Q4 2022 Liberty Global PLC Earnings Call

February 23, 2023

Good morning, ladies and gentlemen, and thank you for standing by and welcome to the Liberty Global fourth quarter 2022, Investor call. This call and the associated webcast are the property of Liberty global and any redistribution retransmission or rebroadcast of this call our web.

In any form without the express written consent.

Liberty Global is strictly prohibited.

At this time all participants are in listen only mode. 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 question and answer session page two of the slides detail.

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 facts. These forward looking statements involve.

Risks that could cause actual results to differ.

Materially from those expressed or implied by these statements. There are risks include those detailed in Liberty Global's filings with Securities and Exchange Commission, including his most recent Form 10-K.

In Q as amended Liberty global disclaims any obligation to update any of these forward looking statements to reflect any change in its expectations or in the conditions of which any such statement is based I would now like to turn the call over to Mike Reed.

You May now proceed.

Okay welcome everyone and thanks for joining our year end results call I hope, you're all doing well as usual we have some prepared remarks that Charlie and I will manage and then we'll get right to your questions and for that I'll bring in my key leaders, who will be ready to respond.

As needed.

Working off of slides as we usually do and they can take quite a bit of good information. This time. So we will assume you've got those in front of you or you will access them at some point just warning. This is our year end call. So there is a bit more information than usual, but bear with us we'll try to keep it Chris.

Begin on slide three with some highlights for the quarter and the full year and I have to start by saying that I'm extremely proud of my team in each of our operating businesses for how they executed through a challenging year just when we thought things were getting better Europe was hit with a war in Ukraine, rising energy costs record inflation and <unk>.

Cost of living prices that impacted customers really across the region, but despite these headwinds we hit or exceeded all 16 guidance metrics for our big FMC operating companies that we established a year ago, and we beat our forecast for distributable cash flow of the Liberty global level by $100 million and that's using guidance FX. So this is.

The third year in a row that we were faced with external uncertainty, but still managed to deliver on our public targets.

Second and perhaps not surprisingly Q4 was very strong quarter for us across the board we delivered positive broadband in postpaid additions in every market fueled by convergence offerings in Black Friday campaigns, and our largest operation Virgin media delivered their best financial result, yet with a double digit EBITDA growth figure supported by price adjustment.

Synergies in net adds and then third we continued to benefit from consistent and steady revenue growth in our three most important segments, which are <unk> broadband and mobile and just as importantly, we're actively addressing headwinds in our BDC fixed businesses more broadly with smart network and product innovation and I'll dig into both of these topics in a moment.

In the fourth we've maintained a clear and consistent approach to capital allocation in 2022, we bought back 40% more stock than we guided to a total of $1 7 billion or 14% of the shares outstanding and we're on track for at least another 10% this year and in a few slides I'll expand a bit on how we see our capital allocation framework going forward.

Forward.

Finally, I'll, let Charlie covered the details of our guidance, but I'll just highlight upfront that despite continued investment in fiber <unk> and digital this year, we expect to generate another $1 6 billion and distributable cash flow in 2023, so a strong year for us operationally and financially and as we'll discuss in a moment, we're well positioned to drive value for shareholders moving forward.

Slide four is our standard schedule showing connectivity trends for our four large FMC telcos over the last five quarters. One quick observation is that for the first time in over five years every market experienced positive broadband and postpaid mobile adds in the fourth quarter. The top left shows <unk>, which has delivered three straight quarters of sequential.

<unk> growth in both broadband and postpaid net adds despite intense competition in our cost of living pressures in the U K broadband speed upgrades together with strong momentum from our volt bundle drove our best broadband quarter of the year by the way, we outperformed BT again and regarding an even higher share of national gross adds than we did a year ago Q4 also.

A strong pickup in postpaid net adds.

