Q4 2020 Liberty Global PLC Earnings Call
Yes.
[music].
Good morning, ladies and gentlemen, and thank you for standing by and welcome to Liberty Global's fourth quarter 2020, Investor call. This call and associated webcast are the property of Liberty global and any redistribution retransmission or rebroadcast of this call or webcast and.
Any form without the express written consent of Liberty Global is strictly prohibited at this time all participants are in listen only mode and today's formal presentation materials can be found under the Investor Relations section of Liberty Global's website at Liberty Global Dot Com. After today's formal presentation instructions will be given for a question.
That and answer session.
Two 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 and Liberty global filings with the Securities and Exchange Commission, including its most recent filed forms.
Our 10-Q and 10-K as amended.
Liberty Global disclaims any obligation to update any of these forward looking statements to reflect any change and its expectations or in the conditions on which any such statement is based I would now let's turn the call over to Mr. Mike Free.
Thanks, Operator, and welcome everyone. I appreciate you joining us today and this is our year end call. We got a lot of ground to cover and then apologize upfront for the length of the remarks.
But all my colleagues that is from the line and I'll be sure to get them involved during the Q&A and then as usual Charlie and I will be speaking from slides, which are available on the website and so hopefully you can access those and follow along.
I want to begin on slide four with some 2020 highlights and by any measure. This was an extraordinary year for us for our employees and our customers nobody was immune to the effects of COVID-19, and 2020, including us as Youll see but we were lucky lucky to have some strong antibody so to speak that emanated from the critical role, we play and the lives of our customers and which allowed us to meet or.
Nearly all of our own internal forecast that we established pre Covid family School hospital businesses, Big and small saw their reliance on stable and robust connectivity rise to unprecedented levels.
Average upstream and downstream traffic and January was still 90% and 50% above year ago levels. So, we're still and this and doing quite well and with any crisis show. Many operating lessons were learned for example, and importance of putting our people first with flexible work arrangements constant communication and attention to their wellbeing. We also experienced the goodwill that comes from.
And the extra mile for our customers and our communities with more speed more data more entertainment and essential and low cost access points and we quickly identified the significant benefits of accelerating the digital Roadmaps and we're already on for customer sales came from attention and it's also fair to say that throughout the year. There was an underlying flight to quality and more connectivity customers, which really play.
To our strength.
Really deliver the fastest speeds and most reliable services fixed mobile bundles and better customer experiences and our competition and as the customer puts a higher value and these factors moving forward, we're committed to the investments and the innovation required to solidify that position.
And you've seen that happening and our fixed mobile transformation launch of one gig broadband everywhere, our investments and digital customer journeys and our commitment to new connectivity and entertainment products, which I'll talk about here.
So with all that said, perhaps not surprisingly 'twenty and 'twenty was a strong year for us operationally and financially.
And there is a summary table and the right side of this slide with the key numbers, but I'll just highlight a few things beginning with our significant increase and subscriber growth. We added over 80000, new fixed customers and the year reversing the trend of customer losses, which stood at 74000 last year and broadband net additions, perhaps one of our most important measures of growth with 242.
<unk> thousand up threefold from 2019, we even saw growth and postpaid mobile adds to 513000, despite shop closures throughout the year now there were plenty of key drivers behind these results. For example, all operations saw reduced churn and higher NPS and that provided a tailwind this was particularly evident in the U K, where we delivered.
And consistent growth on our day of your footprint and of course and do build territories. We also saw consistent sales and net add improvement and Switzerland every quarter continuing the turnaround the began 10 years 10 quarters ago.
Johnny will take us through the financial results, but the bottom line is and we delivered.
Net out the impact of Covid on things like premium sports and mobile roaming we generated positive revenue while at the same time exceeding our original expectations for EBITDA and operating free cash flow. The standout number from me and I'm sure for you was free cash flow, where we beat guidance with $1 1 billion. This year up nearly 40% year over year and you can do the math against our 580 million.
And shares outstanding to arrive at free cash flow per share. That's apparently we're discouraged from doing that for you and you'll see that implied yield and our stock is attractive and moving to the second box. There is more good news here. When you look at our Q4 results, we've been talking about low churn and record NPS most of the year and this continued to drive sales and net adds higher in Q4, making it by far.
Our best performing quarter of the year low.
<unk> media in particular saw its best customer growth and 12 quarters and our Swiss operations UPC delivered positive broadband additions for the first time in 13 quarters and that complement another strong quarter from Sunrise at the foundation of this customer growth a key product launches around one gig smart Wi Fi and and advanced Entertainment platform again, and I'll talk about those and a second despite low.
And from home and all of the related challenges of a pandemic, we made some pretty big strides and our fixed mobile transformation here with two large M&A transactions and Youre aware of these and I just referenced the acquisition of <unk> closed in November and I could not be happier with the progress we've already made on leadership integration and commercial planning.
Net of Rockstar management team led by Andre <unk>, who is the CEO of Sunrise and including separately, the Pasco, who launched the UPC turnaround and and now report to Andre and <unk>.
<unk>.
The synergies have been validated commercial day, one planning is well advanced and <unk>.
Income in the meantime continues to accelerate so we should have much more to say about that on our second quarter call.
And our Q1 call turning to the U K as we do quite a few times today I'm happy to report that the regulatory review of the joint venture we announced last made between Virgin Media Telefonica Zone. Two is right on track and we have been heavily engaged with the CMA and feel really positive about our mid year approval like Switzerland, and everything we've learned in the meantime, just re.
Firms, our confidence and this combination financially and operationally.
As reported the Swiss and U K deals together represent about $12 billion of synergies and an NPV basis and that's at today's FX rate.
And 65% of which should accrue to us and you can do the math on that in terms of potential value creation and I'll also just point out.
With our Belgian and Dutch integrations, and we have a pretty good track record of under promising and over delivering on synergies.
And you probably noticed the Vodafone and <unk> reported around 6% EBITDA growth of $1 2 billion of operating free cash flow for 2020, with all expected synergies achieved a year earlier than planned and.
