Q3 2020 Liberty Global PLC Earnings Call

[music].

Free.

Thanks, operator, and welcome everyone.

There is 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 into Q1 as we normally do I will be referring to slides as you walk through quarters, hopefully can grab those off the website and follow along with us and I'll kick it off on slide.

Ali we 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 Cove, it pretty well and that's one of the reasons were confirming our original 2020 guidance today.

They are more moderate and more targeted in last spring and after six to seven months of this businesses and consumers are more prepared this time around so.

Hope as I said before is to build on our improved relationship with subscribers regulators and politicians and make sure. We come out of this period, even stronger and more customer focused and I think we will.

And the pandemic is also reinforce the fact that our strongest customer proposition is connectivity.

In Hollywood, there's a charter this slide and I apologize, it's a little small, but it shows a complete turnaround in revenue and EBITDA growth, but the team has achieved or the last three years and 2017, the company's revenue and EBITDA decline, 3.7% in 5.6% respectively. Those.

Those numbers have improved steadily every year with revenue and EBITDA actually in the nine months of this year up 2.5% in EBITDA up 7.5 per cent, but there are several factors that contributed to this including of course, a significant synergy target that was a G. B early but equally important is the positive impact of higher M. P S and <unk>.

<unk> levels from fixed mobile subsets anywhere from 50% to 80%.

And a scale that Vodafone Ziglar has the Dutch market is also critical right. It's now larger the K P. N N broadband fixed voice, an entertainment services and a generating four to 500 million euros of distributable cash to shareholders. This year.

Do you have a major factor here is continuous innovation across our product and technology Roadmaps in Holland, but if <unk> is rolling out a nationwide one gig network. They were the first of rollout five G and they've embraced a horizon entertainment platform and that sort of innovation is occurring across the European footprint. It all begins with network superiority of markets like the U K for exam.

<unk> or project lighting has been a resounding success. In fact, we've included the latest figures in the appendix of this deck, so check them out and we continue the bullish on continued expansion of lightning.

We're also working on a clear path to 10 G or 10 gigabytes per second using a combination of HSE and fiber to the home the pace of innovation of five the mobile is equally critical with Vodafone Viggo and Sunrise and others, leading the way in their markets.

<unk> and reliable network support innovation to connectivity, which is where this all began and we've led the way with smart and intelligent Wifi and better faster and cheaper C. P. E. And then finally, our entertainment platform continues to delight customers with the best user interface seamless integration of apps voice control and tons of other features.

And importantly horizon is also laid the groundwork for our migration too and all I P video services platform with our Apollo box. This is in network agnostic App centric portable and low cost. This is worthy entertainment business is headed and we're leading the way again in Europe.

Now a success in Holland, Belgium.

Really underscore excitement about the Sunrise acquisition, which we recap of it for you on slide seven the main driver here scale U P C and Sunrise together create a clear number two to swisscom in one of Europe's most attractive and stable markets with around 30 per cent share across all services and a significant opportunity to grab meaningful sure I'd be to be.

Now like our other F. M. C deals. The combination is anchored in best in class networks right out of the gate you'd be see Sunrise will reach 90% of the fixed market with one gig services they'll have leadership and for G mobile and the largest and fastest five G network in the country now the synergies are also substantial you'd expect.

That with an M. P V of over 3 billion Swiss francs.

Small, but important interesting content platforms in our largest markets. Our infrastructure portfolio was an early investor an edge connects which was just acquired by EQ T and a multibillion dollar transaction and we're actively pursuing ways to monetize or grow our own infrastructure and property related assets, which is an exciting space right now you're following that I'm sure.

So I'm looking forward were mainly focused on four things first.

Firstly, delivering stable and longterm free cashflow in our core fixed mobile markets have just talked about that looking for ways to close the value gap on those assets. What you think are a real and tangible opportunities.

Investing in our own equity story through buybacks of course, we've just added more to a buyback program and then selectively and only when appropriate investing in adjacent and attractive opportunities. That's a strategy. So I'm happy to take questions on any or all of my remarks at the end, but for now all right now I'm Gonna turn it over to Charlie Charlie to you. Thanks, Mike.

Turning to a consolidated numbers I'm, just going to go to page entitled underlying revenue stable.

Total revenue sort of decline at 1.3% in Q3 <unk>.

On the right side of the page, we set out our estimates for the input too covered what it has done to underline revenue grows which as you can see account so I'm moving 100% with the Q3 decline.

And cancel we estimate the covid produce revenue spent $41 million compared to $110 million in queue too.

Oh, the turtle premium spills accounted for around $30 million <unk> revenues will also impacted by $30 million I'm verbal revenues were just about $9 billion predominantly by rooming revenues.