Is always an important trading period for mobile and the <unk> brand continues to perform very well, especially at the top end of the market with sector, leading churn well below 1% now Sunrise in Switzerland also had a strong fourth quarter with 53000 broadband postpaid adds importantly, after two quarters of losses in Switzerland delivered positive broaden.

<unk> growth helped by a strong black Friday period focused on one gigabit offers and a new Netflix bundle, we put into the market. This was particularly good performance given the continued higher churn we've experience related to the UPC brand migration that we flagged really mid year last year now in postpaid summarize delivered another strong quarter with 34000.

AD supported by the Sunrise brand refresh and interestingly, our Swiss ski sponsorship, which is off to a great start now that the ski season is fully underway after nine quarters of broadband losses, Vodafone Zygote delivered 7000 net adds in Q4 in part supported by its zero sprinter and Black Friday campaigns look at the Dutch market remains.

Hi, Lee competitive with price and quality of service now becoming more important in fiber when you look at customer churn incidentally KPN loss broadband subs in the quarter Vodafone as it goes 26000 postpaid adds were negatively impacted by the loss of some corporate accounts, but were still higher than KPN in the quarter. It's also interesting that T. Mo took some pricing in January of <unk>.

9%.

And then finally, telling that added 13000 broadband in postpaid ads, which is largely consistent with prior periods and postpaid mobile adds were steady supported by their bundles and really strong performance from the base brand. So solid execution across all of our markets in broadband and mobile and slide five is also becoming standard chart for us showing revenue growth.

Across the four main FMC op goes and then broken down by revenue segment. So there is five key takeaways here first if you look at the total revenue growth for each FMC Opco Youll see that revenue remained resilient with broadly stable to positive trends across the group.

As you move down the chart, however, youll see that consumer fixed revenue as a whole is consistently negative from negative one to negative 4% and thats impacted by losses in video and voice are to use something you're well aware of as well as pressure on <unk> and mixed during this cost of living crisis, but interestingly, while we continue to lose video subs at a rate of <unk>.

Or what's happening in the U S video is now only about 15% of our revenue.

I'll spend a moment on how we're addressing the headwinds in fixed on the next slide.

Now embedded in this fixed BTC result, our broadband revenues, which continue to grow, albeit modestly and will increasingly become a larger and larger part of the fixed consumer story in every market and then third revenue growth in consumer mobile is all green across the board driven largely by service revenue, which is growing 2% to 4% across the group.

It is a function of strong postpaid additions of course and price adjustments through the year and then fourth <unk> remains a growth engine across all assets with revenue, increasing one 5% to 4% and significant upside as we expand our reach in market share and then finally is the pie charts at the bottom may clear, we have a highly diverse and arguably defensive revenue mix.

With mobile will be the C and b to B now representing almost half of our turnover and b to b itself, comprising $20 to 25% of revenue.

Slide six <unk>, a bit deeper into our fixed consumer business and how we're addressing some of the headwinds today I'll start by showing fixed <unk> trends in the top left.

As you can see have been relatively stable in Belgium, and Holland, even slightly up with both markets cutting down price rise as well and dealing with limited front book back book dynamics in the U K, Switzerland. However, we've seen around a 3% decline in fixed RFP related partly due to the fact that we start with higher arpus in each market and then thats compound.

In the U K by declining video voice and cost of living pressures and in Switzerland. As we discussed we are managing through a migration from UPC Sunrise, which has impacted our booth. So what are we doing here first of all we're taking price increases on fixed you know that around 40% in the UK and mid single digit in Belgium, and Holland and those are outlined on the bottom left you can see what we've done.

Secondly, we're implementing a number of commercial initiatives.

That are critical here by far the most important is our broad convergence strategy, which as we've demonstrated helps improve churn in PFS and cross sell opportunities we've talked about it before in Holland FMC households have on average 20 points higher NPS and 50% less churn is a real not theoretical benefits to the fixed base as we converge.