As I mentioned and the last one is called Vodafone is a great case study for how fixed mobile convergence delivers growth and stable free cash flow, even before the more strategic opportunities for factored in which is a great segue to our 2021 priorities and I'll start with our commitment to two initiatives that are very very important to all of US first of all I'm extremely proud of our work and diversity.
Good day, and inclusion across Liberty Global and we have been focused for some time on gender equality and supporting the less fortunate and our communities with broadband access, but we can and we will do more so and established our first global day, Eni Council last year, which and Codeshare, we ramped up both our internal and external work around five pillars.
<unk> gender LGBTQ ability and generational equity.
This builds on our programs already in existence, and Turbocharges others, but the bottom line here is that we will hold ourselves and the entire company accountable to greater awareness and tangible goals reflect our culture and our purpose and.
Equally committed to our ESG programs, where we're already a recognized leader most of you know that we've been and the Dow Jones sustainability index for years and are currently number three and the telco media sector were also and the top 15% of S&P sustainability performance measures among other acknowledgements and like many of our peers. We're squarely focused on a net zero targets, which we will announce later this year and let me.
Quickly hit on five other key priorities for 'twenty and 'twenty, one first of all and you'll see later in the presentation. Each of our core markets is planning to deliver positive revenue growth. This year, reflecting continued momentum and customer additions expected or announced price rises and progress and our BTB divisions, just a footnote that assumes modest not necessarily heroic improvement and the COVID-19.
Crisis throughout the year.
And nearly certain that despite $45 billion of accretive M&A last year, 2021 will be equally busy and exciting for us on the strategic front and becoming a fixed mobile champion and number one or two and our markets delivers more than competitive stability and long term growth. It also gives us the scale to shape, our markets and drive even greater value creation.
<unk>, which we will do a third we'll continue to optimize our portfolio of venture investments in 'twenty and 'twenty, one to bring greater transparency to the assets that we believe already represent about $4 per share and I'll come back to that and a moment.
And then fourth we're laser focused on free cash flow growth, Charlie will take us through the guidance in greater detail and a few slides, but I'll steal the headlines which is that we're forecasting a 25% increase in free cash flow over the year and when you factor and our commitment to buybacks with $1 billion, we purchased last year and about $19, a share and a new $1 billion buyback.
<unk> authorization in place for this year, we should see an even bigger increase in free cash flow per share now, let's dig a bit deeper on our operational performance on slide five and the purpose here is to lay out visually the acceleration and customer growth. We saw throughout the year side by side with our core product innovations that stimulated and supported that growth.
So starting on the left hand side of the slide you can clearly see the significant sequential improvement each quarter and customer and broadband net additions by far and most important measures growth fixed customer adds went from negative 19000, and Q1 to 56000 and Q4, almost and the straight line and we.
Set new highs and broadband with 242000 total AD and I just set up threefold from last year, and again steady sequential improvement quarter after quarter.
Now the biggest contributor to this growth was our biggest market of Virgin media added over 100000, new broadband subs last year, drawing from again, both the VA, you and lightning footprint and and the fourth quarter grabbed nearly 45% of all broadband net adds and the market, even though we only reach half the country.
And so many things are coming together right now and the UK and Lance and his team have done a fantastic job, we've seen better base management and record low churn and they brought call centers onshore, but still increased the percentage of digital sales to 50%. The network is resilient and they brought out a bunch of new products like one gig fixed mobile bundles and <unk> G. P. <unk> hundred 60 and intelligent Wifi.
And those same growth drivers are being activated across our European footprint, So and the middle of the slide you can see that we doubled the number of homes commercially available for one gig broadband to 20 million at the end of the year with most markets at 100% coverage today, so back to the U K our gig one commercial rollout reach $7 3 million homes by.
December almost twice the number of BT Openreach and of course, we're only half the market and will be firing up the remaining 8 million gig one homes throughout the balance of 2021 that will significantly widen the gap with BT and provide a great tailwind from Virgin media.
Be clear, it's early days and the marketing and one gig services for share and you can see that and the middle of the slide, but just under 200000 gigabit subs and our footprint today, but we know speed matters to customers, we know what matters now more than ever today over 90% of our broadband subs around 100, megabit or higher service and.
And half of our subs growth of 200, Meg or higher level and we've seen this moving moving before it's just a matter of time before one gig product gains traction and we will lead the market again now turning to video quickly and the bottom left of the slide you can see the improvement and video losses from 74000, and Q1 to just 10000 and Q4 total loss.
<unk> of 180000 in the year with 30% fewer than last year and represented around two 5% of our video base, that's meaningfully better than the U S and we've talked a lot about the differences between Europe and the U S. Many times, we have lower video or Bruce or less pressure on subs and we have a stronger free to air broadcast sector, which keeps right.
And on linear and time shifted TV.
And we have widely available fixed mobile bundles, where we know the video product is a key component for customers.
On top of that we continue to rollout the most advanced video devices and the market like G&A from 60, which I've mentioned and the U K, which is our latest UI and now shows and NPS improvement of 50 points and our new IP box and we call Apollo, which is a four K app centric box very inexpensive devices, it actually fits and your palm and allows us to up sales of traditional video.
Alex.
Entertainment roadmap and my opinion has never been more robust with all countries on the same platform for the first time and I'll just close this slide out by saying the momentum and you see building on this chart has largely continued into 2021 with modest price increases continued churn management and product innovation. This should be a strong year for our DTC business.
And of course that assumes the availability of vaccines will reduce the need for further lockdowns and as I already mentioned in other words, we do expect a slow but steady improvement and economic activity throughout the rest of the year by the way just a footnote.
And we are giving you an update on each country and the appendix, including data on project Lightning, which I know you're always interested in and I'll. Just say project Lightning continues to perform brilliantly so look for that information and I'm going to.
And my remarks, with a few words and our ventures portfolio last quarter and provided a teaser for you and with <unk>.
