Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Liberty Global Third Quarter 2022 Investor Call. This call and the associated webcast are the property of Liberty Global, and redistribution, transmission, rebroadcast of all the calls or webcast in any form without the expressed written consent of Liberty Global is prohibited. At this time, all participants are in a listen-only mode. Today's formal presentation materials can be found underneath 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 statements regarding the 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 further growth prospects and other information and statements that are not historical facts. 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 recent 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 changes in its expectations or the conditions on which such statements are based. I will now turn the call over to Mr. Fries.

Great. Thanks, operator, and welcome, everyone. We appreciate you joining us today for our third quarter results call. We've got a lot of ground to cover, so as usual, Charlie and I will deliver some prepared remarks, and then we'll get the rest of the team engaged in the Q&A. I'll just remind you that we'll be referring to a slide presentation, which is available on our website and has a fair bit of useful data, so hopefully, you can grab that while we're speaking. And I'll kick off on Slide 3 with what we believe are the five key takeaways from the quarter. First of all, as you all know, we continue to experience a challenging macro environment in Europe today with record inflation, higher energy costs, rising interest rates, and volatile currencies. So, while unemployment remains low and central banks are clearly taking action in our core market, it's pretty clear that GDP growth forecasts are coming down, and we remain cautious about the macro outlook for 2023. Now, despite these factors, our business continues to perform well, which is consistent with what we experienced in prior periods of economic dislocation. Our operating companies provide an essential service for individuals, households, schools, and businesses, and we don't see anything on the horizon that will change the demand for connectivity. In fact, we only see it increasing over time. Our Q3 results reflect this trend, with subscriber volumes and revenue largely stable to growing across the group. We'll drill down these results in a moment. And we also saw a significant improvement in EBITDA growth in the quarter in three of our four markets, as Charlie will expand upon the positive benefits from synergies, cost controls, and price rises more than offset the impact of wage increases in energy costs where we're fully hedged for 2022. Third, we're making excellent progress on our fixed to mobile network strategies across the footprint. Our fiber plans are advancing in the U.K, Ireland, and Belgium, and 5G coverage is increasing in every market. More on this in just a minute. Fourth, we remain firmly committed to our buyback plans, with $1.7 billion or about 14% of our outstanding shares repurchased this year and a minimum commitment to buy back 10% of our shares next year. Now, our confidence in this strategy is emboldened by the widening gap between public and private values, our free cash flow profile, and the strength of our balance sheet. On the latter point, it's worth repeating that all of our debt is siloed, long term, fixed rate, and currency hedged, and we're sitting on a large cash balance. So, not surprisingly, we believe our capital structure is a huge asset in this environment. Finally, we're confirming all of our original guidance for 2022 at the operating company level, and importantly, our distributable cash flow guidance of $1.7 billion at Liberty Global.

Thanks, Mike. On the next page, we provided a summary of the revenue profile in our four key markets. Overall, we've managed to deliver revenue growth in three of our four markets amidst challenging market conditions. Despite some pressure in fixed, price adjustments in Benelux were supportive and mobile grew strong. VMO2 reported a modest decline in overall revenue, with declines in consumer, B2B fixed, and low-margin handsets, not fully offset by strong mobile growth. In Switzerland, strong mobile momentum and growth in B2B more than offset the pressure from lower consumer fixed revenues. Lower fixed line revenues were driven by changes in ARPU mix and softer fixed volumes relating to the phasing out of the UPC brand last quarter. This impact will likely continue in Q4 as we reposition the UPC subscriber base. In the Netherlands, we saw a return to revenue growth, supported by a strong performance in Mobile and B2B, coupled with the July price rise benefit in Fixed. The strongest revenue growth we've seen in Belgium this quarter, driven by their mid-June price rise of nearly 5%, higher roaming revenues, and strong ICT delivery.

Moving to Slide 4. We're presenting our usual chart on connectivity trends in our big four markets. There’s always quite a bit of data included, so I'll begin with a couple of general observations. First of all, as you glance at the numbers, you'll see that we delivered stable performance in Broadband, that's the orange segment of the bar chart, with growth in the U.K. more than offsetting flat to slightly down net adds in Switzerland, Belgium, and Holland. In line with these historical trends, Broadband sales picked up in the third quarter sequentially and year-over-year, supported by back-to-school promotions, but we also saw elevated churn due to price rises, and in the case of Sunrise, the phaseout of the UPC brand. Meanwhile, it was a good quarter for Postpaid Mobile, which saw improved growth trends versus Q2, supported by the iPhone 14 launch in September and converged FMC offerings across the group. Now looking at each market briefly, Virgin Media O2 delivered a sequentially better quarter in Broadband with 19,000 net adds despite a highly competitive backdrop and cost of living challenges. We estimate our share of gross adds was up for the quarter, bringing our national market share to a new high. And we continue to see good growth in our greenfield areas, what we have historically called Lightning, which bodes well for our network build plans going forward. In U.K. mobile, we had our best quarter of the year on postpaid ads with 47,000, supported by our best-in-class churn.

