Q1 2021 Liberty Global PLC Earnings Call
Please standby good day, everyone, you're holding for Liberty Global's first quarter 2021 Investor call. Thank you for your patience the investor call will begin shortly.
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[music].
Presentation materials can be found a note of the Investor Relations section of Liberty Globals website at Liberty Global Dot Com.
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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.
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 Globals filings with the Securities and Exchange Commission, including its most recently filed forms 10-Q and 10.
K as amended.
Liberty Global disclaims any obligation to update any of these forward looking statements to reflect any change and and its expectations or and the conditions on which any such statement is based.
I would now like to turn the call over to Mister freeze.
Great. Thanks, operator, and Hello, everyone of you're doing well and we has always appreciate you joining or two of results call today try and I'm Gonna run through what we hope for some abbreviated remarks of leaving a bit more time for Ya of questions and I've got pretty much the entire team on the call and I'll get them involved and needed I'm gonna keep it off on the Sly.
And for of your phone and the long with some key headlines for the first quarter and before I do that let me just say that we continue to remain focused on our employees and customers first and foremost give me what remains of pre challenging period and your as it relates to COVID-19, although we seen infections and all of our markets coming down from the levels vaccination programs and the cough.
And and how slow stores, you've probably noticed and as a result travel restrictions and protocols are still pretty tight and Europe now despite the pandemic related challenges. We're very encouraged by the operational progress. We made during the first quarter of 21, the commercial momentum we experienced throughout most of last year of scary right into the new year and Q only out of nearly for.
8000, new customers compared to the loss of 20000 last year and over 225000 broadband and mobile or do you use that's up over 60% from the same period and 2020 and a consolidated basis. We grew revenue the robbery and free cash flow and that's despite COVID-19 impacts and some merger as soon as you related costs, and Charlie and walk us through and.
And the last headline here really sure of current 1 billion of our buyback program, which has been progressing and a pretty rapid pace you may have noticed.
Spin around $450 million and the first for months of the year of really just to take advantage of the value gap and our stock, especially with the growth for delivering and the pending transaction and the U K and I expect a lot more to say about that on the second quarter earnings call. The slide five just runs through the logic and rationale of the verge of media O two combination through the lens I.
Walk through scale synergies strength and strategic Optionality. So first we're creating the cleared number two operator and the market. After B T. The 42 million fixed and mobile subs 11 billion pounds of revenue and nearly 4 billion pounds of EBITA and we're also combining two best and class infrastructures, including the largest.
And most admired mobile platform with 40 per cent of the market and the Uk's fastest broadband network serving over half the country with one of <unk> speed by your in other.
By the way, our broadband and pay television market share is also about 40 per cent of on the verge of <unk>.
Synergies and the deal or the largest obscene amount and you and MTV of 6.2 billion pounds or around 540 million pounds and an annual basis I think it's important to remind everyone. The 80% of the synergies our cost driven and shouldn't be achieved and roughly three years net assumed the 700 million pounds integration cost.
We'll also and these numbers have been debt it multiple times and I'm, a virgin and Oh, two and clean team working together. So we really hit the ground running on synergies by the way. This is of great moment to congratulate are very of Blue schuler under the anticipated appointment to the C. E O role of phone closing as you on the loose has been the liberty for over 10 years now most of that time builder.
And are highly suggest with Germany business and we sold the Vodafone for 12 times EBITDA and and since then reinvigorating growth the verge of medium, but you may not know is he spent the 10 years proud of join US working for Telefonica and their Germany mobile business. So he's uniquely qualified in terms of fixed more of of convergence transformation value creation and of course he is a terrific.
<unk> knowledge base of both shareholders.
The balance of of the leadership team, including incoming CFO, Patricia Kobe and who's from the Oh to have been selected and will be announced as soon as we get fond of Clarence.
So Virginia the O two will start out with real advantages, including a winning team strong product offerings to premium brands, the best connectivity and entertainment bundles and the market and the opportunity to create the Uk's first fully converge and digital flat for the.
The last one of <unk> I'll dress you relate to of questions. Many of you asked us and we offer and address proactively and referring to the strategic Optionality. The J V will have on day, one to both expand upgrade and monetize is fixed infrastructure.
We've already talked publicly about the opportunity to extend virgins, one gig network too and ideas for 7 million homes, allowing us to tap and a new revenue streams like wholesale of course retail convergence and be the b and perhaps giving us to access the new sources of capital I'm really attractive terms and will quickly explore strategies to maintain our significant speed advantage on the rigs.
<unk> and 15 million homes, using new technologies like doctors for and even STS bond to our existing Ducks I think we're all excited about the option to you which are meaningfully more attractive as of combine faithful champion in this market and.
Clearly our confidence and those fix network strategies in bold and my verge of media recent performance and you can see on slide six Q1 with another strong for for her to meeting with our best revenue performance and over two years and that was driven by record low broadband churn strong top line growth of B, B and new FMT bundles customer.
Customer additions also if you'll revenue despite the price of announcement, which is typically of tough order for us by the way, we actually added 31000, new customers and registered our fourth street corner of customer growth and R. B a new markets.
Broadband is a great story here and the UK with of four fold increase you over your net broadband adds in fact over the last four quarters. This is of great stat, Virginia and to add it over 170000, and new broadband subs and the U K and the four quarters prior to that that number was 20000 and there's.
A lot of significant drivers behind this acceleration, including the launch of intelligent Wifi too.