We will cost the revenues accounted for around $6 million with a drag.

Many of your effected revenue streams or other relatively low margin, we'll have our compensating operating expense impacts, which is one of our adjusted EBITDA growth was not significantly impacted and a quarter.

On the next slide will provide details of or just the debit the rebased adjusted EBITDA growth was minus 5% of the quarter, which means you have to date growth is one is 3%.

Nowhere confirming a full year gardens for mid single digit me base, adjusted EBITDA decline, which implies a significant you'll need to come on in queue for.

Why is this well 2019 sort of material step up and adjusted EBITDA in Q4 versus Q3, whereas in 2020, we expect queue for <unk> people will be flat 223.

Now this is because we have deferred the UK pressurize that we typically executed in queue for resulting $26 million Delta.

And then we're supposed to the demands of covered wheel onshoring certain customer care operations and I've accelerated investments in a number of digital initiatives.

To go with this results in an increase spend year on year of $17 million.

We expect these investments to deliver long term settings going forward, but these after these initial setup costs.

Finally in both the UK in Switzerland, we expect to encounter pre merger integration cost of $8 million, a $9 million due to the pending transactions.

So a couple of intensity yesterday, we continue to reduce our capex spend versus previous years due to the completion of many of our investments and capacity and roadmap projects as well as a decrease spend resulted from upgrading our customer premise equipment on a new platforms.

And carefully we reported capex, the sales ratio of 22.3% or 19.9% on a pre lightning basis.

There was a reduction of newbuild spend in the quarter, but we still succeeded in building 125000 times in that you can island contributing to a year to date type of 311000 homes.

We're looking to complete a further 100000 times in queue for assuming uplands aren't affected by the upcoming long term.

And cancel we did not expect capex to rise as it did in 2019 and so for the full year, we estimate capex cause sales pre lightning we around 20%.

The current events reduction in Capex will remain on track to grow oses mid single digits in 2020, as we set out in the next page.

For two three reported ospf, a $552 million on a pre lightning basis $623 million of underlying oses.

All of our markets, except Belgium, where it was flat show underlying growth and ospf versus the Q3 2019 numbers.

The Netherlands in particular, so very strong growth rising from $247 million to $348 million year on year.

We expect this underlying grows to continue in queue for across our markets and our targeting $500 million a consolidated OFC F. The queue for including the impact of a lightning investments up from $433 million the previous year, turning to free cash let me confirm guidance of $1 billion, a free cash flow for the full year increasing from 542.

$2 million a year to date.

Cutting out the key drivers to achieve this we expect no further material interest payments in queue for inland the previous years and tax payments will be minimal.

We expect to receive the balance of the schedule of distributions enveloping [laughter] ago, which we expect to be 50% of the upper end of the four to 500 million Euro target range.

He has a big working capital has posted to $41 million.

I'm expected to be broadly flat for the full year.

Our underlying year to date pre lightning adjusted free cash flow with $789 million demonstrating the continued strong cashflow generation of our businesses.

Turning to our capital allocation on the next page.

Quiddity remains strong.

Reported full company liquidity of $9.3 billion at the end of Q3, including six $8 billion of cash and Sma's.

Performance of the Sunrise transaction close this will be reduced to five $4 billion it could be approximately $2.9 billion of cash and sma's.

If you overlay the clothes or the Virgin media room C transaction pro forma cast is expected to be four $7 billion.

Now with that transaction, we would be consolidate virgins revolving credit facility, leaving remaining labov as a $1.2 billion predominating UPC credit pool, resulting in total group liquidity of $5.9 billion, which will continue to provide the great with the excess capital to invest.

Continue to repurchase our stock and a purchase $1 billion through the end of October.

Since can't three of 2019, we repurchased 29% of our market cap and continued to much repurchase further stock.

As Mike indicated we're looking to Opportunistically, Bob like a further $1 billion through 2021.

<unk> turned up as dividend distribution model coming into a dividend flow of $2 75 euros per share going forward. We see this film dividend distribution policy as a template for a future FMC companies as an explorer Nicholas things over time.

In terms of reference we remain committed to a four to five times leverage targets and I'm very comfortable with the top end of the range is there is clear near term visibility on EBITDA growth as we realized FMC synergies, which allows us optionality to deliver towards the middle of the range and below over time.

Both of our existing FMC champions, Belgium, better Benziger almost pass both have loan basic debts with an average life of around eight years and low borrowing costs fixed at 3.4% in Belgium for 10% of Bourbons ago.

Belgium leverage means with four four times in the U S got basis for the execution of the percentages of eight six mobile consolidation.