We've also invested significant effort into integrating streaming apps into our video platforms. Netflix for example is bundled in just about every market and we are increasingly able to add these subscriptions to our bill.

We're also focused on rolling out all IP in App first video devices across our markets in the UK. For example, we're now adding video subscribers not losing video subscribers actually adding video subscribers in January as a result of our stream TV launch.

And then our investments in digital are reducing friction and cost and the fixed consumer business. The tools. We're rolling out are driving more online sales, reducing call center interactions improving self install rates and driving cross sell opportunities and then finally, we're making good progress on new revenue streams and these include things like home security or telehealth and energy.

We've rolled out products just like this in most markets and we intend to continue to take advantage of our customer relationships and digital platforms to widen our revenue lens and find new areas of growth is certainly a significant part of our plans to keep growing broadband and improving our fixed consumer business relates to our fixed network investment strategies in every market.

Which we provide an update on slide seven.

Also important remind folks that we are the broadband leader today in Europe with over $31 million gigabit homes ready for service and just as importantly, we have a clear path to 10 gigabit speeds in every market with multi creative structures really creative structures that will ensure we are optimizing capex intensity. So the chart on the bottom left shows you that.

By 2028 will be 70% fiber to the home across what will then be a 36 million home footprint now that exclude whole buy arrangements in markets like Switzerland, and Ireland that add another 4 million fiber homes takes us to $40 million and brings at fiber percentage to 75%. So we could be as many as 40 million homes.

By 2028, that's good organic greenfield growth and our plans to get there are summarized on the right you are familiar with our approach in the U K, we added or upgraded 1 million fiber homes in 2022 and that will accelerate by at least 50% in 2023 again most of that Capex, especially the Newbuild capex is being invested through our.

JV with Telefonica and <unk> off balance sheet in Belgium, We've announced the deal with <unk> you are aware of that to build fiber across Flanders net coaster of cost structure that you closed this summer and in the meantime, we've agreed a reciprocal wholesale access deal with Orange that ensures that <unk> is the undisputed leader in the north of 70%.

Plus utilization and also capable of entering the south and we completed our one gig upgrade in Holland last year and in Switzerland. As you know, we're going to use a hybrid approach with DOCSIS fiber and whole buy and then finally in Ireland will be our first market to launch wholesale services on our own fiber network in 2023, and that's after announcing a wholesale agreement with Vodafone So.

We have a sound and we think efficient set of plans in every market to remain the speed and quality leader in fixed connectivity and you should expect that we'll keep you posted on progress here every quarter now moving to slide eight we decided to hit the valuation question head on this quarter. So if you back off and squint your eyes, a little bit this might look like a complicated slide.

But it's really quite simple the purpose here is to help decipher the valuation gap in our stock a bit and focusing on our FMC opco. So one way to look at our current market valuation is to break it down into three parts as we've done on the left side of the chart, so assuming full value for our cash balance and our ventures portfolio.

The implied valuation of our FMC op codes at the $21 price level is roughly five five times EBITDA and around 13 times operating free cash flow using our actual reported figures for 2022 by the way cash is cash and our venture investments are conservatively marked theyre held in very tag.

Efficient structures and we've already returned over $500 million to the parent.

Interestingly the free cash flow yield at $21. Once you reduce the market cap I ventures, and cash is well over 30% and.

Now moving to the middle of the slide the analyst community as an average price target on a stock of $30 that implies a 40% premium to our current market price of $21.

So running the same math and attributing all of that premium to the FMC Telcos result in an EBITDA multiple of around six five and an operating free cash flow multiple of about $14 five by the way our peer group trades between $6 five seven and a half and some as high as eight five times EBITDA.

The free cash flow yield of $30 by the way is still compelling at around 15%. So while our peers would be really mid to high single digits and the analyst correctly site in our view a handful of narrative to support their price targets and this includes things like telco sector tailwind in Europe .