Yes, sure can do. So in fact, we have consolidated our commercial brands, UPC and Sunrise, into one commercial brand that we are using for new customer acquisition, which is now the Sunrise brand, and that has already happened at the end of May. Since then, of course, we have, less distribution surface for the acquisition of new customers. In fact, we have been able, in the last two quarters, to accelerate our inflow of new customers on both mobile and fixed. On mobile, we are already outperforming our previous levels, so that is working very well. On fixed, we are slightly behind previous levels, but we are expecting to ramp up on that as we go along. Now the other question, of course, to the migration is while we have now a fully-focused Sunrise portfolio, we still have a number of UPC customers on old products. And those will be migrated over the years to come, so we're not expecting that we migrate all of the customers onto the new products within one quarter. It's a journey that will probably take around two years. And the ARPU pressure that we are seeing is mainly driven by the lower front book prices compared to the base situation that we have, in particular on the UPC side. Now giving an outlook, it's a bit premature at this moment in time because we have just started our ratio initiatives and are learning as we go along. But overall, I think the situation is quite well.

I think it's fair to say, Mike, that once fiber becomes available nearly in an area, you see a small uptick in the churn mostly in the first six to 12 months because it attracts new customers, simply because there's choice. But at the same time as the commercial offers on the fiber side expiring, you also see a lot of customers coming back for various reasons, but the most dominant one is that the video platform in VodafoneZiggo is extremely rich. And at the same time, it's all about the experience, which you give with the fiber connection versus the HFC connection, and our strong WiFi proposition is attracting a lot of customers. So we do see a small uptick, then after six to 12 months, you also see customers coming back on the back of expiring contracts.

The first question comes from James Ratcliffe with Evercore ISI. Your line is now open.

Hi, thanks for taking the question, a couple, if I could. First of all, just when you think about the impact of a higher rate environment, can you talk about any impact on your thoughts around capital structure, the appeal of debt retirement, target leverage, the appeal of holding a large cash balance, and also whether this affects your use of vendor financing? And second, Mike, you mentioned TV and video, and that's a declining business in terms of profitability. Can you give us a sense of what the profit margins on video look like versus, say, broadband? Thanks.

Sure, hey James. I'll let Charlie work up an answer to higher rates, but just preface that answer by saying we're fixed rate across the group. So higher rates in terms of our existing balance sheet don't impact us directly at all, it's only refinancing should we need it, we don't, or M&A, which we're not commenting on. So, but he can work up a more specific answer to that. On TV margins, they vary by market. They are low, but they're not as low as perhaps Charlie implied. Meaning that in broadband, we're generating 99% margin, TV could vary on a gross margin basis from 75% to 50%, depending on what we're paying for content and in what market we're paying for that content. So it's not B2B, it's not broadband, and it's not voice, which is very, very high margin. Because it does have direct costs associated with content and content acquisition and spend, but it's still positive margin. That - I think sometimes, we refer to a broader definition of profitability on TV where we start to include the cost of the box. But of course, the devices themselves are becoming less expensive, more powerful, more IP-driven streaming devices. So the good news is, what I meant in my comments was that we're doing a lot of things on the technology side to drive the overall rate of return, if you will. The rate of return on capital from this business down by making the devices themselves very inexpensive for consumers. So we need to maintain that revenue stream even if it's small because we do know that consumers in the U.K., for example, have told us - without a video product, they would be less interested in our broadband product, which is one of the advantages we have, of course, over every altnet in that market as we're offering an FMC converged bundle with video. And it does matter to consumers that you can offer them some sort of video solution, whether that's an all-in box like an X1 box or Xfinity to draw a comparison, or whether that's more of an IP-first, digital-first box, app-first box like our TV stream box in the U.K., which really drives you to streaming services. So having a solution for video is critical.