Five zero is continuing to execute the signatures from its manager and should deliver further from his current but two five times.

We can put in a number of financing for the quarter, including a trying to financings in a bunch of cleansing all you can switch transactions.

In both the UK in Switzerland, the companies will be about five times before the benefit of any synergies with average lives around eight years and the cost of that in the UK, a 4.4% and 3.8% in UPC, which benefits 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 <unk>.

Two three so strong customer and broadband performance with high M. P. S.

The Swiss transactions has been approved close around mid November.

Okay transaction remains on track.

Our underlying cashflow generation remains strong with capital intensity established about 20% of sales excluding lightning.

We are reconfirming all of 2020 guidance metrics, mainly mid single digit adjusted EBITDA decline.

Mid single digit ospf growth and adjusted free Cashflow for the full year $1 billion, including Lightning construction Capex and then finally, where amounts of your new $1 billion buyback authorization.

And without operator obits questions.

The question and answer session will be conducted electronically if you would like to ask a question. It. Please you spell by peskin, let's start or extra T O. If I could get one on your phone.

In order to accommodate everyone. Your request that you ask only one question if you're using a speaker phone. Please make sure your meat function as turned off to allow your signal to retire Clinton what.

What part for just a moment to give everyone an opportunity to join the kill.

And we will take our first question from V J diet with Everquest.

Good morning, Mike two questions first in the UK, you'll be reconnecting to get customers and instead of contact them on modification with a plan as part of part of the pricing of the base can you just talk about how much was done what.

The customer impact and $10.

Indian outlook on what that could be going forward.

And set up a bigger question, obviously, all fixed up all about conversion strategy is it's showing a lot of success and pollen in Belgium expect that to come in the U K in Switzerland, Although the next year and you start to talk about structurally of competitively constantly is there any will be then.

Those two market the new market won't have similar success and we can get back to you pretty healthy that will keep the I wrote and in that context is there any way to even plot to quantify what side of the modern benefits are getting I know that John is down.

Better, but any sort of profitability megaron on this convergence that would be very helpful. Thank you.

Sure. Thank you for that.

<unk> and I'll, let him drive the debit card.

Exactly I know best Terror issue, what we've said in the past I think with a P. Here, though which is we're not giving specific without disclosing specific numbers to who was contacted how many year, but we have said publicly that so far the effect of that in the contract notification process has been better than we expected which means.

That while our churn from that process was larger than the line. We have not had to provide the same level of discounting or or or Kansas to offer you that we thought with a car so.

Indiana do you believe that the end of contact location profit, thus far has been better than the expected, but I'd like to to get into that let me just answered the second question.

If there's more to add to that does go ahead, well go ahead and do that now that you've you have something else to add to that but.

Yeah, I think what I can add it like over all you have to see strong that day.

Hey, So therefore, you see that the total number of end up concepts notification, but it's not really material.

Oh, well, yeah, but yeah, we are doing much better on trial and on ops, you, we 1% down but yeah go we have half the price rise and.

<unk> started first of September and cause of October half and half the class of customer base. So therefore, you see all told that the impact it's not too high however, that's named <unk> and <unk>.

<unk> will also obviously flow through him two of 2021, so that we have for me swallow and picking a negative way 2020.

Yeah, an annual best tariff is really just started so it's too soon to know what time, what's that would've got it yes all of that yeah.

Spot on the up on some questions listen I I do believe to answer your question and sort of the general do believe that both the UK in Switzerland can show should show.

Similar trends in terms of both financial trends in operating trying to what we've seen in Belgium, and Holland. There's a couple of things out of the same of course, you can look at the synergy estimates there in both markets there within.

Ange of what we've seen and all the other transactions we've been involved in the been involved in over eight different country mergers, whether we're a seller or a buyer or a partner with F. M. C and so there's a lot of data on synergies Justin's in the case of Holland, Belgium that was about 5 billion euros send you estimate and knocked the ball out of the park as I say.

Both in both countries. So we've got experience without actually on Saturdays I believe the estimate.

The validate I don't believe I know the estimates have been validated both transactions by both sides of the equation and it's a really good about those estimates.

Tuesday number in Switzerland, and the 6 billion number in in the UK those provide a lot of T always financially obviously, a course on the operating side. So the benefits of S. M. C. A hard to argue with a structural reductions in Sharon consistent.

Consistent and regular improvements in M. P. S are in a competitive market having this quadplay bundle you said it doesn't seem it pollen although.

<unk> bundle batters being able to provide full package of products and services are all connectivity matters, having a mobile operation to cross celebre I've been having a broadband platform through crossville mobile matters and and you know this is to take the statistics and the opportunities are very similar in both countries to what we've seen.