We can now have pricing power market rationalization, and mobile revenue growth and regulatory relief and we agree with that but there are arguments also typically include three other drivers like the benefits. We're realizing from our sub base that is now 50% converged or the expectation of continued and on target synergy realization in the UK and Switzerland and the inherent.

Free cash flow profile of our business, especially given that we believe we're in a peak capex period right now so.

So I guess the message is at $30 doesn't seem like a big stretch to US one of the reasons is that we don't believe analysts have captured all of the drivers that in our view support a premium market valuations, we don't specifically quantify what a premium market price it looks like our lawry's wouldn't let us do that but we do identify.

The key elements that should support values, well above our stock price and perhaps even twice analyst price targets and those are summarized on the right hand side of the slide.

To begin with we had been on the receiving end as most of you know of six private market transactions in the last six years, where EBITDA multiples were as high as 12 and OFC F multiples exceeded 20 admittedly synergies did factor into some of those valuations, but these were subscale cable television operations not fully converged FMC champions.

And you can run your own numbers, but in today's environment. We believe eight to 10 times EBITDA and 18 to 20 times operating free cash flow are not unrealistic multiples in our base. If you look at historical transactions for high quality FMT businesses in Europe and.

In addition, there are a handful of other value drivers that we believe would support a premium valuation that analysts don't cover first.

We've gone to great lengths to build true national champions that are shaping the market structure in every country. We operate and secondly, we have embedded infrastructure upside in the form of towers as well as our fiber networks. That's not recognized third we're only beginning to realize now the benefits from new revenue streams like security gaming in telehealth.

All of which we've launched and finally, we are arguably at peak Capex levels. This year, which will result, obviously, an even greater long term cash conversion.

Add to this equation, our unique approach to value creation that relies on agile capital allocation that leverage, but derisked balance sheet and are committed to buybacks you've got a winning combination. So building on that last point about our levered equity model slide nine digs a bit deeper into our capital allocation framework and we know this differentiates us.

From our peers. It all begins with shareholder remuneration, which we show graphically on the left hand side of the slide.

As you know we've now retired over 50% of the shares in the last six years, averaging 11% per year and in 2022, we exceeded our initial buyback authorization as I mentioned by 40% by 14% of the shares and returning all distributable cash flow of $1 7 billion to shareholders now for 2023, we remain committed to the 10% buyback floor.

And we are well underway there on the right hand side, we tried to put the buyback into context. If you look at our overall capital allocation framework. We have three principal sources of cash of course, we start with our existing cash balance at the corporate level of $3 4 billion and the modest interest we earn on that before investments then you add the.

One 6 billion of distributable cash flow that we receive from our operating companies that we just guided to which includes recaps and then finally, we expect cash proceeds.

Bottom line from the sale of venture investments in noncore assets over time, we're clearly a cash generative business, so where do we invest that capital first.

You would expect we do prioritize our networks, so our fiber and <unk> investments are important to us at the company level.

None of that PP&E is funded out of our cash balance since we generate free cash flow at the opco level, but we mentioned it since it does impact the amount of distributable cash flow, we receive and therefore it is a capital allocation decision and as I mentioned on the previous that we see ourselves right now at peak levels of capital intensity by far the largest use of cash is directed towards our buy.

Back programs, where we've allocated over $12 billion since January 2017, and we are committed to this strategy again this year.

From time to time, we will allocate capital to our FMC op dose were strategic transactions that create value. A. Good example of this is the next fiber JV and the U K or even the acquisition of Sunrise and then finally, we have been building a sizable portfolio of strategically aligned assets in tech media and infrastructure now.

Building on this last point of investing capital into strategically aligned assets, we thought it would make sense to provide a bit more background on our current portfolio of investments and how we intend to manage as part of our business going forward.

Look at the top of slide 10 on the left hand side in my last slide Youll see a familiar chart that breaks down to $3 1 billion ventures portfolio into principally tech content and infrastructure and then a few notes beneath that on how that value moved modestly in the fourth quarter as a reminder.