So I think, I'll just echo what Mike said. I think we're very comfortable with our ratio of four to five times. We have an average life of seven years, so we don't have to do any refinancings. If in seven years' time, rates are materially higher, it will depend a lot on - and I think we've demonstrated we have the ability with the underlying businesses of Broadband and Mobile to pass through inflation. So I would be very - I would expect us not to change our four to five times our guidance. I think in terms of vendor financing, just to reiterate, vendor financing is just a tool to optimize your working capital. We shouldn't be forcing our vendors to lend us money for 90 days if we can organize it for them in a people way. It is not material to our cash flow metrics. It just is a tool we use to optimize our cost of capital for our vendors and our supply chain. In terms of the excess cash, I think the most important point is all our businesses, even with all the things that are going on in the world, are broadly speaking, positive free cash flow and/or significantly positive free cash flow. So that corporate cash number that we talk about, I mean, that is clearly free and clear for capital allocation. And Mike said, we think our stock is cheap. And/or if we can find acquisition opportunities that are even better than buying our stock, which looks hard today, then obviously for that. But I don't think there's any – Mike you should comment, but there's no imperative to hold that size of cash at the parent.

Certainly not from a leverage point of view, I think it's more of just being opportunistic. And we think this environment - and the reason we say that cash is an asset in times like this is you don't know what the next six to 12 months will bring for competitors, for peers, for opportunity. And so, we want to stay in a position where we could take advantage of that if necessary. But netted against our debt, obviously, is a good thing if you're looking at net leverage, so.

Thanks guys. Just to follow up on Switzerland, question Switzerland bank. You mentioned Q4 might be a bit tough still on the rebranding, so if you could give a little more color on how far through the UPC migration you are, and therefore, how we should think about kind of cable ARPU declines in the next few quarters and also the KPIs? Is this just a Q4 thing, or do you have a bit more in early 2023? And if I can, on the balance sheet, you mentioned the cash. Should we be thinking about interest income as a decent offset to some of the FX hedges you've done, I think you've had about $40 million this year? You could earn a bit more on interest income.

Yes. André, do you want to tackle the rebranding issue? Yes, sure can do. So in fact, we have consolidated our commercial brands, UPC and Sunrise, into one commercial brand that we are using for new customer acquisition, which is now the Sunrise brand. Since then, of course, we have, if you want, less distribution surface for the acquisition of new customers. In fact, we have been able, in the last two quarters or 1.5 quarter. We accelerate our inflow of new customers on both mobile and fixed. On mobile, we are already outperforming our previous levels, so that is working very well. On fixed, we are slightly behind previous levels, but we are expecting to ramp up on that as we go along. Now the other question, of course, to the migration is while we have now a fully-focused Sunrise portfolio, we still have a number of UPC customers on old products. And those will be it's over the years to come, so we're not expecting that we migrate all of the customers onto the new products within one quarter. It's other journey that will probably take around two years. And the ARPU pressure that we are seeing is mainly driven by the lower, if you want, front book prices compared to base situation that we have, in particular on the UPC side. Now giving an outlook, it's a bit premature at this moment in time because we have just started our ratio initiatives and are learning as we go along, so I think we will have a more stable outlook in the upcoming quarters. But overall, I think the situation is quite well.

Yes, yes. So you're quite right. We're going to get some cash income, happy days. Actually, all our cash is - corporately, it's broadly speaking, in dollars. So you should be looking at the corporate cash yield. And obviously, we've been getting very little at the beginning of the year, and now we get towards the end of the year, it’s much higher. So you can do the math as well as I do. But we have these SMAs, and we are getting pretty good yield pickup, so there will be a reasonably material number next year from net interest income. And it will depend on the rate of the buyback, how that plays out in terms of how much we get.

Thanks very much. Hi guys, just a quick question on VodafoneZiggo, please. It looked like the – I think from what you said, like the churn was static, with maybe the gross adds weak this quarter again despite some pretty aggressive promotions. So could you just discuss how competition is hitting? Is there a big difference between gross adds on the broadband product in fiber areas and non-fiber? Obviously, the competition is fiber and non-fiber areas? Do you see quite a big distinction, in other words, is it just fiber hitting you hard?

When there are more choices available, customers intentionally decide whom to select as their operator. The key point I want to emphasize is that when the promotional period ends, customers are prioritizing quality, which we provide. We are independently recognized as the best fixed network in the Netherlands, so this is not just my personal view. Additionally, the distinction between fiber and HFC does not affect the WiFi experience. I truly believe we offer an outstanding WiFi experience with our puck box, smart WiFi apps, and the overall service we deliver.

Yes. Good afternoon. Good morning and thank you for taking my questions. Maybe the first one is a follow-up on Switzerland. And André, you mentioned the integration process. Your main competitor last week highlighted that in the areas where Salt is offering fiber, there seems to be a bit more pressure, let's say, on the KPIs. I just wanted to perhaps get an understanding of how you're thinking about the integration given that over the next few months, Swisscom definitely sold more and is likely to have a much bigger fiber footprint on which to market our products, and whether that puts any pressure perhaps to accelerate the migration process? Any thoughts on that will be great.

