the opportunity is to go up to 40%, 50%. So you can expect that this is one lever to accelerate the machine. And second, we have prepared the machine for further scaling, meaning that our partners can ramp additional employees and development colleagues and also we can even start a more regional approach. So we know where the 7 million homes are. We know how to scale the machine. We will absolutely take more usage – more use out of PIA. And as Mike said before, right, we have to get the financial construct right, the partnering right and then also obviously in agreement with our future shareholder, Telefónica.

May I just add an additional question, which is we have obviously – we are obviously talking now about the Lightning infrastructure. Is it in your mind at all to consider wholesaling the existing cable footprint? Thank you.

Well, we have obviously considered that and I think we will continue to look at that as a possibility, but premature to discuss that today. Obviously, it could be utilized in that regard. It would depend on a number of factors, what sort of partnership and benefits we would get from doing something of that nature. So it’s premature, I think, to get into that, but it’s obviously a theoretical possibility. As I mentioned, the 2.6 million homes are largely fiber anyway that we’ve already built and the existing homes, the existing 13 million homes that we – that are HFC are also, if we chose to, either easily upgraded to DOCSIS 4.0 or fiber or potentially could be made accessible on the wholesale regime. Just premature to think that through, I think the main focus today is to get the Virgin footprint extended to be the number one broadband platform in that marketplace for the foreseeable future not forever. And we have a great opportunity to do that based on the conversation we just had here, so...

Thank you very much.

And moving on to Michael Bishop with Goldman Sachs.

Great. Thanks very much. Just a question on Switzerland, so we saw the sort of big bang launch of the new tariffs from the beginning of March, but I was wondering just to elaborate a little bit more on the medium-term strategy with regards to the combined Sunrise business, mainly from the perspective of – are you still, I guess, pursuing this sort of old Sunrise strategy, which is unlock the low churn in the market through promotions to try and drive more of a natural balance in market shares in the market given what Swisscom has, or are you thinking more around potentially more price inflation? So, just wondering essentially the old prices versus volume debate and what the strategy is? Thanks.

André, you want to handle that?

Yes, I can, of course. Yes. Thanks Michael for the question. So, I think what we have seen in the Swiss market is that the promotional activities have been quite intense. Nevertheless, on both ends on the Sunrise business and the UPC business, we could lately benefit from it in terms of share of additions. And that has contributed to the stabilization of the top line evolution of the combined business. So overall, I think while that is a quite heated market, we are currently rather benefiting from the situation than suffering from it. Going forward, of course, what is most important to us is we drive more convergence, that through convergence, we create more stability in our customer base and create also more opportunity for cross and up-selling additional services. So that is really the clear strategy that we want to pursue. In terms of price aggressiveness, I mean, it’s not really about us, but in reality, the price aggressor in the market is really solved with quite aggressive price points on mobile and on fixed. And we will have larger competition from them as they will benefit from the growing fiber penetration in Switzerland. But we think that we are well prepared with the convergence strategy that we are executing, which temporarily would give us an edge as we have the benefit of the fixed-mobile product that sits on the HFC footprint and has a speed advantage. So overall, I think there will be a gradual change, I think toward more convergence in the market, number one. Number two, I think the price aggression is unlikely to further accelerate, but potentially rather to soften over the mid-term.

Great. Thank you so much.

And our next question comes from James Ratzer with New Street Research.

Hi, yes. Good morning everybody. Thank you very much, indeed. I had a question just regarding the trends you’re seeing in the UK ARPU at the moment. You’ve obviously got a little bit of drag from some of these Ofcom effects at the moment, but presumably some of those will start to lap over the next few quarters. And then we have the price rise that you just put through in March. So with that in mind, was just thinking about how we should think about the phasing around ARPU for the next 2 to 3 quarters, please.

Lutz, do you want to address that?

Yes. Sure. As Mike said, ARPU down 4%. Drivers are that in Q1 ‘20, we fully benefited from a price rise in Q4 2019, which is not the case now. So the price rise has started to materialize from 1 of March onwards in Q1. Therefore, we will get the entire benefit out of it in Q2. So that is one driver. The other driver is, as you said, end of contract notification, average best tariff notification. Now this is something which will continue. The overall impact is much less than we have planned for, an estimated fourth or roughly half of it. However, it is still existing, and then, right, there is pressure. The acquisition market is still quite heated. While the back book pricing is very rational, everybody is doing price right. But out of the bit lower acquisition prices, we have also a bit of drag, which I don’t expect to change. Then we had these boxing events; right? There was a big boxing event, Wilder against Fury, which was a one-time off. So therefore, I think the ARPU development going forward is a bit more positive. Remember, in Q2, right, we paused the sports content for our customers. So definitely, that will now help us. But going forward, I don’t want to come up with exact numbers, but I think we won’t stay at minus 4%.