Acceleration of the FMC bundles of Lodge of five G January and sustained investment and give you the network expansion digital transformation and customer service all of which are instrumental components and establishing a stronger and nimbler business for the future is all of those really well for the JV with O two.
Now and with the chart and slide seven that summarizes some of the key operating highlights for Liberty Global on a consolidated basis and then for the big for <unk> Virgin Media Sunrise, UPC Telenet and put in for <unk>, moving left and right I think it provides a good perspective, oh and each business is evolving side by side and I could probably.
10, 20 minutes on it but instead of I'm gonna spend about two and a half and I'll start with three general comments about the group.
First of all of you just scan the the AD date at the top of the chart. Firstly line, you'll see a lot of green arrows, pointing up and that reflects strong improve and year over year of customer broadband and postpaid mobile growth across our pop coast. So it's not just verge of media that's accelerating it's happening pretty much across the board.
And you'll also notice that we've ramped up our one gig networks with Switzerland, and Belgium, now region of 100 per cent of customers with the one gig offering and the you can expect to be at 100% and Holland and 80 per cent by the end of this year. So when we show discharged early 22, those numbers will all read at or around 100 per cent, none of our peers and say that.
And finally of common of fishbowl of converges ratios, which continue their steady rise of about 150 to three and a basis points.
Belgium, and Holland, or now and at or about 45 per cent and Switzerland is at 55 per cent of that reflects hi, convergence of sunrise, but only 25% of it upc's of large untapped cross sell opportunities and and Switzerland, and and the U K.
And that's already talking about verge of media. So I'm just gonna add a few quick comments and some of the financial date of first a quick explanation of of the <unk> decline of 4% cause.
And this was impacted negatively by three things and the one only one month the price rise contribution that was and March number two the headwinds of end of the contract and annual best tariff actions, which we talk about every quarter and number three of decline and other revenue my phone usage of pay per view and then an EBITDA, which is down what by nine per cent I think it's important to point out that the figure include and the only one.
1% drag from merger related charges associated with the joint venture. So those costs were excluded EBITA lost would of been closer to 1% of those same caused by the way how about two per cent drag and operating cash flow growth.
Turning to Switzerland briefly the new summarize upc's off to a great start Andre and the team delivered of strong Q1, with 56000 and broadband and postpaid mobile adds that's up 50 per cent year over year and that was fueled by sales momentum of course, both brands and record M. P S and both Sunrise and UPC.
And they also ruled that you may of notice of commercials, they want to offer to new and existing customers. That's called together more Wow, that's a program that rewards existing customers with benefits like the free Sam and discounted sports and security package essentially similar to what we've done Mark as my color and then motivates new and cross sell customer with giveaway of like laptops, ipads and Tvs and the reaction so far.
Far as and very strong.
And you can expect regular updates on the integration process, and Switzerland, which at this day, just going really well the first positive synergies materialized last month and you might have noticed of the head count restriction was just announced.
Financially revenue as far as the flat and the quarter with EBITDA down seven three per cent and operating free cash flow down 6.2 per cent, but those numbers include about $11 million and 20 million respectively of what we call cost to capture those of the cost of the capture synergies for the organic result, if you will was better try and will cover of those numbers at the moment.
Telling it also has a strong quarter with robust operational performance of the broadband and mobile, adding 9000 broadband subs and 15000 posts a mobile subs and they also grew fixed or blue one per cent as customers migrated of higher tier broadband and multi play packages that look and fix mobile convergence continues to be has always been the main focus of.
<unk>, they had 19000 do converge customers and the quarter and they've launched and new innovative fixed mobile package they call one and read about.
Charlie is gonna cover of financials, but with three and five per cent EBITA and <unk> of growth telling us off to a good start to of the year and then lastly, the Vodafone zygote kind of mixed quarter to be fair, we continue to feel a bit of pressure on broadband.
But at the same time fixed up who was at 4% and postpaid mobile subs with straw and you ruin of the team have really leaned into a number of programs to drive broadband growth, including smart Wifi and broadband speed increases across the entire customer base and they're also on track of they just mentioned the double the give you the footprint to about 80%.
By the end of the year and the nationwide coverage and early 22.
On the mobile from convergence continues to deliver low mold, Sharon, which helped drive 51000 postpaid adds and the quarter and push fix mobile convergence penetration up to 45 per cent. So it's good to see what of and they will deliver another good financial quarter with revenue of 2% helped by double digit P b growth and their 11th consecutive quarter.
For a positive EBITDA growth with three per cent and Q1 and that's despite COVID-19 impact so wrapping it up a strong corner for us operationally with continued momentum and customer broadband and mobile growth and all guidance confirmed our strategy. The Bill FMT champions and core markets is weeks away from our biggest milestone yet with the completion of the <unk>.
Virgin O two deal and Meanwhile, the benefits of fish mobile convergence continued to materialize around scale synergies competitive strength and strategic Optionality and we remain committed.
To a leopard free cash flow of growth plan and this year anchored around a steady buyback program and seek to take advantage of but we all fields of meaningful value gap and the stock so with that Charlie over to you.
I'm starting on the Sly type of returning to revenue growth the groups of revenue growth and put two per cent of the first quarter. Despite continued to street shoes, and the pandemic and kind of thing of groups right by and estimated 60 basis points with drugs for Dumbly related to you and your reductions and really.
Oh of operations with more substantial mogul businesses and Jude groups of impact from the <unk> and we sort of 900 and do a drug and Switzerland. The trends continue to improve within the line results blues of it.