Highlights and a handful of investments, but really not much granularity and given that we believe the total portfolio is worth $2 $4 billion today for a little over $4 per share we thought it might be useful to provide a bit more detail on these investments.
So on slide six you will see the four verticals that comprise the portfolio check content and sports and sort of emerging markets and a catch all really and infrastructure.
And as you'll quickly spot 90% of the value resides in the first two buckets and the left so thats, where I spend my time, starting with our tech ventures portfolio.
And I will note and we began investing and tech about 12 years ago with a small dedicated team in Denver, and Silicon Valley, which remains very small today and during that time. The golar has a way, but really we're looking at mostly modest investments and early to mid stage companies that provide products or services, we can exploit and our operations. Historically the team has been focused on verticals like infrastructure and cloud and Ms.
<unk> learning with some blue Sky and investments and things like gaming or augmented reality or advanced advertising now will the value we deliver to the portfolio company can be significant because we're typically a customer that's why we get has to be and a lot of deals. We don't include the value that the portfolio company brings to us and our returns and Trust me there have been many examples where that number is larger today, we have around 250.
Currently invested in 40, plus companies, which we value at nearly four times that amount and this excludes the $180 million that was previously invested and the ventures fund and has already returned $350 million of capital to us, which we just moved into our consolidated cash balance and the team they've historically invested around $50 million per year, but they have.
And some really smart bets and we've.
Sure and a couple here on the slide skills. For example is a mobile gaming platform that we invested $14 million and back in 2017, anticipating our role and the mobile business and today is publicly listed with a market cap of just under 14 billion and value of our stake at $450 million <unk> is a prince is principally a supplier of smart Wi Fi devices and the home.
That improve or extend reach but also service gateways for device management, we've rolled it out and Europe. Comcast is the largest distributor and U S. And we began working with plume and 2014 as a potential supplier ultimately invested $25 million and based on their latest funding round that states worth around $170 million and we have an incredibly strong relationship with this strategic vendor.
A host of other examples and the tech portfolio in fact, the team believes we're currently invested in no fewer than nine companies that either are or we think will be unicorns and I'd like any good venture investor We had and we will continue to monetize these positions when the opportunity arises and return that cash to corporate the <unk>.
And large bubble represents our investment and content and sports Guy and at 1.25 billion today and this includes our stakes and companies like ITV.
All three media Lions gate and Formula E. Now as most of you know, we acquired 10% of ITV around seven years ago, and and average cost of 2016 pence not surprisingly and as most of the figure it out we fully hedged that position at the time with the color and as those colors will expire soon we have begun unwinding that position and lowering our cost basis and the <unk>.
Currently we're long about 7% of ITV at 75 pence and the stock goes Monday at 113, and the balance remains colored and we may or may not close that out we'll see we did the same thing with our hedge position and Lions gate when the stock was and the mid single digits or thereabouts and now trades at 13th So let me preempt the question by saying right upfront the day step to not portend anything.
Strategic with these companies were just taking advantage of market dislocation to materially average down our cost and these positions like any smart investor would do and just.
A quick word on Formula E, which is starting its seventh season of eight races. Later, this month and Saudi Arabia and.
And I have to explain why this racing series is well positioned right with manufacturers like Mercedes and portion now and the series ever.
Everyone appreciates the future of driving and racing is electric and we have about $150 million invested and a 32% stake that we conservatively value at $250 million and yes. Many specs have been circling and we'll see what happens, but the only other thing I mentioned briefly is our growing investment and infrastructure, which we believe holds immense untapped potential.
And for Us and I'm, referring to both our own infrastructure like Cabot is real estate and towers, which were rapidly organizing into separate units, where necessary and third party investments and business lucid like edge connect for example, where we rolled our stake and to Eqt's $2 7 billion dollar acquisition and Thats connects for <unk> return and a seat at the table with what is arguably the smartest and.
Mr and infrastructure in Europe, So there's lots of exciting things happening with interest from historically, we've been pretty quiet about our activities and certainly they are not taking resources your focus away from our primary business, but there is real value here and real strategic and actually to our operations and you can expect us to be more transparent moving forward. So let me recap our strong 2020 operationally and financially.
And a great start to the year, you'll see that our two big fixed mobile combinations, and Switzerland, and the U K are right on track and with 6 billion of liquidity at year, and we continue to invest our capital exactly how we signaled we would so first building FMC champions and our core markets we've done that.
Our second Opportunistically investing and ventures that are both strategic and financially rewarding and you're seeing the fruits of some of that work right now and third buying back our shares which obviously, we believe are undervalued relative to almost any measure. So I'm excited to take your questions, but first over to you Charlie.
Thanks, Mike turning to our consolidated numbers I'm, starting on page entitled underlying revenue statement.
Total print revenue declined 5% and Q4, resulting in a full year decline and appointed to offset.
We estimate the negative impact of Covid.
Around $54 million and Q4 and around 200 milligram is simple.
Which negatively impacted our growth rate by around one 8%.
And without that we believe and have seen positive rebased revenue growth.
And the right hand side of the page for each of the last three quarters, you can see the five key areas impacted by Covid.
In general Covid impacted our business much less in Q4, and then take them.
<unk> sales in Q2.
The impact of not having access to premium sports and Q2 was $34 million and export.
Sports products returned by Q4 events, some centering around secondary and governance.
And that sales and rental revenues the impact from private.
And we estimate contributed $216 million drag in Q4, while the impact from our podcasting business since it was around $6 million reported.
And there was some impact from a PDP businesses, we estimate around $22 million and Q4, but it was largely due to reduced sales force.
To date, we haven't seen a material impact from bad debt charges, and that's about <unk> or consumer businesses and the next slide and provide details of our adjusted EBITDA.
And our full year 2020, we delivered minus three 9% adjusted EBITDA growth, which is in line with expectations as we called out in the Q3 results presentation Virgin Media declined 11% Rebased versus Q4 2019, now this was driven by $7 million of customer financing.