We're not coming up with these values on our own we use a big four accounting firm to provide an independent assessment of value on an annual basis than in the three boxes in the top right. We highlight some really important updates that we thought you should be aware first.

We have 60 plus investments in our tech portfolio.

Five of those investments five companies today represent about 75% of the value and we've listed them here for your reference three of these are companies that provide innovative cloud based solutions <unk> well in bid side is the cyber security business. Our net investment in these five companies is about $100 million and they are conservatively valued today at seven one.

Importantly, each of these companies is currently doing or planning to do business with our <unk> and that's part of the flywheel, we provide invested companies and quite frankly, why our pipeline of deals is so robust. The bottomline is that our tech ventures team has an eight year track record of making money in strategically aligned product service and technology.

Companies and has already returned $500 million to the parent next Youll also see our three largest infrastructure investments Atlas edge. Our 50 50, JV with digital bridge the edge connect data center business, where we are 5% shareholder with EQT and next fiber. The JV. You have described discussed already with Telefonica and <unk>, that's going to build five to 7 million fiber homes in the U.

In each case here, we are using either existing opco assets or our strategic position in a market to create and benefit from these infrastructure platforms. It's also important to point out that these figures do not include our tower assets in markets like the U K and in <unk>, which we owned two joint ventures.

And on the far right. We provided just a few bullets on the announced Vodafone investment I'm not sure there's much to add to what we've said publicly we do think the stock is undervalued and there are a handful of near term catalysts that should be beneficial. We've also put in place a very clever structure, which minimize the amount of equity we had to put up while protecting our downside. Although there is no scenario, where we would have to <unk>.

Invest further capital beyond the relatively low cost of borrowing which is partially offset by dividends. We also intend to replenish that equity investment as we said in the press release with asset sales and there are more than a handful that we're focused on presently.

I suppose it's good to see that the Vodafone stock is up since our announcement, we don't take credit for that but obviously, that's a positive and then finally on the bottom right.

Provided a few points and how we see this part of our business evolving and.

And Youll see that the three main verticals tech content and infrastructure are targeting technology services or platforms that are right up our alley as they say we have expertise history, our unique synergies in each of these areas. We've added a fourth pillar that we simply call financial for lack of a better word which captures existing and potential investments in the debt.

Our equity of situations that we feel are strategic distressed or provide a unique opportunity to put capital to work across the first three pillars are investing principles are straightforward. We're looking for businesses that provide significant growth opportunities. This typically means businesses with scale sector, <unk> and strategic benefits to both our opco or perhaps other portfolio.

Investments were also interesting companies built around new or disruptive innovation that either diversify our amplify our core businesses and then lastly, we intend to be extremely disciplined here with exits in what we refer to as capital location. We've already begun to evaluate every position and believe there are more than a handful of assets that could be monetize both in <unk>.

<unk> group and outside the portfolio like towers for example.

Those are the core building blocks of value creation first we're going to continue to drive growth in free cash flow in our FMC champions and optimize our ownership positions in these businesses over time. This may include capital investment and M&A or strategic growth in some of those markets also will be very flexible and agile about as we've said in the past listings or spins and things.

Secondly, we're going to continue to put our capital to work in an efficient buyback program as we've consistently done in the third.

We're going to remain opportunistic about investments that we feel are strategically aligned with our core mission and with within our capability set and this last one is not easy right, but we surely earned the credibility to work here given our history of building buying and exiting assets in our sector over time.

I don't want to be on this call in three years' time sitting on $3 5 billion of corporate cash at 6 billion of liquidity I don't think you want that either so we're focused on value creation first and foremost and I think we're in a great position to do that Charlie over to you.

Thanks, Mike on the next page, we provided a summary of the revenue profile in our four key markets two.

2022 saw stable revenues in three of our four markets and slight growth in Belgium, despite the challenging macroeconomic environment.