We used to and headwinds of $8 million, and Belgium, and $60 million and the Netherlands, the 1.8% growth with both of them and zig of represented eight consecutive causes are to blame for growth with strength of foods Christmas consumer and be to be statements and the <unk>.
And the next line of you provide details or just the debit but of course, the couches soon and just wait and results.
This is my strong revenue performance verge of media M. P D a to kind of 1.9% due to pre Mujik coast, the ketchup and as previously how much of the ongoing investments and due to the wound customer kind of onshoring moving to increase the operating expenses.
And the benefits of these initiatives continue to terrorize twins would improve and the second half of the year.
And Switzerland of seven per cent headline decline as explained predominantly by impacts from COVID-19 and $11 million of comes to catch up with the first and to do starting to mature Rosemary for home goods.
More established conversed assets delivered of very strong performance the tone of growth rates benefited from the acceleration of Priggery rights and the price of your period is Mike Sporting events opposed and March 2020, and that's it and put the one I'm wind and Q2.
Focusing now and O S. Yeah, well, despite the head with the $30 million of cause of the ketchup the consolidated group delivered 5% growth.
The strong results groups of you can on the Belgium of predominantly due to the India phasing a couple of the projects.
And the Netherlands, Chief 17, and a half the sent you and your growth with a couple of intensity of 19% company for the sales and and Ospf margin about 27% with aspirations for for the digital and systems efficiencies Disappoints have you competed the synergy program.
Focusing on of cool Liberty global perform as much of the free cash luck, we delivered and $93 million of free cash for and Q1, despite the phasing of interest payments for doberman before the and the first and for the closest of the.
We are on track for for you of guns of $1.35 billion, which represents 26% here and you of growth with growth accelerating even more and a portion of basis as the aggressive he retired and I'll smoke.
Turning to a couple of allocation dashboard, we ended the coolers with nearly $3 billion of cash having allocated for $147 million to buybacks across the first few months of the year, representing nearly half of the current 1 billion dollar authorization.
Moving to and I read the cross off hopefully and we continue to of bright known Turner fully hedged credit silos and.
UPC credit cool, we refinanced the sunrise acquisition debt, reducing the cost of <unk> to for 2% securing $18 million of annualized interested savings going for it.
These and I was he could of the issuance of sustainability link notes with embedded commitments for improved energy efficiency and the use of renewables.
Finally, we value of of benches pool party with $2.5 billion, reflecting the full color on one of the one 9.9% snake and on T V. The step up and value of all Univision snake for them, the announced module kind of <unk> and the partial monetization of of skills investment.
So the concludes we continue to of debate to bring the breast per months to our customers and a convergence strategy of delivering for.
For like a strong stance of the we are responding a bunch of media got improving the M. A D. A M from low single digit decline to pull the stable. So small change, but it shows investors have the best sense of the underlying trends as we seek to close the oh too much for the second quarter.
We can pull the all of the previously announced guns metrics and with that operator of its questions.
Thank you.
The question and answer session will be conducted electronically. If you would like to ask a question. Please do so I pressing the star of Astra key for by digit one on your phone and order to accommodate everyone. We request that you ask only one question.
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And our first question will come from Polo tank with you B S.
Yeah, Hi, thanks for taking the question.
Yeah, Hi, Thanks for taking the question. So I just wanted to come back to of comments about strategic Optionality and the U K Uhm. So can you maybe give us your latest thoughts in terms of cable wholesale and the potential five O J P and the U K. So where are you want talks with potential partners and are you mean.
The cope with you for Nigel partners or strategic partners and then also could you maybe talk about your 50 per cent steak and cornerstone and is the strategic or or non core.
Sure type of the <unk> I can't get into too much detail on who we're talking to and who we're not talking to and you can you can respect that I will say, though that the opportunity from my point of view looks very real today. If you look at the 2.6 million home debt would we be.
<unk> already of lightning.
And we'd go for the vast majority of those are fiber, we have great experience and construction of fiber we have of ready made operating platform to go out and build fiber and so you know our ability to ramp up quickly and have you know behind it <unk>.
<unk> and and a product and of bundle to go out and penetrate with is pretty attractive so I'm not gonna get into the specific today, except to say that we are gearing up if you will to present that opportunity to the cancel strategic and financial partners to expand our footprint of course, the if we did that.
And then the question we have to ask is where are we going to exploit that opportunity ourselves and leave it for Virginia.
Oh, well we provide.
Wholesale access and that is you know and negotiation and some respect with your partner and what the best return to both the core business as well as the investors. If we adds up so it's it's ongoing it you know the cost of to build has come down our ability and effectiveness of buildings gone up you know or not.
<unk> of the markets and where we would build is terrific. So I think those 7 million homes, you know or what are the art for the the construction of if you will but who and when and where and why I think we're gonna keep that to ourselves for now except and you should expect it to be a fiber of build that verge of media is likely to be.
The core customer of that network and the wholesale access to that network will be the commercial negotiation, but but likely just to ensure that we're getting great utilization because while we may be able to for penetrate 30 per cent, we've shown that over and over again on our $2 and 50 million homes and go with Lightning and if you've got the 40 50 50 per cent.
Penetration on that new construction and that's obviously a better return for everybody. So so stay too I guess as well and I can say and then.
What was your second question and <unk>.