Do you think we can kind of start to get back towards a stable ARPU trend by the end of the year, please?

Yes. I mean this is – it’s always a balance between volume and value, right, and what the market is offering. And I mean, you have seen that we have created huge customer additions, right? For customer additions compared to Q1 ‘20 are up 18%. So most of the growth is coming out of acquisition. So that is always a balancing act. And I think it would – simply would be serious to now predict what will happen until the end of this year.

But I think it’s fair to say that this quarter is an outlier, should be an outlier in terms of how negative it is. You shouldn’t see something like this again in the balance of the year.

Yes. And I think what I also want to mention is that with this, our most negative quarter, I think if you compare it with competition, I think it’s one of the best ARPU developments in the market.

Got it. Thanks, guys.

And moving on to Robert Grindle with Deutsche Bank.

Thank you. Back to the UK, if that’s okay, Mike. I think you’re leading us from the earlier answers that you prefer an organic own-build scenario in the UK and have the experience and knowledge for that and, as Lutz says, you can scale. But is it tempting at all to supercharge the national opportunity for broadband post O2 by wholesaling off in altnet or even to buy an existing player who is building outside of your own footprint? Thank you.

Well, you know us, Robert. We will look at all options to accelerate and advance a particular strategy. The ideas you describe are really incremental steps we could take to accelerate or improve upon a core plan, which is utilize the expertise we have, the brand and the product and the penetration capabilities we have to expand the reach of the network while taking advantage of what we know to be a lot of excess capital really looking for business opportunities like this and potentially strategic partners locally who would join with the benefits being not just acceleration of Virgin’s growth because we’ve proven with the 2.6 million homes that we’ve already built, we can and will penetrate really well and grow the customer base in that new territory, but also the benefits that come from perhaps re-rating that project and getting – being stronger financially, the benefits to our B2B business, which could be material. It’s a lot of good things that occur if we’re able to pull this off. And look, I don’t want to imply to anybody here on the call that this is something for sure you should be baking into your plans right now. It’s too early and our JV isn’t even closed yet. I’m simply saying that it’s an obvious opportunity that comes from having the scale and the benefits of synergies and other aspects of the JV that we will and should be evaluating. And we think there are lots of opportunities to do that with or without financial and strategic partners. In the case of with, obviously, that means it’s a better impact financially in terms of using less capital. But even without, we think it’s a great IRR. We have proven that on Lightning. So we will see how it unfolds. The things that you described, with buying altnet or utilizing altnet, those are sort of incremental steps that may or may not be accretive to the core strategy, which is you need to control your own destiny in this space. I think that’s our main goal. And if those other things can help realize that goal, we will take a look at them.

Great. That’s a lot. Thanks Mike.

And our next question will come from Jeffrey Wlodarczak with Pivotal Research.

Good morning, guys. I wanted to focus on the strong UK data subscriber results. You’ve put a nice string of results together. How much of that is just churn dropping sort of dramatically, which is something you’ve seen in the U.S. around COVID, versus increased gross connect activity? I guess if you could talk about the sustainability of these results? And then have you seen any material pickup in consumer interest in being upsold to higher speed data packages? Thanks.

Lutz?

Yes. So I said before that our acquisitions are up by 18%. So this is almost making up for the entire number. So it’s not so much churn driven; it is entirely acquisition-driven. And this is simply, we think, a question of demand for higher speeds, as you said. And also, our digitalization program is really taking off. So the digital channel share has increased from 41% to 51%. So the digital machine is running here. On churn, though, it was 3% better, so minus – from 14.5 to 14.2. But this is also a success because, right, we have increased prices. So the price increase quarter a year ago or 18 months ago exactly was then close to 20% churn, right? So it is better from both regards. But if you look at the exact number, it comes from acquisitions. And speed matters in these days as you said. So our average consumer speed is 184 meg now, I think coming from the last quarter, 175, so a constant trend. At home, at the moment, homeschooling, home working, and then also entertainment streaming, right, needs speed.

Did that help, Jeff?

And maybe for – to your question, Jeffrey, is it sustainable? So, I mean, we have commercial momentum as we speak. So that is good, and we want to keep that. Obviously, when you look to the next quarter that was indeed a quarter that has highly benefited from the start of the pandemic, right? So remember, you couldn’t churn onto the Openreach network for some point in time because of the missing field technicians in the field. So I think don’t make the mistake and expect the same numbers across the quarters. But in general, demand for speed is there; commercial momentum is there. And I think overall, as an industry, obviously, right, we also need to find solutions for chipset and – right? I mean there is a silicon shortage as we all know. But the demand for speed and the commercial momentum is absolutely there.