I can't share with you the long range plan, but if I could which would seem similar kinds of profiles.

Vodafone <unk> up their guidance on EBITDA. This year at mid single digit while I. Just showed you that three years ago was negative five per cent.

And we do think that you know those same kinds of characteristics of operating and financial are achievable and again I can't share with you My plan, but you should assume that we see that opportunity. So late as do our partners in the case of UK and I think the Sunrise management team as well of course.

The other side of the transaction for a long time, so everybody seems to be a line here and were anxious to get service.

Thanks Bye.

Yep.

We'll take our next question from my called the check with Goldman Sachs.

Yeah. So I just have one question, which is also on the UK pricing and just wanted to understand how you think the price buses volume equation has worked in the yeah not taking price.

And that's with a view to potentially what you're thinking about next yeah give him betis means I'd actually some of the moves on UK My I've always seen as well so just in general the pricing environment sales like installed quite a bit better despite covid.

Well the other guys I met question.

Yeah go ahead, and all that I need to go ahead yeah.

Well like we have all the pork pelinka price rise for this yeah Michael.

And you wanted to make sure that we really continue with the momentum of weird third up in especially Brockton.

And but if you could help wrecking knock yourself at the market seems to get more rational on the price increase site and obviously, we cannot disclose here what we are going to do but I think overall I T that Purdue.

Positive.

Yeah, I think the decision made to defer the French fries in 2020 with a right decision. It had perhaps a module impact on volume, although I think.

Reduced churn the pandemic central element of our products and services, probably had more of an impact on that but as you pointed out <unk> the market is.

Clearly expecting from other operators and other options of Vegas clear publicly does that there will be taking price rises in 2021. So yeah, we'll we'll decide and generally what our best movies, but what we think the decision in 2020 with the right one and.

For sure it set us up for stronger 21.

Can we upgrade our next question can Bend Sunday with Morgan Stanley.

Thanks, Good morning.

And good afternoon to the folks overseas I wanted to just 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, they're spending one way or the other partly bring it up because sky's talking about.

Yeah, some real opportunities in terms of driving down I think entertainment expenses Uhm. So I'm just wondering if if 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 T. V. 360 platform is this a big deal for your position in the market I don't know, how you would compare that to see.

Q and I think it's I don't think it's a new set top box or does it feel like a big Capex deployments I want to just make sure. That's the case you will get a lot more color on that product, which launched this quarter.

Yeah, I'll, let Michigan have you take a couple of things and I had revenue at the 360 platform.

Really as a new user interface, Hawaii that for Ya user interface, which is you know X one plus plus you with everything you would expect to see and that we think is a game changer and in this market where everybody.

Continue to watch video pretty pretty significantly on the TV [laughter], but it also integrates all the apps and has the full that's why it's called this with you the full.

Integrated O T T experience built in so we do think that's a game changer later this year when it when it rolls out it has been in other markets in Switzerland, just wrote without an island M. P. S.

And in Harlem M. P. S rises materially if people see it as the next the next generation of video experience, which we need to be part of it and a customer charswell.

On the program the point.

Without being specific about any particular programmers I think it's fair to say that across Europe, not just in the U K.

You know, we anticipate a different type of discussion with all of our linear providers, whether it be sports or entertainment when you're seeing one and most of our market for not disclosing it and why is that occurring for the same reason you're seeing that he and yes, perhaps.

Wow viewership many of viewership remains pretty low Boston yeah.

Compared to the U S. It's clearly moving the other direction over time, and you're seeing some modest losses and some can be subscribers. So the idea that will continue to pay more linear programming in Europe that will continue to play pay flat weights, if you will or not customer dependent rate is is crazy, it's not gonna happen.

So we're in all of our negotiations with with these providers will finding that.

Their desire to go over the top.

Together with the head with Lucille in the video linear video business.

Will result in better margins over time on the video product, but I think most importantly on that issue, we're not waiting around for that that transformation, we're integrating apps and do our boxes today like I mentioned in my in my monitor I P boxes is rolled out in Poland. That's an app centric you know network agnostic Bob.

You can roll it out anywhere we have rights too.

Clearly Europe is heading the same direction integration of those itchy apps aggregation of over the top content.

Seamlessly and a and a entertainment experienced and you know we need the package you up on that on that on that roadmap. So similar cancel the U S. Not quite as aggressive will quickly appearing but I think bold pro programming cost pressure ought to be lessening for us over the longer term, which is natural giving blood in the market you've all.

<unk>.

Yeah, I didn't get that most of it Mike so.