Oh, it's back to the cable wholesale the also your cornerstone tower of joint venture and cause I have to say that's part of your and I think at the perimeter of of your UK business day, how did you take that that and cable wholesale I think we'll look of will address that when the transaction closes you know, we'll sit down and look at that tower asset strategically.
<unk>.
Obviously, we're in a position to if we wanted to monetize it at the J V. You should assume that there's a possibility we would look at that favorably. So let's wait for the transaction clothes, you know with the decision would like they make jointly with our partners Telefonica, but we're obviously in a position to.
To monetize of that if if we felt that was.
Appropriate and and the other needed or wanted to get the capital out to do some of the strategic thing so.
Thanks and.
And you got a.
Thank you. Our next question will come from David Wright with Bank of America.
Well, thank you very much for taking the.
Thank you very much of the technical the the the questions and I guess, it's just the simple fall along from.
Some of the question before I think you'll you'll current one right build right till style of lightning is instead of looking at for them to fall from the top informed of Tonight before and 50000 per on them I think that's why you've been running and wife, possibly indicated you could you could continue and do you think the reason opportunity with your current <unk>.
<unk> to raise that one right Uhm mind, you think there's an opportunity to kind of.
Do what the T Day, then and double down and you know with with the capital behind it from one of the source of <unk> to do a lot and will night into yeah 1 million per on them, though.
<unk> <unk> I think there is and I'll just the I'll, let loose provide a little color on that I'll simply say that the four to 500000 homes.
Was a a balance between you know what our capacity was and what our desire to generate free cash flow is so I think we were trying to optimize the bill Luth has always been banging on the table. The Bill Moore, but we were saying well we can do more we should be of more of of time, but let's try to optimize the financial results as well, but look.
Why don't you address the the bill capacity.
Yeah. So I mean, you you you could pet compare the bit with open the reach US well now they are currently moving <unk> predominantly P. I E alright, and using that went back.
And at the moment, we we have this old and the the percentage of below 20 per cent of <unk> and the opportunities to go up to 40 50 per cent of it. So you can expect that this is one of eager to accelerate the machine and second we have prepared the machine.
For for for the scathing, meaning at that hour popping up kind of ran the additional and <unk> and the bite off of my colleagues and also we can.
Even thought of more region of the approach. So we know where the seven <unk> home for all we know how to scale of the machine and we will absolutely take more usage more use out of P. A a and if Mike said before right we have to get the furniture and construct right the pop and entering right and then also per.
The in agreement with all of your Tricia or the Pentagon.
May I just the the original question, which is we've obviously, we're obviously talking that about the lightning and for stroke is it in your mind the total to consider the whole filing the existing cable footprint and <unk>.
Well, we <unk>, we have obviously considered that and I think we will continue to look at that as a possibility, but premature to discuss that today and obviously it could be utilized in that regard it would depend on the number of factors and and what sort of.
Partnership and and benefits, we would get from doing something of that nature. So it's premature I think to get into that but it's obviously of theoretical possibility of.
You know as I mentioned, the 2.6 million homes are largely fiber anyway that we've already built and the existing homes and you know the missing 13 million homes that we that are HFC are also if we chose to I either easily upgraded the doctors for of fiber or potentially could be made accessible on the <unk> on the wholesale.
Virginia, just premature to think that through I think the main focus today is to get the birds and footprint extended the be the you know the number one broadband platform and that market place for the for the foreseeable future not forever and we have a great opportunity to do that.
Based on the conversation with this out here so.
Thank you very much.
Mhm.
And moving on to Michael Bishop with Goldman Sachs.
Thanks very much.
Alright, Thanks, very much just a question on Switzerland. So we saw the the sort of big Bang launch of of the new tariffs from the beginning of March but I was wondering if you could just elaborate and a little bit more on the medium term strategy with regards to the combined Sunrise business.
Mainly from the perspective of <unk> are you still I guess <unk>.
Sharing that sort of old Sunrise strategy, which as you and I I unlocked the low chat and the market three promotions to try and drive more of of natural balance and market shares and the market given what swisscom has or are you thinking more.
Uhm around and there's potentially more price inflation. So just wondering yeah essentially failed price for us is volume debase some of the <unk>. Thanks.
Andre one handle that.
Yeah, I can and of course yep, Thanks, Mike and for the for the question. So I think what we have seen and this was market is that the promotional activities have been quite and tense. Nevertheless on both ends of the Sunrise business and on the UPC business, we could the lately benefit from it in terms of the share of.
Of additions and that has contributed to the stabilization of of the top of line of evolution of of the combined business. So overall I think and while that is it quite heated market. We're currently rozzer benefiting from the situation, but then suffering from it uhm going forward of course of what is the most important to us is and it would.
Drive more convergence, that's true convergence and create more stability into our customer base and create or the more opportunity for cross and upsetting additional services. So that is really the the Kia strategies and we want to push you in terms of fries aggressiveness I mean, it's not about really about us, but and then in reality the price of <unk>.
And the market is really salt was quite aggressive price points on mobile and on fixed and we will have logical petition from them as they will benefit from the growing five of penetration and Switzerland, but we think that we are well prepared was the convergence strategy. The we executing which temporary would give us an edge as we have.
The benefit of the fixed and <unk> product of it sits on the age of see footprint and has a speed advantage. So overall I think there will be of glad you change I think towards more convergence uhm and the and the market number one and number two I think the price of aggression is unlikely to further accelerate.
But potentially rather too soft and the over the midterm.