Fixed consumer revenue pressures across our markets was softened by sensible price adjustments in Benelux and in the U K and we saw strong mobile and <unk> growth across our portfolio.

<unk> delivered stable revenues in Q4 and across 2022, we've continued pressures on fixed consumer <unk> and challenges in b to b being offset by strong mobile subscription revenue growth.

Switzerland saw Q4 revenue growth decline has continued strong mobile growth was offset by we could be to be wholesale revenues and continued pressure on the consumer <unk> as the business reset the pricing of as UPC customers and the migration to the Sunrise brand.

In the Netherlands, Despite our strong performance, we saw a slight decline in revenue growth due to weakness in the consumer fixed business, partially offset by price adjustments, which we implemented in July .

We delivered mobile service revenue growth of six 3% in Q4, which was supported by a middle price adjustment in October .

Belgium delivered Q4 revenue growth of one 7% and one 5% across 2022 as the mid June price adjustment continues to support top line fixed off <unk> growth in the second half of the year.

The next slide sets out our adjusted EBITDA performance in the quarter.

Standout performance in Q4 with sort of a by Virgin media to posting full year adjusted EBITDA growth of 6%.

In Q4, virtually two delivered accelerated EBITDA growth of 10% driven by synergies from the merger and the continued impact of price rises during the year.

This was despite $40 million of course, the capture which hit the Opex line this quarter.

Versus the exceptional EBITDA growth in Q4, we do expect Q1 growth too much more muted and this is impacted by the phasing of a delayed fixed price rise and toughest synergy comparisons versus the prior year.

Summarize sort of an EBITDA decline of eight 1% in Q4 as tailwind from the Nbn synergies faded combined with a continued weaker fixed our premix.

This continues to be as a result of the rotational churn challenge associated with UPC migration to the Sunrise brand.

We expect headwinds from this migration to continue to impact EBITDA trends in 2023 and in particular impact the Q1 numbers.

But if I think I saw a slight decline in EBITDA growth in Q4, driven by cost inflation headwinds, which offset the impacts of price adjustments.

We expect cost inflation headwinds in particular and energy to impact our 2023 outlook with an estimated EBITDA hit of about 100 million euros from energy and wages.

Telenet reported EBITDA growth of around 5% for the second consecutive quarter driven by price adjustments the business anticipates ongoing headwinds some energy inflation as well as mandatory wage increases of 11%, which will hit from the start of 2023.

The next slide provides a more detailed update on our energy costs. The fully Ukrainian basin energy typically accounted for a low single digit percentage of operating costs and historically our policy was to hedge those costs forward on a rolling 12 month basis.

This hedging policy helped soften the impact of rising energy costs in our 2022 results and we were able to absorb the impact of the unhedged cost and still meet our EBITDA guidance in our op Cos.

However in 2023, you will see a full impact of the increased energy cost, resulting from the innovation and as you can see from these slides we have broadly hedged the energy costs in each of our markets for 'twenty three but this has been a significantly higher rates in 2021 and 2022.

We've highlighted the impact on each of our markets, but if you were to add them all up and use today's dollar exchange rates broadly 2021 energy costs of around $218 million increase to around $410 million in 2022 and will be around $600 million in 2023.

Presenting a hit to free cash flow across our portfolio of around $330 million as a result of the invasion.

Everyone else, we don't know where energy prices will settle out but in the meantime, we continue to execute on a rolling 12 month hedging program.

Starts over 'twenty 'twenty, four hedges, which thanks to recent price declines are at lower prices and we've locked in between 'twenty three.

We're also investigating longer term fixed rate deals through PPA agreements.

The next slide gives an update on our progress in the UK and Swiss synergies, resulting from the <unk> merger and somewhat acquisition.

We remain on track in both the UK and Switzerland, with our overall synergy targets with a very strong finish to the year in the U K and just to remind you that virtually joy two we expect to deliver $6 2 billion pounds of NPV synergies or an annualized run rate target of 514 million pounds from the Goto merger.