Gotcha, and some other growth investments, particularly $21 million and the accelerated digitization and onshore and about customer content platforms, as well as and $18 million, increasing marketing and resulted in accelerated subscriber growth.
The remaining difference versus Q4, 2019 will be impacted and a contract integrations and <unk>.
Our price rise from Q4.
Q1, 'twenty and 'twenty one.
Swift trends continued progressive improvement of seven 9% decline in Q4, partially explained by a 4% drag from $10 million from cost to capture our estimated synergies.
Well, sometimes it's rebased results improved since completion and Suriname.
Non-GAAP financials Standalone business, we're floating around 2% from new growth. Thanks, so much.
Historical IRS reporting gross.
Turning to operating free cash flow, we delivered 5% operating free cash flow growth for the full year, which is in line with our guidance of mid single digit growth.
And despite $26 million of course, the capture which is equivalent to move and what percentage of price.
Our capital intensity declines 22, 5% from 2020 or 19, 6% excluding Capex project.
And of course, the capture and Switzerland or markets with returned positive Fcs growth year on year.
A standout result was a deconsolidation joint venture and the Netherlands, which from 9% year on year.
$2 billion.
And free cash flow.
Turning to our 2020 free cash flow results, we delivered a 39% growth $300 million compared to 2019 and workflow.
And $1 1 billion.
Free cash flow and about $1 billion guidance.
This was despite some currency headwinds versus the guidance assumptions and that's important and drag from working capital, which we generally believe she will be telecom companies such as ourselves.
Our cash flow was further suppressed by $329 billion of capital expenditures related to our UK and network expansion project.
From a patient titled <unk>, 'twenty 'twenty, one outlook, we provide details of our expectations for our key assets going forward.
Given that we fully expect our UK business will be consolidated into a joint venture by mid year.
And the things they got and Telenet already provide central and guidance going forward, we will provide our key financial guidance and also the group consolidated basis from each business unit.
At the global level regarding only to consolidate and free cash flow, which we expect to grow and moving 25% to $135 billion between 2011 based on an assumption that the JV closes at midyear.
And the U K and we expect to return to top line growth, despite and increased year and impactful and if contract and best telecommunications, although cost to capture synergies railway and adjusted EBITDA and the west.
For the full year, we would expect Standalone and Belgium, EBITDA declined low single digits across most metrics.
We also expect a return to revenue growth and Switzerland, the combined UPC Sunrise business growth.
Expect a low single digit adjusted EBITDA decline and a mid single digit.
And that's because we're spending over 150 million and Swiss francs and costs to capture sandwiches.
And the underlying business.
Got it.
Total net a Belgian operations has got into revenue, 10% adjusted EBITDA growth and continued free cash flow.
And to generate 420 to 440 million euros.
And I don't think of a Dutch JV and from two relative to 3% adjusted EBITDA growth and inventories here, we have cash distributions to Joe and John too.
From a range of $550 fixed income and 50 million euros, 677%.
Got it.
And with that operator, we'll take your questions.
The question and answer session will be conducted electronically and you'd like to ask a question. Please do so by pressing the star or ASIC, followed by the digit one on your phone and order to accommodate everyone. We request that you ask only one question.
And if youre using a speaker phone. Please make sure your mute function is true.
And to reach our equipment well pause for just a moment to allow everyone an opportunity to.
And to join the queue.
Alright, well take the first question from Robert.
Excuse me.
James Ratz Sir.
Pardon me it is going to be from Robert Grindle with Deutsche Bank.
Okay.
Okay.
Okay. That's that's my I think yeah, hi that and how's it going.
And my ask about the U K and I thought would be strong lightning and take up stocks.
But the lightning and builders.
Lower them.
Three years is that is that COVID-19.
Or are you hanging fire a bit pending the <unk> merger or I think you mentioned and the slides that.
Passive infrastructure access is not really available at the moment.
Is that what youre waiting for them and and what's the prognosis there. Thank you.
Well I'll just make a couple of comments and Lutz you can work up a more detailed answer.
If you look at the last four or five years, we've always dealt between 405 hundred homes.
And homes per year last year, we did 426000, and we've gone through and $5 million a day I wouldnt read anything into it it's more about just optimizing our overall financial picture could be and build a few more yes could we have a few less probably the PIH is reducing our costs pretty considerably to below $600, which is a gray.
Thing and the more we use of that of course, it could accelerate both the capital we spend and the number of homes. We built so it's all good news there there's really no.
Nothing negative.
Our coverage is growing our penetration remains strong and rfps are strong and the rich.
Hi, So the lightning project as it sits today is in great shape, certainly when the merger closes or the safeguard the joint venture closes we will sit down with telefonica, when we're allowed to and really reevaluate the entire picture around our fixed networks and the U K specifically the pace of lightning build.
Lee our broader ambition to expand the network beyond our lightning footprint and aggressively.
The path will take the 10 gig.
And when we bring and financial partners. How are we how are we accretively and aggressively and take advantage of our network leadership and this market and its share.
Network leaders for some time, that's a real opportunity here.
Any other color.
And you said it all basically I think the only thing I would add.
The lightning and keep them on.
Talk to the network of expenditure and four homes. It's also not going to connect more and more base stations Hawkeye G that we closed two big deals one with Vodafone and <unk>.
<unk> and obviously also <unk> and <unk>.
Acceleration of.
And we connect and separate.
And so if you take those into account.
And then it runs at pace and <unk>.
I think we have two revenue of this strategy together and after the approval.
Thank you.
Once again that is star one to ask a question. If you find your question has been answered you may remove yourself from the queue by pressing star to the next question is from Christian.
HSBC.
Okay.
Yeah, great. Thank you hi, guys.
I have actually a question on Switzerland.
So it looks like a good outcome <unk> broadband growth and debt markets on an underlying basis at UPC standalone.
My question is more on the integration costs and the phasing you mentioned $150 million and you maybe give us a split.