Great. Thanks very much.
And our next question comes from Jeans, Ratter with New Street research.
I.
Yes. Good morning, everybody. Thank you very much indeed, and not a question just regarding the trends, you'll see and U K all too at the moment <unk> got a little bit of.
Drag from some of these of calm effects or the modem and presumably some of those will start to lap over the next few quarters and then we have the price rise and you just put through and Marsh. So you know is that in mind, just thinking about how we should think about the phasing around <unk> for the next two to three quarters.
<unk>.
Did you want to go for that or I can let the but yeah for sure go ahead.
And I can I can so so and <unk>, it's Mike set them up and the opera down for per cent drive of Uhm that and Q1 20.
Really benefited from the price rise and queue for 2019.
Which is not the case now with the the price rise half the other two materialized from first of March on the web and Q1. So therefore, we would get the entire benefit out of it and you tube and so that is one driver. The other driver if if you set and of contact notification average.
Hello from notification and now this is something which will continue.
The overall impact is much less.
Then we have planned for an estimated for the rocky at the top of it. However, it is still to this day and then mm mm right that it's the the pressure the extra there should market if it's the quiet you too.
And while the best book of price and it's very rational everybody's too and probably thrive, but part of the <unk> <unk> Lola the different prices with lots of a bit of dreck, which I don't expect to change and then we had and the boxing events like that what's the Big book thing is and.
And why they're getting Fury, which what's the one time of so so therefore I think the opposite of development going forward. It's it's a bit more positive remember and Q2 that'd be past the spot content for customer for <unk>. So definitely that will no help up but the going for what.
I don't I don't want to come up with a tech number of but I think we want to save money for it.
And can you hear me can kind of start to get back towards the more stable off of your trend by the end of the year. Please.
Yeah I mean this this it's always the balance between volume and bedroom right and what the market with offering and I mean, you have seen that we have created huge customer addition to the ninth of our customer additions compare the 221.
20 are up 18 per cent. So most of the growth is coming out of the acquisition and I'm. So sorry that it's always the balancing act and I think it would simply wouldn't be serious too now predict what will happen until the end of the the.
But I think it's fair to say that this quarter and outlier should be and out yeah in terms of yeah. How negative. It is you should see something like this again and the balance of the year.
Yeah, and I think what I also want to mention is that with the.
Oh, Oh, almost negative quarter I think if you compared with competition I think it's one of the best how cute development and the market.
Credit and thanks, guys.
Mhm.
And moving on to Robert Grendel with Deutsche Bank.
Thank you.
Back to the U K, if that's okay, Mike I I think you're leaving of from the earlier ounce of that you prefer and organic and build scenario and the U K and have the experience and knowledge for that and it was that says you can scale.
But is it tempting of total to supercharge the national opportunity for broadband posto, too bye wholesaling off and open that or even to buy and existing play of.
Who is building outside of your own footprint. Thank you.
Well you know us Robert we will look at all options to accelerate and advance the particular strategy and the the the ideas you describe are really the incremental steps, we could take two accelerated or and or improve upon.
And Ah core plan, which is you know utilize the expertise we have the brand and the product and the penetration capabilities, we have to expand the reach of the network, while taking advantage of what we know to be a lot of capital of excess capital really looking for.
Business opportunities like this and potentially strategic partners locally who would join with the benefits being not just acceleration of vergence growth because we've proven with the 2.6 million homes that we've already built we can and will penetrate you know really well and and grow the customer base and that.
New territory, but also the benefits that come from perhaps for me rating that project and getting you know being stronger financially the benefits to be to be business, which could be material with a lot of good things that occur if we're able to pull this off and you know look and I don't want it implied to anybody here on the call that this is something for sure you should be making into your.
<unk> your for your plans right now, it's too early and our J the isn't even close yet I'm simply saying that it's it's an obvious opportunity that comes from having the scale and you know the the <unk> the benefits of synergies and other aspects of the J V that we will and should be evaluating.
And we think there are lots of opportunities to do that with or without financial and strategic partners and and the case of with obviously that need the to better and packed financially and from the the meaningless capital and even without and we think it's of great IRR, we've proven that on lightning. So we'll see how it unfolds and the things that you describe with by and all of that for you.
Utilizing <unk> that those are sort of incremental steps that may or may not be accretive to the core strategy, which is you know you need to control your own destiny, and this and the and the space and I think that's our main goal and if those other things can help realize that goal will take a look at it.
Great that I'll pull up thanks, Mike.
Mhm.
And our next question and come from Jeffery for the check with pivotal research.
Good morning, guys I wanted to focus on the strong UK day to subscribe results.
You've put of a nice string of results together and.
And how much of that is just churn dropping so the dramatically just hoping you soon and the U S. Around COVID-19 for increased gross connect activity I guess for you to talk about the sustainability of these results and then have you seen any material pick up and consumer interest and being a soldier higher speed day the packages. Thanks.
<unk>.
Yeah, So like I said before that Oh exposition up by 18%.
So this is almost making up for the entire number so.
Not so much try and driven it is and tie the acquisition driven and this is simply we think the question of demand for I S. B U S. You said and also our day to to get this Alization program is really taking off so the ditch until 10.
Sure it's half the increased from 41 for central 51 per cent.
Yeah. So the the the machine is running and.
Uhm on true, though it was the three per cent better. So yeah. That's all of it so mine of from 14th.
524, P and got too, but and does this also success the call.