I think like a Virgin media T. V 360, you think it's a bit better vanskike cute alright, we've had some furniture and it's got a cute doesn't that.

And it's an over the air software update all customer forget and therefore, not high cost and it will delete two <unk> alright, so because you know it from other markets that that M. P. S is extremely high end that'd be sort of Elektra and we will check though that in.

And on the on the program clubs Cardwell when you compare from my programming <unk> 21 to 20, obviously the cost increase have flattened lots.

But this is mortgage with Covid and belong to we're doing exactly what my cats explained for the oval a European market, we want to get a much more provided because stripes are we help all I'll pop knots on their way to direct to consumer apps and we have a lot to offer that from pulling them then.

<unk> transformed salt and on the other hand side, we are keen on getting a more on variable Clinton cost for linear viewing and we have already managed to kill some of these contracts and then some all those with an English.

And don't underestimate the the leather do bring to those conversations today, you know years ago, and we didn't have any mobile customers today.

Hello to include them you know so I will have something like 50 million mobile subs O T. T guys are searching us out.

They they want you know it you've seen how well Verizon did the business slots and you've seen all the two two guys here and looking for mobile partnerships to get launched so we're in a position and all the core markets to play that will in a O T has already the large apartment for business plus in the UK. So it will be in that position and all these core FMC markets with a mobile <unk>.

At four in which gives us additional leverage in those conversations right.

That makes sense. Thank you both.

Okay then.

And we'll take our next question comes Steve Malcolm with Red burnt.

Yeah. Good afternoon, guys Uhm I, just Wanna come back to that question of programming cause I just clarify uhm. If that's okay. And then one more quick question. After that Uhm you basically have two large premium sports providers in the U K B T and sky the Beachy deals largely fix the sky deals kind of fixed and variable.

From what you're saying you know I think it's reasonably clear, but should we assume overtime, you're making every effort to make those fixed costs for those two large suppliers more variable and give them kind of get more access to a larger base and an ability to go out T. T. So I guess that's question one and then secondly, just look for listing point like in Charlotte I get off the.

Last time, right, but when I look around Europe, there to kind of get.

Company that that ilk telnet in order to D. Both trade, a very high dividend yields and pretty like multiple so I guess the question is what's the market missing why would switched it would be that different is it just because it's a better market would you consider something a bit more radical say a full the merger to your shareholders in an effort to create value. Thank you.

Well I'll take the second one and that you can be thinking about the first one Charlie chime in here too. If you want I I was looking I think there is you did ask the same question authenticate that down there are lots of reasons, while telling it is where it is let me think the dividend they've announced longterm free cashflow profile their competitive position in the mall.

Place a winning characteristics I think there was some concern that's neat to tell him that amongst shareholders. There specifically related to strategic issues, whether it's the livius conversation capital expenditures. So that'll be can you look a towel on it and read across the rest of Europe until well because of trade here you know a Swiss I P O R U P.

K I P O won't trade well, if you just like the butterfly Zig, though but keep your <unk> <unk> need K P N and all the core matrix. If you look at the three months or a year to date results for both companies, It's night and day and yet you know that that will also could be an opportunity for a reasonable.

Valuation of lastly, I'll, just say that [laughter].

Wow, you you could be right in the valuations won't be as real bastard, perhaps we hope for they couldn't be any lower than our own valuation. Let me just pause there alright. So so perhaps it won't be nine times, EBITDA and a 6% free cashflow meal, but if you look at where we tried today, creating local listings.

With local following and local energy in that marketplace gives you the shot at and manage though with the balance sheet correctly and the dividend profile correctly give you a shot at long term value creation that that apparently we're not able to achieve at the top go here for reasons, you would know better than me I suppose and so from my point of view, creating value at the opposite whether it's the way we so.

Germany of the roll over to a manager telling it was a valuable created that decor that played value for us and we'll look at all options to the best of your last point will look at all options to create.

By valued flush with the value gap.

Goes or whatever that might look like.

<unk>, New York instead of number one how 'bout Sir.

No. You go ahead I was just <unk>.

I was gonna walk in it should we assume that you wouldn't seek to use any proceeds raised at Ikea just to retire more equity arbitrage hard multiple in Switzerland, possibly against your you know your group multiple.

I think it's cause we generate free cashflow. So we don't need to look at inorganic transactions to raise cashway equity shrinks to the generate pretty cash, but look it will be opportunistic you've seen that over the last five years. So that'd be we've always done what we believe is the right thing both in terms of the operative if you the position we're in and you'll be.

Go to the manager capital capital allocation, so nothing's off the table.