Great. Thank you.

Thank you. Our next question comes from Steve Malcolm with Redburn.

Good afternoon, everyone. I'll try to ask two questions if possible. For my second question, on Slide 16, you mentioned the reduced cost of utilizing Passive Infrastructure Access from BT, which I believe is a cost-saving measure. Can you provide more details on the economic considerations behind this decision? It’s clear that ongoing rental expenses to BT must be taken into account. As you plan to expand the use of PIA from 20% to 40% or 50%, will that influence your decisions on where to construct new builds, especially with PIA availability throughout the UK? Any additional insights on the factors influencing that future build strategy would be appreciated. Also, following up on Lutz's earlier comments, it’s encouraging to see the price increase implemented without significant churn consequences. However, sometimes churn may follow as new pricing takes effect. Should we anticipate a slightly softer performance in Q2 due to potential increased churn related to that price adjustment? Thank you.

You want to take the second one first, Lutz?

Yes. So you’re absolutely right. You see a bit more churn – roughly, you see two-thirds of the churn when you really send out the letters and one-third when the bill kicks in. So therefore, we will see a bit of churn out of that in Q2. And I think on your question, where are we intending to build? I mean, we absolutely take the commercials into account, right? So if it’s more expensive to pay for PIA, then we build ourselves. If it’s cheaper, we leverage PIA. Our overall selection of these 7 million homes is more linked to how easy in general is it to access or how far is it from our network. The – is it entirely cities? Are we there already with Virgin Media and therefore, it’s easier to penetrate? It’s less the question of how much PIA we are able to use or not?

I believe goes to somewhere around 50 – over 50% at some point, our collection of our plans, but will become an increasingly larger part of the build over time.

Yes. I mean on – we absolutely know, right. I mean, Openreach is publishing where PIA is available. And then obviously, you take a bit of haircut to be on the safe side. And therefore, right, the number we are planning with is something like 45%, but let’s see, right. We are currently ramping it up, coming from 18%. And – but definitely an opportunity, but it goes both ways, right. On one hand side, you can connect faster and cheaper. On the other hand side, obviously, all additional homes are a bit more far away from the network and therefore, are slightly also a bit more expensive to connect.

Yes. It’s more new build network extension, yes.

Yes, more new build.

Okay, thank you.

And moving on to Nick Lyall with Societe Generale.

Hello guys, I hope you are well. It was a question, Mike, please, on VodafoneZiggo. The subs are sliding a bit faster again this quarter. And you’ve now got the analogue switch-off so you can have a look again at pricing and speed. Can you just tell us what your aims are, please, with VodafoneZiggo in terms of subs numbers? Do you intend to try and stabilize? And what could you use to do that? Or would you go for pricing instead? And could I also try and clarify, just on the fiber build in the UK, how much do you think you could exploit the UK’s super deduction on tax as well? Is that something that applies to all of the build or just part of it? Maybe you could help us with that a bit? Thank you.

Yes. Maybe – Jeroen Hoencamp, CEO of VodafoneZiggo, is on the call. So I’ll let him work through an answer on VodafoneZiggo’s strategy around broadband because obviously he’s the man building that strategy. And on the taxes, listen, I’m not entirely sure I’m with you on exactly what you’re referring to. But obviously, the broadband rate issue is very helpful for us in terms of new construction and fiber. We’re always looking to reduce that bill, if you will, which seems to us to be – we might have other ways of reducing that bill, by the way, beyond just fiber. So we’re always focused on that particular tax impact. Charlie, do you have anything to add on that tax question?

Yes. I would just say the other point is the accelerated allowances, the 125%, does apply to the build, and yes, it would have a positive impact. I think it’s too early to quantify because it will clearly depend on the build rate, and it will clearly depend on learning a bit more about O2’s tax profile. But clearly, given that O2’s a taxpayer, there will be some incremental cash flow savings generated from the new accelerated allowance.

Jeroen, you want to tackle the VodafoneZiggo question?