Right. We we we have increased prices. So the the the price increase quarter of a year ago or 18 months ago, except the worse than close to the 20 per cent sure alright. So so so it's better of from from both regards but but if you look at the exact number it it comes from acquisition and.
And the speech metrics and these days S. You said <unk>.
Average come to you and speed is hundred 80 for <unk> now I think coming from the last 475, and it's all quantum friend and I mean, you're right at home at the moment Homeschooling, Homeworking, and then I'll try and for payment.
The streaming right and.
And that helped you out and maybe <unk> for your question maybe to your question Jeffrey is it sustainable. So I mean, we have commercial momentum actually speak and so so so of <unk> that is good and we want to keep that.
And obviously when you look to the next quarter and that was indeed the quarter that has highly benefited from the start of the pandemic alright for remember you couldn't.
<unk> onto the Openreach network for some part of the time because of the missing for your technicians and the field. So so I think don't make the mistake and and expect the same number of the crux of quarters <unk>, but the <unk> the amount for the speed of say a commercial momentum is there and I think.
Overall as an industry. Obviously right. We also are fine for me to find solutions for chipset and alright, I need the the cynic and a shortage of three I'll and I'll, but but the <unk>.
The the the month of speed and the commercial more of a comes up to the to do that.
Great. Thank you.
Thank you. Our next question comes from Steve Malcolm with Red burnt.
<unk> <unk> <unk> <unk>.
Yeah, you get off of it and guys I'll I'll try and sneak into of I can the second one very quick one just and slides 16, and he talks about the lower cost of of using passive and restart your access from the T. Six.
To underplayed and saving can you just uhm give us some details and so the the overall economic decision there because obviously, there's ongoing rental costs of the beaches be considered and also you know as you consider increasing the scope of P. I a from the 20 per cent of the 40 to 50 per cent does that impact where you dislike. The build you know given the availability of P. I of course, the the your case of <unk>.
Just some extra color on the sort of moving parts of that decision of Rohan future Bill would be great and then just pulling up the <unk> previous comments or just a quick one you know obviously the it was very good to the price strike line without any major try and and packed sometimes the trying to like you know as of the new bills of a heart of bills hit customers accounts and it should we expect slightly soft.
The cute too and did you see saw the increase turn on that price fries hitting their of times. Thanks a lot.
You want to take the second one first and it's.
Yeah, So you're absolutely right you see the big mantra right roughly you see <unk> off the true and when you you really sent out the letters and want the and the bill kicks in and so I'm <unk>.
For the.
And we will see a bit at all for the.
True and all of that and Q too and I think on on your question, where where are we intending to to build I mean, we we absolutely take the commercials into account alright, so if it's <unk>.
More expensive to to pay for a P. I E. And then we put the <unk>. If it's cheaper we never H P. A a and oh of over or the collection of the the 7 million homes.
More link to the how easy and general is it to access the how far is it from our network. The the is it is it entirely cities are we there already with verge of media and therefore, it's easier to penetrate and it's it's left the question.
How much P. A a are we able to use one of them.
Because of what what would you say you Gotta remember I believe goes to somewhere around 50 D over 50 per cent at some point.
By the collection of our plans.
The will be come and increasingly the larger part of the bill the overtime.
Yeah, I mean, the only on the <unk>, we absolutely no right. Yeah, I mean, Openreach is publishing where P. A a is is available.
And then obviously you you take it the the heck ought to be on the safe side and and therefore right. The number of we have plenty of with this something like 45 per cent, but <unk> and.
And let's see right. We are currently of ramping it up coming from 18 per cent and but definitely an opportunity and it goes both ways like one hand slide you can connect the faster and cheaper on the other hang tight and they'll be with me all the additional homes a bit more far away from the network and therefore.
<unk> like the ultimate more expensive.
Okay, but just to be clear what what did you say you can go to 40 or 50 per cent. That's that's the function of you becoming more familiar with the processes and just the way it works and and when you're way out of the cost I mean, when you when you compare 392592 and average give the the 390 doesn't include the rental costs, presumably you've got to pay to openreach for access of those dogs and.
<unk>.
But remember the five nine got it includes some P. I a right and the first quarter. We were about 20 per cent out of something like that so if there is some P. A build out of that but it will definitely be of benefit to the overall cost for promise and is it said, we'll just be you know as we go sneak by Street town by town, we make those decisions the optimal way for the overall.
Project.
Okay for Ya.
Any other time.
And the machine, it's alrighty scaling right. So we are operating at 80, because that and it's not the only of question of how quick the can we say it scared of the machine like we had ultra of doing a new housing formations. We are doing infield. So this bill uhm pop of a four to five kind of line.
And <unk> every year, well you cannot Tuesday, and when you look at the 7 million there. It's it's naturally more of.
More of the ability of a P. A S. I O yeah, Yeah Tomorrow, New <unk>, new build network extension, yeah and the monument.
Okay. Thank you.
Yep.
And moving on to Nick while with Society General.
All the guys are you well it was the question my please on the <unk> the subs of sliding of it faster and again with the <unk>. The the analog switch off so you can how about the <unk> the pricing and speed can you just tell us what your name's all please for the food.
For me to go in terms of subs and was to you and to try and stabilize and what could you use to do that what would you go for price and instead.
Could I also try and quantify just on the on the side of the billed and the U K, how much do suit and could exploit ukase uhm Super deduction on tax as well is that something that applies to all of the bill of just part of it maybe you could help us with the ultimate Thank you.