No that about us however, I think that you know that the <unk> should be pretty clear what you wanted to ask what we're going to cost question.

Yeah. My my comments the fourth more across all talk I'm. It costs. So you will know only airy fairy to the sports premium programming 12, five so therefore take this view a bit more broadly across all our contact close snuck onto the Prince when it comes to the spot premium.

Obviously, we have with those pop not C. T N Sky still we we have today and then the existing contract and.

Which would come up I think in 18 months from now.

So yeah, we need to find the weight on one hand side to to help our partner to have a secure revenue stream, but I'll get that in five two.

<unk> to sit on some saying more variable and this is something of your C V looks to go out and buy it.

It makes the 18 months and then and then obviously, where we can share that with you that alright that'd be the idea is that obviously strategically in January we want to get more on there the cost and on the other hand five if it comes to available then obviously, we use all the yes, it's we.

Having two two then come to a proper London plan behind that.

Deep just wanting to talk to you figure negotiating position with those Oprah as a striped sending the last eight months given what's happened.

Well I mean, so first of all we have worked very good together.

Doing the pandemic I think that's that's that's very good and then I mean, the contact me a contract come into play I think when we are old so hopefully at close and and then yes, I mean that we have mobile number fixed customer and hopefully we have multiple for for the severe smell.

Awesome.

Alright, Thanks, a lot.

Uh-huh.

And we'll take our next question from Matthew hair again with benchmark.

Well, Thank you Mike and your comments at their cable check you kind of highlight it sounds differences between your position in the U S operators a lot more fireworks competition over in Europe, and how about you also seem to suggest pretty explicitly even.

And you thought the the headroom a doctor three one with a little bit less than what you US offers were saying in gorilla that <unk> requires a need for deeper fiber in your doctor's four O and all that I mean do you think that's a fair characterization and do you think that with all this capacity be brought on <unk>.

DOCSIS four O and all that you're going to finally see some better App development that you can monetize I'm nursing cool things cable so I'd like the like your whole graphic coffee frog and all that but.

It feels like you really could see some cabinets.

<unk> celebration in your in your perceived value in price with Johnson.

What we're seeing what zoom in conferencing and all that thank you.

Look at it I think that that is a couple of points at the value of our networks is undeniable you can just look at what's happening European infrastructure space No I'm networks are valuable today, well beyond you know what with a P value, then and and for all kinds of reasons. It made good sense the path to continue to speed.

Enhancement in our in our fixed networks, you know you've got multiple paths with today, we're getting the most out of three that one with a good weekend, we've already trial, two and a half kids fees with three that one you know that's something that's something we can do if you choose to do child that in the UK, but we're really focused on 10 G. Four <unk>.

Good and to be honest with you when I mentioned, one gig five or six years ago, everybody was like what the heck is at eight at four Trust me when I say that you know the 10 gig conversation will be starting a new start and we'll be starting pretty quickly and will be look at our networks. You've got a couple of ways to get there with doctors for that that was you mentioned and where would it fall right in line with the U S operators charges Comcast both of them.

Be pursuing a strategy like that'll be could also decided to the home. She is pond, where we had because the economics to support that kind of road map to 10 G. So stay tuned lots to talk about there and as you point out lots of cool things with faster, Steve low latency lots of cool things, we can do both of their fixed and mobile nets.

Works you know, we just talk yesterday as a team on some of the internet or the ideas rather than that thing.

And that'd be it to be honest with you guys will benefit should.

Being in the mobile space for the I O T opportunity. It's also advantageous to be partners with companies like Telefunken, Vodafone who are leading the way in the development of Biofuels Avenue in this part and as far as we learn and benefit from that too. So I think there's tens of opportunity to monetize networks fixed and mobile continue to expand speed and capacity you're going to do.

Late in two to 510 gig and you know Sky's the limit I think that's really why these networks are being valued where they are.

Thanks Bye.

Yeah.

And we'll take our next question from James Gotcha with Me Street Research.

Yes. Thank you very much and date and two quick question is please if possible I'm gonna just regarding your U K K P. I mean, the customer ads. This quartet ready look to me like one of those kind of stand out take us in the <unk> I was wondering if you could kind of just talk us through a bit more what's help to.

Drive throughs adds up you know even farther than the soaring in queue to I mean, it in fact solely down to be more kind of price compare shit out a short not having the price rise might've only impacted September so I'm, a strong a form and stay I was wondering you know.

What you can say about how you see that in future Cortes as well and then secondly, just interested to get you updated thoughts on the I T. The state I believe that that call up position. You have is now on the winding I think about 30% unwound in the quarter. So you'll know running a kind of economic.