Yes, of course. Thank you for that – for the question. I think I heard a few questions combined, something about broadband, something about value, and the – and strategy. So let me start with the strategy part. As you’ve seen, we’ve had a solid quarter with revenue growth, EBITDA growth, and we’ve had that quite consistently. So what I’d like to say is that our plan is working, and we’ve had from the start of the JV 4 years ago, a real focus on fixed-mobile convergence. That is still the cornerstone of the strategy going forward. So fixed-mobile is working for us. We’ve seen a reduction in churn on the mobile side of about 80%, and on the fixed side of about 50%, and that’s remaining stable, combined with much higher Net Promoter Scores. So you also asked if that’s going to be more value or price; it’s definitely going to be a value-driven strategy. Hence, the things that we are doing, as you said, you talked about the analogue switch-off. So we haven’t yet completed the analogue switch-off. Quite a bit of work to take 1.2 million customers off the analogue signal and move them all to digital. Why? It gives the customer a better experience. But also, and that’s very important, it gives us the ability to increase the network capacity. This allowed us to, for instance, upgrade the fixed speeds by 40% on average in April, which we have done to our entire base at no additional cost. The value-driven bins are that we are launching new SmartWiFi boosters and a new and improved app, really focusing on improving your WiFi coverage in the house, the in-house experience from our customers, and that is driving a much higher NPS of about 20 points versus regular customers. Last but not least, super important, Mike already spoke about the GigaNet coverage. Today, we cover about 40% of the country with GigaNet networks. That will be 80% by the end of the year, and that will be 100% by next year. Today, by the way, that’s already 500 meg to 600 meg across the whole country. So we’re in a good place if you compare it to KPN, and we’re definitely playing the value game versus other players in the market who are probably a bit more price-driven.

Great. Thank you.

And we will take a question from James Ratcliffe with Evercore ISI.

Great, thank you. Two, if I could. First of all, continued strong performance on B2B and SOHO. Can you just talk about what your market share is and what share of the potential locations you either connect to or pass close by? So what the upside opportunity potentially there is? And second, on fixed-mobile convergence, where will that 25% be in the UK once you close the transaction? And can you talk about how you are going to integrate the customers who might be O2 and mobile Virgin Media fixed line together and get them under the same plan? Thanks.

James, on the B2B question, it’s unclear whether you’re asking a generic question or a specific question around a particular market. But I can just tell you more generically that the B2B opportunity for us across the board continues to be perhaps the most exciting – one of the most exciting things that’s occurring here, many operations with double-digit B2B revenue growth in the UK, in particular, with dark fiber with SOHO and SME. Penetration rates, I think our overall, Lutz, correct me if I’m wrong, I think our overall market share of B2B in the UK is less than 10%, something like that.

Yes.

So there is massive opportunity to drive B2B in the UK with this combined business platform. We’ve seen that same opportunity in all of the markets. So watch that space, and we will start to highlight B2B more than just a comment as it relates to revenue because for us, as we upgrade networks, as we extend networks, the B2B element here, in particular, SOHO and SME, which is a growth driver in every country. Also, Lutz is the number one provider of backhaul and dark fiber in the UK as 5G rolls out, and that’s going to be a continued source of revenue as well. It’s all good news, I think, on the B2B front. And with mobile joining us in the UK – with mobile, that’s obviously going to create another accelerator in terms of being...

Mike, can I just add a couple of numbers there? Just a couple of numbers, I mean look, this is our guesstimate of the addressable market. But at the Benelux, companies in Belgium and Holland are north of 30% market share, it’s quite a bit north, I think, Jeroen. We’re around 10% in most of the other markets, growing fast. So either Switzerland and the UK is a big opportunity as we see it to sell a SOHO product, not to the SOHO customers, SOHO product to customers. And that’s something which has been proven in the Benelux. So, we agree with you, it’s a very strong growth lever for us.

Lutz, do you want to address the...

Yes, I agree. I mean the market share – yes. So first, I mean, on – the SOHO market share, to be precise, is at the moment in the UK at 10.5%. So pretty much what Mike and Charlie were saying, and we are growing rapidly, as you know, right? So we have increased the customer base 28% year-on-year and the revenue 17%, right? I mean we have also, I think in Germany, if I’m not mistaken, right, we had at the end, 40% market share, so a huge opportunity. On fixed-mobile convergence, well, I mean, what we are going to do with the joint venture, I think we only can decide really after company day 1, as you know. But obviously, having access to 33 million mobile customers and, on the other hand side, having the opportunity to sell in, right, 5G mobile network into Virgin Media with a different brand, right? I mean Virgin Mobile operates more at the low end of the market, so typically, the use for the second SIM card in the household, while O2 has the highest ARPU. So it goes without saying that this will help us to accelerate the fixed-mobile converged customer base in the joint venture. How we are going to do it exactly, stay with us and we will disclose that then after closing.