And Opex and Capex year, and also what you expect in terms of synergies already in 2020 and kind of the phasing over the next few years at least broadly speaking that we can model. It properly I think a bit more color or guidance around that would be nice.
Yes.
Andre on the call and ask him to address some extent and were being obviously low careful about annual.
Synergy expectations.
I'll tell you that in 2021.
Synergies are expected to be relatively nominal I think maybe the 30 billion Swiss franc range something like that.
Against the 150 million cost to capture but it ramped pretty quickly. So I think in 2022, it's it's it's four or five times that number and then a growth sort of ratably through the 2020 for 2025 timeframe.
And it's not going to look materially different than the Belgian and synergy model or the.
The Dutch synergy model in terms of how much is revenue how much is cost avoidance how much is.
Cost savings based on the 'twenty and 'twenty cost base and it's about $85 15, 15% revenue and those are really in the later years. So it's a conservative.
And <unk> and argue.
And I don't know what other color, we're providing all those sorts of numbers, but I'll, let you.
Well I think you outlined it well.
I think on the cost to catch up and cause and tried to be pretty and Frontloaded. We are moving fast integration is progressing quite well.
And obviously and some of the Opex stuff.
Go into force, whereas some of the investments are coming later on as we go through it.
And I would expect that the largest part of the total cost and kept it should be done by the end of 'twenty two and in terms of synergy phasing of course, it's always a bit of a question mark around the revenue synergies how quickly they are going to run through but as Mike has pointed out I would fully confirm.
And the disabled so from that too.
Thank you very much.
Alright, and the next question is from James <unk> with New Street research.
Okay.
Yeah.
Yes. Thank you very much indeed question instead of me really was around your cash return thoughts from here I mean, firstly on the buyback I noticed the pace of that seem to slow in the fourth quarter. So I was wondering if there was any logic behind that and should we be expecting the pace of <unk>.
Feedback to be accelerated during the first half of this year and this is I mean, given the strong cash flow guidance that youre, giving and the range of buyback I mean, youll still and this year at the current run rate with.
And with well over $3 billion of cash on our balance sheet. So I was wondering if you could give any further thoughts around timing.
And that potentially being returned to shareholders or other uses of capital. Thank you.
Well I can't identify any other uses of capital beyond what Ive said generally which is we remain opportunistic around strategic.
Transactional.
Ideas that might occur and our core markets.
And maybe continued modest investment and ventures nothing else that's jumping out at us at this point for that would require meaningful amounts of capital. So buybacks remain front and center and as you said.
Just looking at last year, you'll remember that we started out at.
A normal pace one of course, the stock decline, we ramped up and spot most of our stock in that period of time Q2, Q3 and from our perspective, we'll do the same this year. So I think the end of the year was a bit of and odd period, both related to where we were at <unk>, one plans and our.
And material non public information and having and just announced or about to announce the increased authorization, but wanted to get through the year. If you will remain and we had so I think you should expect us to look at the situation.
Dynamically and it wouldn't surprise me, if we ended up buying more stock and the first half and the second half because we believe.
Our operating and financial story continues to look better and better, but let's see how about how things evolved but you got the full 1 billion available yet we have been spending more.
Daily and.
And this year than we were.
And the fourth quarter and that shouldn't surprise, you, but let's see how things evolve can't be more specific than that James.
Great. Okay clear thank you.
Mhm.
Yes.
Alright. The next question is from Michael Bishop with Goldman Sachs.
Thanks very much.
Just try and pull together a couple of things on the free cash flow I died and sales like the step ups are 135 is largely driven by the higher they go and distribution and then obviously that the growth.
Accretion that sunrise.
Is there anything else you'd call out.
And that's driving that 135, given it looks like Youre guiding the operating cash flow will be and.
And obviously down for a couple of the assets like the U K.
And Switzerland.
And then if I could ask.
And therefore more forward looking question on the cash flow, which is related it sounds like we should take the 135 and then effectively.
And so think about that.
A run rate basis going forward youll be spending.
At least $150 million and integration costs, and Switzerland, <unk> and the U K, but then you'll probably spend some.
The second half as the deal and the UK closed sales.
Basically should we think about the underlying cash flow being quite a bit above $1 billion. Thanks very much.
Good question and stomach.
I think the.
Youre quite right and we saw the acceleration and.
I think it was continued through the cash machine the Southern Federation.
And until that based on that guidance.
And the U K, it's more flat.
And because it is also because of the Coca capture and also the lightning build and again.
Emphasized it.
And you can switch off the interest.
Capex and that would increase our free.
Free cash flow and maturity.
No.
And then in Switzerland, and I think you've already pointed out and we're getting some good free cash flow growth.
Because we are getting from financial synergies as a result from the transaction. So I think the message is that we've got a real cash flow machine and I think Mike made the point about the synergy.
I don't want to go from here, we would expect continued free cash flow growth as we monetize those synergies.
And I was wondering if we see a continued good operations.
Okay.
And as I said in my remarks, it's you would already know Michael and the free cash flow per share figure would be even obviously.
And a more robust from a growth rate basis, just given our.
The repurchase of eight nine and 10% of our market share every year. So if you are looking at it.
Integrated and free cash flow underlying operating free cash flow story, as Charlie said and as you pointed out is strong and then.
And we were able to accelerate.
To accelerate that and that free cash flow per share basis, just by virtue of our buyback activity.
And my right so that the second half a day.
So sorry, just to follow up on the second half of the EBITDA and the U K, some sort of rights and thinking about will be effectively a small net cash outside and so also and the $1 35, because Benelux, Switzerland.
And your integration will be more than the synergy that you deliver.
Well I think that's the way it is.
Gotcha.
Good day.
And we actually look at it it's actually broadly flat.
And the free cash flow and the U K.
And then again they will close.
Give your updated assumptions and the Covid because obviously, we don't have a lot of inside of them.
Opex cash.
If it does close.
Close it's probably about the same free cash flow, there's a lot of very good index assumptions.