Make steak way that quick he expenditure on the I T V steak again.

Interested in your thoughts on the kind of rationale set continuing to hold that and what you want to do with that state longer time I T.

I'll take the second one did you can take the first one look at an I T V. As he would know games. When we originally acquired our position some time ago average cost with well over two pounds. Fortunately, we call in that position and had virtually no economic exposure to the ups and downs, but my T V. As those colors are expire.

<unk>, we had a choice to make and we decided to average down the price around 70% or more so we're essentially owning the shares that the market. Thanks, we own anyway at about a 70% reduced price in our minds that was worth exploring and we are doing that from time to time and we think that's smart we have no intention of doing it.

Anything with the state we have no intention of doing anything with ITV they'll look at we're gonna be the second largest telco in this market second only to be too and our view is a small stake in the largest broadcast your could be strategic defensively offensive. It I don't know, but there's an opportunity to own that state for 70 per cent left a new thought we owned.

<unk> if you think that's a good trade. So we'll do might look at that we might not we could head the position again once we what's the online but we can also had you to get so and that expect us to be you know I've been financially astute.

And to take advantage of any opportunity Gerard up to the average down and be and be stronger position than we were a year ago on that strategic take the position our strategic steak. So did you want to take the Cape you that one.

Yeah on on for W. A question walk around six <unk>.

And then so I think it's two sector right.

The the Charlestown and this is not only because of covid called with half help, especially in queue to add Openreach heck no installation teams all day and we have that that was not the case in here three but we have got it looked for a customer and that's what we have on the show up a call center resources that we have all sorts of.

A lot of good to to franchise with poor customer we have offered handed and it speed at the minimum for everybody without charging more so we have to offer a lot to them and M. P. S has increased at 10 percentage current so previous here so badly.

<unk>.

And this is in effect, which we see if if it's not only into 223, it's more midterm and obviously also we are making up for the chair on Los Angeles and up contract notification for that could be cool.

And then on the other hand side, although we have close all Oh <unk>, we must remember that we have been able to accelerate sales. So we not only about budget, yeah buff previous E. As in terms of sales and and I need a <unk> physician.

Price.

If more under pressure alright, so that is why the bank book, it's getting more rational the acquisition prior to your skill. That's heavy competition, we are not going down trees price levels, and we get off the issue and that's a combination and also up with me could come over Convergences, hoping alright.

So we have launched 15 months ago, and also that you would see that more more contributing pet for sure. So therefore, maybe long explanation, but sort <unk> sorry, it's not that we have done anything special.

<unk> commissions or no what a physician prices enormously our Youtube attention and we can only do this for one quarter. It as an automatic effects off that onto a libra mortgages, so better and pay for customer and I know what's wrong.

<unk>, sorry about that would kinda suggests that the right you've seen in Q3, <unk> probably be sustained into it towards into queue for as well.

821.

Okay. Thank you.

<unk>.

And we'll take our next question from Andrew deal with Crazy.

Hi, Uhm, just going on from Steve. Good question, I mean, I I guess I'm standing appointment process of the current let me see global equity valuation uhm, but what what what are you thinking of some rough timeline can make listings I'm given the face of the European Circuit Devaluations why why do you think this is a better.

Midterm Bunny Qureshi path in private multiple corporate transactions, giving you know fairly unique footprint. The fact that it seems to be pretty wide Gulf between public and private.

It's gonna be operating I says no so the underlying infrastructure.

And also if I can just ask <unk> when you say strategic investments in an adjacent to can you explain what you're meaning I mean I've seen uhm.

Uhm, five and Tony's Enchondroma freeze room, okay, but what about do graphic expansion excuse me content is there anything you can rule out.

Yeah, Okay. Good questions <unk> on the I P O question.

And in the reference to public to buy the multiples and other sort of corporate transaction you know us we are always going to be opportunistic.

It isn't like we have one and we will pursue that path at all costs no stand standby or standing understand down we're going to be looking at all sorts of opportunities and sometimes it could be due attractor, yeah, who knows but we do know that they're taking action and being turned it on the first slip when it comes to value crystallization and things of that nature is the <unk>.

<unk> posture for us and so you'll see US look at these opportunities may not take advantage of them. We might so we'll always be opportunistic and focused on create value first and foremost and would never exclude any particular financial corporate a strategic approach to doing that without getting into the details of what those might look like.

<unk>.

Valuations or things of that nature. Just you know rest assured that you will you know if you've seen as you've watched that we pay them and adjust and stay address we're always gonna do what we think is the best the long term value creation on.

In terms of adjacency, yes, certainly we can rule certain things out any you know what geographically.