Yeah, maybe the room home compensate you able to put a day goes on the call. So I'll, let him work through and answer on both of them and they go strategy around broadband because obviously he's.
And that bill and that strategy and on the the taxes this and I'm not entirely sure I'm I'm with you on exactly what you're referring to but obviously and at the broadband right issue is very helpful for us and tons of new construction and fiber and we're always looking to reduce that bill if you will which seems to us to be.
We might have other ways of producing that bill by the way beyond just five and so we're always focused on on that particular types of impact.
And I've tried you of any day out on that the next question, Yeah, and I would just say the other part is the accelerated allowance is 125 cents does apply to the build and yes. It would have a positive impact I think it's too early to quantify cause it and pay depend on the build right and it would kill you depending on and nothing but more about Oh two's techs profile, but can you give them. The other two the attacks per there will be some incremental cash.
My savings generated from the new accelerated loans.
I <unk> I <unk> I mean, the tech will the Vodafone to go question Okay.
Yes of course, and thank you for that for the question and <unk> I.
I think I heard a few questions. Good morning, somebody the my bold and until the the value and the and the strategy. So let me start with the strategy pause and you see what kind of a solid quarter of the W growth, even the growth and we've had the quite consistently uhm. So what I'd like to say the plane is working and we've had from the start of the J V for years ago.
And we will focus only fix mobile convergence and and that is still the cornerstone of just trying to get going forward to fix mobile is working for us we've seen the reduction and turn on the mobile side of the line eight zero 80 per cent and on the fixed side of about 55 zero per cent uhm and that's remaining stable combined with much higher net promote.
Of course, so and you also ask the doesn't gonna be more value old price is definitely gonna be a valued drink from strategy uhm, hence the things that we are doing and you said you talked about the and it looks which of them. So we have the need complete the b M looks scheduled quite quite a bit of work to take 1.2 million customers off the antelope a signal and.
The the most the digital.
<unk> and it gives the customer of <unk> the little sorry, that's very important and gives us the ability to increase the network capacity, Buddy and it and and in that sense has allowed us actually go through the COVID-19 period with much more much higher demand from our customers without any problems and allowed us two frames of upgrade the <unk>.
<unk> by 40 per cent on the average in April, which we have done to our entire base and no additional cost and also the value driven big yard and we are lunch and new smart and Wifi boosters, and the and and the new and improved and really focusing on improving the Wifi coverage and the how's the in house experience from our customers.
And I'm, just having a much higher and P. S. Oh nine of 20 points first is that going to the customers and then the last the and there'll be super important micro and he spoke about the the digging it coverage today, we cover about 40 per cent of the country with digging it and it works and will be 80 per cent of Buddy and the you and that will be 100 per cent by mixed.
<unk> and today by the way that's already 500, Meg the 600 Meg of course, the whole country somewhere and a good place if you compare it to K P M and we'll definitely playing the value chain first of all the players and the market, who will probably a bit more price of it.
Great and thank you.
And we'll take a question from James Ratcliff with Evercore ISI.
Great. Thank you.
Two if I could first of all you know.
The continued and strong performance on the <unk> and so how can you just talk about what your market share is and what share of of the potential locations, you're either connect to or past close by so so what the what the outside opportunity of essentially there is and second and fix them all of a convergence where would that 25 per cent b.
And the U K once you close the transaction and can you talk about how you are going to integrate the customers who might be Oh, two and uhm oval Virgin media fixed line together and can I get them on the same plant. Thanks.
Uhm James on the B B a question, it's unclear whether you're asking of generic question or a specific question around of particular market, but you know I can just tell you K and boy generically.
Yeah, I can tell the more generically that you know the <unk> the opportunity for us across the board.
Continues to be and you know.
Perhaps the most exciting one of the most exciting things that's that's occurring here many operations with double digit P. T V revenue growth and the U K in particular with the dark fiber Wood show and to me penetration range I think our overall luge correct me if I'm wrong I think our overall market share of be to be and the UK is less than 10 per cent something like that so there's.
Yeah, the massive opportunity to drive B B and the U K with this combined business platform and we've seen that same opportunity and all of the market. So watch that space and you know we'll start to highlight be to be more than just the comment as it relates to revenue because for us as we as we upgrade networks as we extend networks the <unk>.
Be the be element here of particular, Soho and to me, which is the growth driver and every country, but also and of Lutz is the number one provider of of backhaul and dark fiber in the U K F. I D rolls out and and that's gonna be of continued source of revenue as well. So it's all good news I think on the day to be front, and with mobile and joining us and the UK with.
Mobile, that's obviously going to create another accelerator in terms of mine.
Monica over the number of that.
The second of November please.
This is get the most of the address of the monkey, but at the battle of coverage, Belgium, and all of the north of the 30 per cent of market share is quite a bit north of and you were and we're around 10 and most of the of the market's growing fast so he to Switzerland, and the UK big opportunity as we see at the cellar Ah so of products no for the.
So the customer so her current customers and that's totally which has been proven and the vet of luck. So we agree with you with the very strong growth.
Leave it for us.
And that you wanted to ask for you I mean the market share.
Okay. Yeah. So so first I mean, the Soho market share to be precise it's at the moment and UK of 10 got five per cent, so pretty much what Mike and Charlie with thing and we are growing rapidly. If if you and alright. So we have increased the customer base 28 per cent your and your and the revenue 17th of time.