Yes.
Yes.
Yeah.
And you are coming through a little bit about each other but I think the point was the DSR and the.
And the guidance is provided assuming that the deal doesn't close just to be clear for folks and give them a baseline on top of which they can overlay the JV and as Charlie indicated.
Interestingly, whether we consolidate.
But Ah Virgin media for the entire year or just half of the year.
Interestingly the free cash flow number won't be maybe you could give up because we'll be distributing that cash and the second half of the year back up to up to the parents or I think you can look at it.
Either way, Michael and Youre, not going to get them to Cherry pick a number.
That makes sense.
Yeah, and also really helpful. Thanks low.
Yeah.
Alright. The next question is from Nick Lyall with Boston.
Yeah.
Yes, and we have it really just.
Uh huh.
One on Switzerland, Please Mike if I could just on the underlying competition still looks a bit tricky and you talked about discounts I think and the statement.
And then on the front so it's not doing anything in terms of your plans for price changes could you maybe just discuss.
And what point, you think and your company can cope with price changes and also what are the plans for the brands and Switzerland as well please.
Sure and fact, Andre what I'll, let you take both us and she was.
Go ahead.
Yeah sure. Thanks for the question so.
I would say overall, yes, the market is quite competitive and there is quite a lot of tension on the front book.
Well I would say that Bose business, and Sunrise and UPC operating still and majorly independent and Q4 Hep C and one of the best quarters for the year and not only for this year, but for the last three years program.
So that is showing that we have.
Very competitive offerings now looking forward for us of course, combining fixed mobile convergence is not the game and we have still a lot of opportunity on both businesses to actually drive more value to our customers, while necessary and not necessarily and destroying value, but rather creating value. So I think thats, one key whether it be one day.
Cool.
And regards to brand consolidation and that's something we are currently looking into most likely we would probably operate as two brands. We have seen that working out quite successfully in the past couple of quarters within Sunrise and that's probably a strategy that we will embrace and also for the combined business.
And we haven't taken a final decision on what the spread is going.
Okay. Thanks very much.
Mhm.
Alright. The next question is from David Wright with Bank of America.
Yes, good afternoon, and good morning, I should say thank.
And thank you.
Yeah, just on that day U K.
I really don't want to downplay the achievement of looks and team.
A lot of the commercial momentum has come with the day.
Les and the price rise. So I guess the question is to what extent is that a factor in and as you bring.
Pricing and to the customer base.
And in.
And the end of Q1 early Q2 I believe.
How do you think.
And those kpis could respond as the commercial activity.
Driven more by price right now do you think or more by the <unk>.
The quality of service and and the branding and the product. Thanks.
I'd, just say and then I'll, let Nick to provide a bit more color.
This began building early in the year day in and so if you look at the U K broadband adds and first quarter was 8000, and I think second quarter, 33003rd quarter 47004th quarter 54000.
And it's our view that that that is sort of undeniable at an undeniable strength, regardless and any announcements and they're being out of the.
And maybe on price increases and as I mentioned in my remarks lots of positive things.
Driving that and look once you once you flesh that out a bit more.
Yeah, exactly so I mean, we put together a strategy to get back to a sustainable growth in 2019.
Fixed mobile convergence won a lot of innovations like Mike has already called out.
Better base management onshoring of customer service.
And that's it so and so this has led to reduce churn.
And increased sales and.
And Youre right, obviously waving a price rise in 'twenty and 'twenty has helped here. So if we would have done wrong the numbers would be a bit lower than net debt growth. However, it would be still substantial though.
And then 2019.
And maybe I'll give you a bit flavor of the price rise how it's going so.
I mean, we are we got very rational reaction from the public so right.
And.
And the press and and customers it was well received and.
And we are in the middle of it at the moment.
And it seems that the demand for higher speeds and the pandemic, especially right.
Is increasing when you have kept SKU and homeschooling.
Parents walking and stuff you need higher speeds and.
So we are offering that.
Therefore, obviously Q1 net adds while doing a price rise and cannot be higher than the 55 styles and bought the net that you have seen and in Q4. However.
I would not be surprised if we would have still net debt.
Yeah.
And Pat can I, just ask as a follow on.
The commentary you made on the demand speaks perhaps to volume compared with et cetera.
And also you have seen some competitors announced.
And I have some fairly substantial price rises and the U K too.
Uh huh.
After a couple of choppy is do you feel like the U K market is returning to more rationale keep apps supported by the Covid effect.
Yeah, well I think all the players have.
Big investments.
And alright, and next generation networks on the fixed side.
And the mobile side Sky.
Also big investments on the content side. So that's one second usage has increased dramatically as Mike has pointed out.
And that means also obviously that all need some funding and therefore I think.
And price rises.
Heck being done by almost everybody IPP CPI plus three nine I think brought up from the same I think just today Sky has and all that price rise for this year as well and we have done it in January and so I would say on price rise very rational.
And I think also.
However, well received by the customers as I said before there is.
Still.
Higher competition from the acquisition Alright, so here right and.
Price is if you compare price developments.
<unk> and <unk> products.
Products like and the 60 60, Meg space and.
Prices are low.
So that is a dynamic and we.
Haven't followed that so much that it's not the media and we get our fair share.
Okay. Good thank you.
Yes by the way that prices are lower and those lower tiers, but we're actually offering generally faster speeds.
And our BT might offer us 38, Meg or Skype and off our 60 Meg product. We're at 100 Meg for that same customer target customer base. So our price per megabit, and that's something people look and it's much more attractive.
And as people get smarter and more.
We're focused on the broadband product that's not and then there are relevant stat, we're always faster even if the prices are comparable.
Okay. Thank you.
Okay.
Alright. The next question is from Polo Tang with UBS.
Yeah.
Yeah, Hi.
Yes, hi, and thanks for taking the questions and so the first one is from Mike you talked earlier about how you'd be busy on the strategic fronts and 2021. So can you maybe just elaborate on those comments and were you referring to completing the UK deal or are you getting new additional things that you need to give.