Thank you.

And our next question comes from Matthew Harrigan with Benchmark.

Thank you. One really down-in-the-weeds question on the presentation and then kind of a Davos question, if you look at Slide 16, it looks like Project Lightning, the penetration rate suddenly spiked from 30% to 35% in the last quarter. I mean that’s a real anomaly. It generally just moves up or down by 1% or 2%. Is that accurate? And does that infer that despite the good customer number, you had some pressure on your legacy footprint? And then the more or less Davos question is EU, to the extent that you’re still in the EU market, is getting very aggressive technology policy. I mean that’s things like – even like things like AI, I know your on – well, you have biometrics. But still, we are a quad-play effort you’re becoming more and more relevant to that. I don’t think you’ve got too much throughout exposure. I guess that Luminoso, the NLP JV, is the only thing I can take up. But is there anything that agitates you on tech policy that you think really affects the economy or actually affects you directly? Thanks.

Well, I’ll let Lutz dig into the 30% to 35% question, and I’ll take on the Davos question quickly. Listen, I think, in principle, Matt, when you step back, we are generally aligned with the EU on most, if not all, of their basic policy initiatives, whether that’s initiatives around consolidation, around how to manage or address big tech. I don’t see really any red flags for us on the horizon. I see mostly positive developments on the horizon, especially if you look at local regulation. I mean for example, Ofcom, I think, is taking a very positive position, and the posture is very favorable for us around network development and infrastructure investment and things of that nature. So on a country-by-country basis we are really focused on those things, things that impact our business more concretely today. I don’t see anything in the near-term, maybe not even in the medium term, on the more regulatory horizon, if you will, that’s going to impact us negatively but probably impact us positively. It’s not that we are – we believe big tech drives our business. On the other hand, we also understand where the regulators are coming from on that. I think it’s a nonevent for us for the most part. We don’t get into that debate, kind of stay on the sidelines of it. But there is nothing that I see on the horizon that’s particularly problematic. We are dealing with the Huawei issue from time to time, from place to place, but we’ve addressed that publicly, and that’s more of a near-term issue that we think we can manage quite effectively. So I don’t see anything on the horizon that concerns us. Lutz, do you want to address the penetration rates of Project Lightning?

Yes. I think, right, one of the very early cohort have been addressing areas where we could get to substantially higher penetration. So therefore, we don’t have in our business case really the 36% you’re referring to. So we work with 30%. Having said that, I mean, we still – currently, we achieved this 30%. Our field sales force has over a year, very limited access to prospects. The reason why I say that is that more and more, we use also our digital sales machine to sell more Lightning, and we apply more data and artificial intelligence. We think there is a way to further increase Lightning. So we don’t change our guidance yet. But what we see currently, how we are able to sell Lighting subs digitally and what kind of intelligence we can apply here is looking very promising.

Thanks Mike. Thanks, Lutz.

I think that’s it, operator, if I’m not mistaken, unless you’ve got something else in the queue?

No. We can wrap it up.

Right. So always, we appreciate you joining us today. Listen, I will just say a few things, if needed here. But number one, stay tuned because the transaction in the UK, we believe, is imminent, of course, subject to CMA approval, but we believe imminent in a matter of weeks, really. And that’s a big moment. That’s a big moment for a number of reasons, one, because it is in itself a fantastic transaction for our shareholders, for our customers, for the UK market as a whole, but also because it means we will have essentially completed the conversion of our four largest markets into fixed-mobile champions. At that point, we can really start to drive the operational and strategic plan, but also the narrative, the key narrative that’s critical for telling our story about where we’re taking these businesses and how we’re going to create value. The second main point, just to leave you with what you already picked up here, I think as momentum is in our favor here, the tailwinds are real in terms of broadband and fixed-mobile convergence, and it’s driven by innovation, by all the things we’ve talked about. But we certainly feel good about that momentum and believe that momentum is sustainable for the reasons we’ve discussed today. The last point I’ll make is confirming free cash flow guidance, $1.35 billion, up 25% or more than 25%. And not to be lost there, we look at free cash flow per share more than free cash flow itself. From our perspective, you can do the math; the free cash flow per share story for us, we think, is even more relevant and something that we pay attention to. So those are three big headlines, I guess, to leave you with, and we appreciate you joining us on the call. We will speak to you after the second quarter. Take care, everybody. Stay well.

Thank you. Ladies and gentlemen, this concludes Liberty Global’s first quarter 2021 investor call. As a reminder, a replay of the call will be available in the Investor Relations section of Liberty Global’s website. There, you can also find a copy of today’s presentation materials.