And I mean, we have and also I think and Germany, if I'm not mistaken right and we had at the end of 40 per cent market share.
So so huge opportunity on fix more of our convergence.
Well I mean, what we are going to do with the Drawbench I think we we only can decide really off the company. The one at you know and but but obviously I'm, having access to 33 million and move our customers and on the other hand kind of having the opportunity to of <unk>.
And.
<unk> G more of a network and it into the the media with the different Brian <unk> I mean, <unk> <unk> operates more of the low end of the market.
The tip it could be used for the second set of <unk> and the whole spelled y O. Two of has the highest the options. So at the trust and cutting the household so so and it it goes without saying that this will help us to accelerate the the victim of of congrats customer base and the Germans, how we're going to do it exactly S day with.
And we were this close that day off the off the coast.
Thank you.
And our next question comes for of Matthew Harrigan with benchmark.
Oh, thank you.
Oh, Thank you one really down and the week question on the presentation of the kind of a day of those question. If you will if you look at the 516 and it looks like the project lightning the penetration rate suddenly spike from 30 per cent of 35 per cent and the last quarter I mean, that's that's the real normally.
The kind of like just <unk> put up or down by my one or two is that accurate and does that and for that despite the good customer number you have some press the pressure on your legacy footprint and then the more or less dabbles question and.
Is <unk> you to the extent of <unk>, you're still on the market is getting very aggressive and technology policy I'm going up and things like you'd like me for like a I know you're on the golf your final matrix, but still we were Quadplay average are becoming more and more relevant to that I don't think you've got too much throughout the exposure I guess the luminoso the N L P.
J V and someone could I can I can pick up and is there anything that adds to to you. One on tech call for you that you said you really affects the economy or actually affect you directly.
And.
Well I'll, let the looser dig into the 30th of 35 per cent question and I'll take on the dumbest question quickly.
And that's and I think and principal amount when you step back we are generally align with the E. U on most if not all of their basic policy initiatives whether that and.
And the initiatives around consolidation around you know how to manage or a dress big Tech and I don't see really any red flags for us on the horizon I see mostly positive developments on the horizon, especially if you look at the local regulate regulation I mean for example of calm.
I think it's taking a very positive of position and the posture is very favorable for us around and network development and infrastructure investment and things of that nature. So the country by country basis, We're really focused on those things things of the impact our business more concretely today, and then and abroad.
Basis, you know I don't see anything in the near term and he made me and even the medium term on the more regulatory <unk> and if you will that's gonna impact us leg of it but probably impact of positively and it's not that we are you know we believe the big Tech Big Tech drives our business and the other hand, and we also understand where the regulars are coming from on that I think it's of non.
The vet for us for the most part and we don't get into that debate kind of stay on the sidelines of it but there's nothing that ICM horizon net.
Particularly problematic you know we were dealing with the quality of issue from time to time from place to place, but we've addressed that publicly and that's more of of near term issue that we think we can manage quite effectively so I don't see anything on the horizon that concerns us <unk> do you want to address the penetration rate the project layout.
I I think I'm right one of the very early cohort happy and addressing area of where we could get to substantially higher the penetration. So therefore, we we don't have and all of our business case really the the 36 per cent of you're referring to so we work with 30 per cent.
Having set that I mean, we we still currently we of cheap the 30% of.
And our <unk> set forth and.
And over Yeah, very limited access to prospect.
The reason why I say that is that more and more we use the ultra of a digital tape machine to sell more of lightning and we apply more data and that and artificial intelligence and and.
And we think that is the way to to for the increase lightning. So so we don't change our of guidance yet, but what we see currently how we are able to sell lightning substitute to be and what kind of intelligence. We can apply here is.
Okay, you're very problems.
Thanks Bye. Thanks for you got it I think that's it operator of I'm not mistaken unless they've got something else in the queue recur.
And we can wrap it up.
So the the always we appreciate you joining us today and this and I'll I'll, just say a few things and.
It is and if needed here of of number one stay tuned because the transaction and the UK. We believe is imminent of course subject to see and May approval, but we believe in the date and a matter of weeks really and that's the big moment that the big moment for a number of reasons one because it is and itself a fantastic transaction for our shareholders for customers for the UK market is the whole, but also because it means.
And we will have essentially completed the conversion of our for largest markets and the fixed mobile champions and at that point, we can really start to drive the operational and strategic plan, but also the narrative. The the key narrative that's critical for telling our story about and we're we're taking these businesses and how we're gonna create value and the second main.
Point just to leave you with what you already picked up here I think is momentum is in our favor here of the tailwind of real in terms of broadband and it takes mobile convergence and it's driven by innovation by all of the things we've talked about but you know and we certainly feel good about that momentum and you know and believe that momentum the sustainable for the reasons, we've discussed today and the last one and I'll make us.
Converting free cash flow guidance, what point, you know three 5 billion up 25 per cent of more than 25 per cent and you know not to be lost there. You know we are we looking for the castle per share more than free castle itself and so from our perspective, you can do the math the free cash flow per share story for US. We think has he been.
And Ah more relevant and something that we pay attention to so those are the three big headlines I guess to leave you with and we appreciate you joining us on the call will speak to you after the second quarter and take care of everybody today well.
Thank you ladies and gentlemen, this concludes Liberty Global first quarter 2021, Investor call. As a reminder of replay of the call will be available and the Investor Relations section of Liberty Globals website.
There you can also find the copy of today's presentation materials.