And as you know some sense in terms of the areas that youre looking at and really just have a follow up question, which is really just about sky.
Dana strong as obviously take numerous CEO of Sky and she Oxy news approach and media very well. So do you see scope for closer cooperation with Sky going forward. For example, maybe sky co investing alongside you guys in terms of our.
Fiber footprint expansion or maybe doing a cable wholesale thanks.
Okay.
Well I'll take those.
First with respect to Dana of course, she is very well known to US He worked for US for me for over two decades.
Consider him to be and outstanding.
And so obviously, we're happy for her and I think it helps.
And for us to have somebody in that seat and we know well and he knows us well and I think who our guests know well so it's a good decision and we're.
Of course, we're in touch with her and looking very closely and a number of things, but she is also quite deliberate and careful so she'll take your time to evaluate opportunities and the marketplace, having said that.
You know I have no reason to believe she wouldn't be just as strategic as Jeremy was around their long term strategy in this marketplace and what options they have to.
Our secure owner economics, and reduce cost to serve and all the things that anybody who is building a business are you building in some cases, what we'd like to do so.
Couldn't be happier with her and we're proud of her on the other hand, and I think it does give us.
Great dialogue and great opportunity to continue to talk about each of our strategic future share. We can't do much until the deal is approved as you could imagine.
And you are unlikely to read or hear anything between now and then.
But I wouldn't surprise me if we re engage on a number of topics with sky, who are a very important partner for us and this market.
On the M&A side of the strategic from that wasn't referring to anything specific but clearly if I look if I go through those three.
Buckets again.
Core markets ventures and buybacks.
Our core markets I think we've done exactly what we said we would do and the last five years ago, and something like $80 billion of bigger actually 80 day plus of transactions.
Allowing us to exit markets and double digit multiples, where we didn't have scale and.
And bed down market for fixed mobile convergence, becoming a champion and markets, where we did have scale and I think we've done it depends on the market and you either exited bought or emerged and we think in all cases, we've done the right thing. So we now have.
And the number one or two player and each in these markets and that gives us the scale to be.
I would say opportunistic and creative so if you. If you are now the number two player and each of these markets relative to income it youre in a different position when it when you look at those core markets strategically just and you could you can imagine what those might include all the markets that we haven't yet done anything in Ireland and Poland. For example of course, we're going to continue to evaluate.
Right.
The right long term future for those markets is in terms of their strategic footprint and whether theres, a fixed level opportunity et cetera. So you should assume that that is high and our list.
And it would be surprising to me. If we ended 2021 without continued transformation even in those two markets whatever that might look like the only other thing you'd like might have heard me referenced indirectly is that we are really excited about the infrastructure space.
Surprisingly, we sit on a.
Massive infrastructure ourselves, both fiber based towers directly and indirectly.
We have real estate and have Charlie and his team and great job extracting property assets from joint ventures, and Arcos, allowing us to look at the future of edge computing. So you should assume that we are being that has created opportunities and.
Opportunistic as we can be and infrastructure, we're not going to go compete with.
The big player sell Mexico, that's not necessarily what I'm, referring to but there are going to be opportunities for us to partner and raise capital and monetize.
And that will keep us busy because those are we know the underlying value of our networks is significant and there is massive amounts of money looking to invest and those networks. It will be creative and see if the waste for us to create value and that's what we people you know that we're not.
And anything we would do though would be accretive to our base case plans our guidance whatever it might be.
Referring to at the time, but it's exciting to me and something that we'll be working on closely in 2021.
Yeah.
Clear thanks.
Yes.
Alright, I will take the next question from Steve Malcolm with Redburn.
Yeah.
Yeah.
Yeah, Good morning, guys.
And taking the question I'll try and go for a couple of accounts quite quick ones first and I'll just go a lot of things I guess.
And don't simply.
And it's delivering the best and actual numbers and the correct.
Operational Kpis are amongst the weakest gross 60 on price and.
Or do you use and the last couple of quarters.
And we've got the balance right now between volume and price, particularly in and see that KPN runs off its fiber build over the next 345 years.
Your thoughts on that and then just.
Looking back when U K.
Help us understand and sort of evolution of day.
And walk me through the year, obviously, you guys target under the patients get the price of oil.
You've got the price right and the first quarter best profit against a lap I guess moving back and the year.
You talked about.
Think about day progress a lot number of free trade.
Good day.
[noise] speedier and moving pretty quick on the U K question could you repeat that just put more slowly.
Not all of it just yet.
Got it.
I just wanted from us.
And you should think about the evolution of the U K.
All three plants and one.
I didn't know about that.
And something like 4% and Q4 relative.
And that attention, it's getting price rise and you're getting price.
And back and you get and begin to lap and the best tariff impact.
Oh yeah.
On the simple when you think you'd get a number of items stable and volume growth, but the architecture and because of that bar or anything from you today and thank you.
Okay, and if you want to tackle the operating question and get your two cents on a like and for agriculture, Yeah. Yeah. So I mean, you called yourself.
The acute either so.
So a price rise will give us a good.
Tailwind for and get the option growth again on the.
You have to hang tight and there is you will see and and ABP and whatever.
Electrification, which hasnt really kicked in and into 'twenty, 'twenty, but which will kick in in 2021.
So and our plan we are careful so we have a contributor it quiet.
And some revenue loss loss to a btn.
So therefore, we think we are more coming to up your flipped into 'twenty, two rather than 'twenty, one, but it won't shrink a lot, but it might be a little it all depends on the customer reaction.
On a P P M.
Yeah.
Dutch market.
And the debt market I think you.
You ruined and her team and Charlie you can get up and here too have had to figure it out pretty well clearly, it's a competitive market and KPN has made announcements about.
Getting to put rough.
And you can't reach with fiber, which we always assumed would be the case, but we've now got one gig everywhere 6 million homes, and our marketing aggressively so I think and suggest.