Swisscom has likely built around 400,000 lines that are not currently marketable due to their point-to-multipoint design. With their recent decision to convert these lines to point-to-point, in order to meet BECO's request, they will be able to launch them once the rebuild is complete. However, this process is not immediate; it will require significant technical investment and modifications to the existing 400,000 homes. When it does happen, there will indeed be more competition in that area. It's important to note that, unlike Swisscom, we are currently offering 1-gig services in the majority of that footprint. Therefore, the impact on us will be less significant compared to the impact on Swisscom.

Hi, thanks very much. Mike, you're clearly frustrated at the share price, given what you said on the slide. With that in mind, I wanted to ask about the buyback, and why you haven't sought Board approval to pull forward the 2023 buyback given where the share price currently is? And meaning, we will kind of have two months now before the next buyback kicks off. So I just want a bit more color around that, the decision-making.

Sure. Well, I mean, we haven't announced anything today, and we haven't necessarily indicated that we won't do anything today. So I think we're just, first and foremost, reinforcing the commitment we've made for 2023. We've talked about the $1.7 billion, which, of course, started the year at $1.4 billion. So you should assume that when we say 10% minimum, it is generally a minimum. If market conditions are such that we would seek to increase that buyback, we would likely do it. And in terms of the next, what is it, 60 days, well, we're leaving our options open. We haven't said anything publicly but we'll see what the market provides, I guess, is the way I would answer that. We think the commitment we made in '22 of $1.4 billion, raising that to $1.7 billion was great for shareholders. And we look forward to buying more stock in the future. And certainly, based upon the commitment we made around 10%, you should assume that as a minimum.

Hi, thank you for taking my questions. I have two, please. The first one is on energy and wages into 2023. Several of your peers that have reported already indicating significant headwinds from energy price increases and wages renegotiations into 2023. Can you give us some color on how you are seeing these two elements impacting each of Liberty's regions into 2023? The second one is on the U.K., specifically on the consumer fixed business. Your fixed line ARPU is deteriorating sequentially this quarter despite a 6.5% price increase that was announced early this year. When you look at the KPIs, you have rolled out 330,000 new lining premises so far this year, yet the Fixed and Broadband net adds year-to-date look a little bit weak compared to last year.

I think in terms of energy, you're correct, Mike. We have secured a significant amount of hedging for next year, which may have mixed implications since energy prices have decreased. Some markets may benefit from this as we plan to be fully hedged on a fixed price, particularly on energy costs at least 23% by the end of the year. We will provide an update on this in Q4. It's encouraging that prices are falling, which makes returns on some renewable investments more appealing. However, we have definitely faced challenges this year due to the war in Ukraine, and some of that impact will carry over into next year.

Yes, sure. So I mean, in terms of fixed customer net adds, right, 12,000 broadband net adds, 19,000 this quarter, so the market is smaller. We explained this to ourselves because during the pandemic, there was a bigger growth in the market, and now, there is smaller growth coming to the market. Our relative market share, so the share of gross ads in the smaller market, has increased. Therefore, we are able to continue to release positive growth here. The underlying EBITDA growth is supported out of a better gross margin here. I hope that helps.

Yes. Good morning. Good afternoon. Thank you for taking my question. I've got two questions, please. In relation to the spin-down effect that you're seeing within the U.K. TV business, is there a sort of a commercial strategy that can help to arrest these headwinds as we go into next year? Or is it predominantly now a matter of cost management? And if it is a matter of cost management, then what would be the immediate actions that you think you would be able to take on a fairly short timescale?

Yes. Listeners, thanks for joining us. Sorry we went over a couple of minutes. I always appreciate your questions and your feedback and input. Just - we really think that we're managing well through these difficult times, and whether it's our connectivity trends or our revenue or EBITDA growth that we're demonstrating, again, that we can perform well when times are tough. And that’s, I think, one of the hallmarks of this industry and we're certainly demonstrating that. And we'll continue on our network investment strategies, we'll update you on those regularly. And we think we're in a fortunate position on our balance sheet with our cash position, and we look forward to both acquiring more stock, but also finding ways to be opportunistic with that capital. So thanks again, and we'll speak to you next quarter. Take care.

Ladies and gentlemen, this concludes Liberty Global's third quarter 2022 investor call. As a reminder, a replay of this 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.