In 2022, we come to be delivered over 30% of our synergies in the first 18 months of the combined business and are on track to deliver over 50% by the end of 2023 may.

Meanwhile, Costa capture peaked in 2022 with over 300 million pounds recorded out of a total of 700 million pounds Costa capture envelope.

Cost to capture are expected to roughly half in 2023 falling to around 150 million pounds as investments in mobile capacity to support the <unk> migration took place in 2022.

In 2023 trends are expected to benefit from the continued flow through of synergies.

Along with the unlocking of further synergies streams, including labor and commercial.

Moving to switch them, we reaffirm our target to deliver $3 7 billion NPV Swiss francs of synergies I think 400 million Swiss francs of overall cost capture.

2022 represents a peak yet because the capture is approximately 140 million Swiss francs of Costa capture supported the business and achieving nearly 50% of our synergy run rate target, including the early benefit of MBNA synergies supporting half one trends in 2022.

The business aims to deliver around 60% of the synergy run rate target by the end of 2023 with key focus areas being the buildup of the DSL migration and head count synergies and delivery of the synergy projects will be supported by an expected 50 million Swiss francs of Costa capture spend in 2023.

Turning to capital allocation Q4 saw a step up in capital intensity across our key operations as soon as we expected and was consistent with our full year capital intensity guidance for the group.

Moving to distributable cash flow, we achieved distributable cash flow guidance delivering.

Delivering over $1 $7 billion of full company distributable cash flow in 2022 based on the FX rates at the time of our 2022 guidance.

On a reported basis for the full year distributable cash flow was around $1 6 billion, including $455 million of dividends from Virgin media row, two along with $478 million coming from our share of the recapitalization of that company and $321 million from Vodafone Zika.

Finally, our outlook for 2023 and I appreciate there's a lot on this slide but to help you understand our current view on the 2023 key financial drivers and ultimately the free cash flow and cash flow distributions about key assets. We've added our view on some of the drivers behind those assumptions.

Starting with BMO to on an IRS basis, we expect to achieve revenue growth mid single digit adjusted EBITDA growth supported by synergy execution and inflation linked price rise adjustments with headwinds from inflationary pressures impacting our cost base, including energy.

Now these numbers are excluding cost to capture for the year, we expect opex and capex cost of capture of around 100 million pounds, which is still within our multi your expectation of 700 million pounds.

We also guide to property and equipment additions of around 2 billion pounds benefits from project Lightning moving off balance sheets, but this is offset somewhat by the fiber upgrade accelerating on the <unk> investments.

On cash distributions to shareholders, but let Jimmy drove two has got into around one 2 billion pounds versus $1 6 billion pounds distributed in 2022.

Turning to summarize we expect low single digit revenue decline for the year, along with low to mid single digit adjusted EBITDA decline, including cost to capture them as the business continues to navigate the impact of the UPC brand migration and lower tailwind from the synergies in 2023.

We guide to property and equipment additions as a percentage of sales to be around 15% to 17% also including cost to capture.

The capital spend will drop this year falling to around 50 million Swiss francs of which 10 million Swiss francs is expected to be attributed to opex.

But it is got into an improved revenue profile supported by pricing actions and low to mid single digit adjusted EBITDA declined as the business will be impacted by cost inflation headwinds of around 100 million euros for managing wages.

Property and equipment additions as a percentage of sales is expected to be 21% to 23%.

The Dutch JV has got into shareholder distributions of 300 million euros to 400 million euros of cash which is impacted by higher cash taxes and a tougher EBITDA outlook. This is versus cash distributions of 602 million euros in 2022.

And finally on an IRS basis, telling are gone into revenue growth of 1% to 2% supported by price adjustments and broadly stable adjusted EBITDA impacted by wage and energy inflation headwinds.