Breather, if you will the synergies and the execution has been intense and rollout of new products has been successful I think 'twenty one.
And is not indicative as we look at it over the longer term.
The opportunity and the marketplace and I think the guidance here just reflects a bit of a breather. If you will not necessarily a discernible trend over the next three years.
And I have confidence and their ability to optimize price volume to look at these this market dynamically.
They're already I mean interest if you just compare that to KPN.
In 2020, which probably many of you do.
It's not very fair comparison, I mean net habit.
Incredible year relative to J P and in terms of net adds in terms of pretty much almost any metric I think we grew revenue, 2% and EBITDA, 6% PPA went back 4% and I think four and 5% and we had about 270000 mobile net adds and if you had 55 you know their broadband result, with worst so but as with any market.
Steve you're going to have ebbs and flows and keeping a good operator, we're not gonna be.
Data and out forever and everybody comes back and punch in and so that's the nature of competitive market place and I have confidence that this management team has there.
That's a good strategy in place for the longer term and let's say the medium term and any one year won't be indicative.
And what you should expect and.
Any color on that journey.
I would agree and I don't think I'd.
They've done a great job and B to B and then if you've noticed that they've moved their market share every material and b to b.
And there's still a lot of runway to go so well actually and they did a terrific job of execution.
Execution and perhaps the most of the best and so I can't everything likes it.
Yeah, Okay and administration.
And once you get out and your guidance and what it says hey, guys.
Yeah.
Yeah.
And you hear me.
Yeah. Good question, Charlie was the decision not to give revenue guidance at Vodafone and you'd probably about that vertical.
Because of the free there that you're talking about and giving some flexibility.
And situational.
No I, just think to be honest and the revenue guidance and a world of Covid.
The easiest thing I think we all have a lot more confidence and cash flow guidance, because who knows.
From whatever and that this is this company and performing well and.
You'll see some pretty good results margin famous the question.
And he is putting pressure on margin.
Okay.
That's all day.
You got it.
I think we're at.
Mark here, Rick or you've taken another question too.
And last one.
Okay.
And last question is from Andrew Beale with Eric.
Rates.
Hi.
I wanted to come back to both and we are again not true.
Just ask you about your background and thinking around a possible IPO.
Obviously, you've just discuss the results and Poland, but I guess, it's a business that's giving you and continues to give you a large dividends. So just wondering how you thought about the ongoing value from 50% ownership of those dividends and a business you'd like versus.
The opportunity, it's a whole lot of equity value more broadly across your wider group operations and obviously.
I appreciate you've got a part of that.
There are things you ought to be able to talk about but any background around that same thing not just for Vodafone and figure out but this is a wider outlook for political ipos.
Yes, good question and of course.
And Theres nothing to report, but do you have a partner, they're quite busy right now and a number of other things and do a great job.
And my guess is if you if you're asked each of us and we both like this business a lot and not just because it's a you know and a three player market and.
And it really.
And in many ways number one and you can get market share and most of the BDC products.
And has great free cash flow profile as you've already indicated.
Is it and IPO candidate potentially.
You could look at that depending on how the market evolves listen I think there is a bit of a rotation occurring and.
And long delayed and should be or how big rotation occurring in the and Europe, because you've got many.
Tailwind I think long regulatory regulators are mostly focused on infrastructure and build out and they want to see companies.
Companies.
And a fair bank environment, where if they invest the money to get a return that's a good thing you might even see further consolidation of global we'll see.
We've already pointed out how COVID-19 can help those who are prepared with great products to grow and consumption is never turning back and the consumption.
It's growing is going nowhere, but up.
Multiples have been depressed for a period of time and there's a lot of positive things in our sector. Because we were the outlier because were more entrepreneurial and more profitable.
And more strategic and a lot of our peers, but nonetheless the sector in general is possibly due for a pretty good a good year here and.
Would it be and opportunity to look at those things I would say, possibly it's not up to us we have to counter.
And we would want to do that with a partner who was resistant to it.
Longer term you should look at it there are built and provisions and these documents for a reason.
Each party and force and IPL, One party can force the sale of the company and they are and therefore, a reason because nobody knows.
Five years, six years, and well look like we're getting to those points and so it's gonna be and interesting 24 months.
You know where we.
A very solid partnership will have to come together and decide when and whats the right outcome for each of us and this the particular assets and markets and I'm thrilled to be net position with a business. That's actually hit the ball Park and achieved everything we thought it was gonna achieved so it's all good news, but as Charlie likes to say.
You know, it's delivering cash to the parent really mean.
Meaningful cash and that's something we can bank.
And as you look at our free cash flow story.
And that's certainly an important piece to us that business and.
And just wrapping it or.
And the dividend or having a partnership with the Russell. That's also that's not something we're anxious to do but keep your eyes on it and stay tuned and that's 24 months I think you'll see activity on that front and.
And let you know when it happens.
And you know look I'll close it out just briefly I appreciate everybody joining the call. We felt it was a difficult year for everyone on the planet and we feel fortunate to have come through it with pretty strong operating and financial results and as I mentioned in my remarks results that mostly have continued through this year. So.
Wasn't.
A one off and our mind Theres a lot of momentum going into 2021, and thus far we're seeing that momentum continue which is a really positive indicator for Q1 and.
And strategically I think we're focused on the right things the ventures portfolio give it a look it's not something we're sharing with you for this and because there's nothing else and talk about we really believe that there is underlying value. We made smart investments now these are investments that enable our op codes and our operating businesses, mostly and that's something to be taken into consideration.
And there could be more coming and as.
As ever we're working on the value GAAP, due and our basketball and execute on our business, but also it would be share strategically and financially, we're making it clear to investors and that where we see the value and the company. So I appreciate your joining us and we'll speak to you soon take care.
Ladies and gentlemen, this concludes Liberty Global's fourth quarter 2020, Investor call. As a reminder, a replay of the call will be available and the Investor Relations section of Liberty Global's website.
And there you can also find a copy of today's presentation materials.