This is principally in Europe, that's what we think the adjacencies reside yeah, because we have a strong fissionable footprint in Europe, and so for the most part adjacencies geographically to be in your epidemic Scream you know.

Absolutely anything else that you should assume that both of those adjacencies would be your focus and then you Jason she would be technology and content focused things that enable our core fixed mobile converge platform. So the things that we've done you know investments we've made in our tech platforms of things with Charlie and Andre I'm working on.

And infrastructure things that have content team or investing and neither all opportunities to not just to make money and the underlying investment but create value relationships longterm partnership with the operating assets. So the adjacencies are sort of you know structural in terms of our operations in a technology platform.

And they are you know geographic and it's also thirdly, using our expertise any that's one thing we know how to do is find self company and one thing we know how to do is finance and manage and and structure businesses. We have an incredible TNI platform that <unk> vast knowledge of where things are happening with technical like things.

Technologically and so the Adjacencies also exist in our talent pool and our expertise in our specific you know capabilities in this marketplace. So those are the three adjacent to for referring to and I would you know if you.

Stick with us through lenses, I think you'd be you'd be close to where we're heading.

Okay. Thanks, just on the timeline can like most things is there anything you can say without breaking news.

I don't think so yeah, no I don't I wouldn't want to get into that right now.

And we'll take our next question from Christian thing then with each S. D C.

Yeah, Hi, Thanks, I've actually a question on on the Swiss business it looks like.

The U P. C. S is finally stabilizing it's onto your trends.

But financially I mean, obviously, we have not seen a substantial improvement.

Why what what's the structure issue that the avatar uhm is weaker than.

Then the then the top time performance I used to the investing in the infrastructure I was expecting a bit more you know, let's say closing the gap between the revenue trends, India that that trend I mean, I know going forward now that you're on Sunrise thinks with maturity to change anyway, but just trying to understand.

Holton dynamics with respect to cure for maybe two one next year. Thanks.

And that seems to charge you Wanna take a is that correct.

Yeah. They should about peace there may be late so we see now and decor to that in court a moment somebody illegals bold bold internet at the last.

Months.

But at the end does relate to me, but like always in the cable business Your transportation and show. Your last 18 months 24 months <unk> effects flow through your P and L.

But like pull most we were able to stabilize to see catch though and again, it's toll free cash flow cool. So with this we see the momentum doing around India into calming, yeah, it as well so chatty.

Alright, Yeah, you are right that there is no let me see if that suits and just as I can truly across the board cause. It has been accelerated what was gonna be good for 10 investments anyway, but the other thing I think Christian which are very minded there's another switch across our cost structure.

From Capex drawbacks, which actually fix it. So for example, if you provide services.

Which is what was you know more efficient way of providing <unk>. That's what your password in the old days you. The Kennedys Capex. So that's one of the reasons why sometimes it seems counterintuitive, but I'll O S. C. F is growing so much but I'll quit Abigail I hope you have a decline and it was a bit of an accounting of that can I. Please the material.

Cause if I can get that for you. So if it was a whole lot should get that'd be around.

Okay, and then I have one follow up regarding the U K D O. It looks like <unk> with respect timing kind of your.

Scheduling or expecting if what kind of <unk> of next year that implies actually that you think it's going to the U K level and rather than staying at the U as it is a fair assumption.

Well, it's outside of our control really I I think you know it could that timeframe could also be consistent with a longer term evaluation from you right. So but yeah, it's really in the hands of the condition they'll determine.

Whether to decide the case or refer it back and we will prepared for the longer term process. If that's where it goes and will happily engage with C. N N. Since I wish you a neighbor tips understand Ofcom on the transaction, which we think is absolutely in a positive for the UK consumer the UK business environment and.

<unk> is virtually no competitive issues at all.

I think it's probably the cleanest simplest transaction Sydney regulators looked at so we're we're excited to keep the process moving and I think they make sure is a type and we've always talked about it and so what will hopefully make that type of thing.

Okay. Thanks, Good luck alright operate I think yeah, you got it I think that's it for us operator, and I want to thank everybody for joining us spending a little over an hour less if you're still answer appreciate that just to point out the I R. T as in London, a debit or always available.

For more questions and standby so feel free to reach out to them ordered me and Charlie or anybody here that that you'd like to chat with about this you always appreciate your input questions and we look forward to talking to you in three months or so between now and then the Tuesday safe and well. Thank you very much everybody pick yet.

Ladies and gentlemen, this concludes February global third quarter 2020, Investor call. As a reminder, a replay of the call will be available in the Investor Relations section of Liberty Globals website. There you can also find a copy of today's presentation material.

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