Property and equipment additions as the proportion of sales are expected to be around 26% with an adjusted free cash flow outlook of 250 million euros for the year.

This is lower versus the 409 million euros delivered in 2022 as free cash flow will be impacted by higher capex on <unk> fiber build.

And finally on group distributable cash flow guidance regarding to one 6 billion of distributable cash flow in 2023 at guidance FX rates.

We reiterate our commitment by about 10% of our shares outstanding in 2023.

And with that operator, let's turn to questions.

The question and answer session will be conducted electronically.

If you would like to ask a question. Please do so by pressing the star are strictly followed by the digit one or your phone in order to accommodate everyone.

That you ask only one question if you're using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment well pause for just a moment.

One opportunity to join the queue.

The first question comes from the line of Sam Mchugh with Zhang.

You May now proceed.

Thanks very much for question.

I'm trying to wrap my head around slide 21 in the central costs.

Two part question. The first is just I see that some changes happening with the PMA allocations just to confirm that so already captured.

The Opco guidance that you gave separately for example, Switzerland Opex charge shift that's already in the Swiss guidance and then secondly, how should we think about the cash burn and central in 2023 relative to what looks like maybe $200 million loss in 2022.

Thanks very much.

Charlie.

Yes, because yes I confirm.

One understands what goes on we do it without joint venture as well as a wholly owned companies.

What we call technical service agreements to really support the tech spend which has been coming down nicely over the years.

That's baked in at the Opco level, we've actually got a renegotiation with one of them pending but broadly speaking, it's all fully baked in and then are the center as you know we've been running around this 200 million type number Gibson.

Gives and takes on that depending a little bit on how much money, we spend on development in those new areas, but I think you should assume it's going to be broadly consistent around that number.

Yes.

Okay.

Thanks very much.

Thank you Mr Monahan.

The next question comes from the line of James Ratcliffe with Evercore you May now proceed.

Thank you two if I could one.

Sure and one more.

Specific.

Talked about.

Seeing for converged customers higher NPS scores lower churn et cetera.

What's the comparison to that because I.

Certainly imagine that.

If somebody isn't happy with their broadband service are probably not going to add the mobile service as well. So can you talk about what sort of the comparisons that in for specific customers, who do add on broadband what youre seeing versus customers who don't.

First route and secondly, just on the Vodafone investment.

Now a meaningful holder.

Core partner of Yours could you talk about anything that that would facilitate or anything that would make more difficult or limit in terms of relationships around the JV if in particular thanks.

Hey, Ken.

Listen on the convergence figures you rune is on the call let him chime in a little bit too, but in the case of Holland, which we site regularly I think we're simply comparing.

FMC converged customers to non converged customers now fairpoint, if thats, one youre, making there could be some sort of self selection. There. If you are happy with US then you're likely to buy more products, which means you'll become happier, whereas people who are not happy with us generally may not buy more products in which case you might say well clearly.

They are not happy customers at the same time, there is no other way to do it.

Either converted or not.

And when you when you can drive 20 points of MTS and have your churn that's a big enough.

GAAP so to speak to support the premise that convergence works.

Now, we could maybe endeavor to provide a bit more color and detail around that going forward, but that is the basic.

Our statistics.

On the Vodafone stake.

Our good partners with Vodafone, we do business together quite frankly in three countries.

We own our network together through the speaking arrangement in the UK, We just signed a wholesale deal to provide them fiber access in Ireland and of course with partners and haulage. So our touch points with Vodafone are many.

<unk>.

This may or may not change that dialogue will see it certainly not the reason we did it.

No direct reason, we did it but I think it doesn't hurt to have.

To ensure that our conversations with them going forward about all of these business arrangements are open and direct.

I would say there.

Great. Thank you.

You bet.

Thank you Mr Ratliff.

The next question comes from the line of Maurice Patrick with Barclays. You May now proceed.

Thanks, guys. Thanks for taking the question, yes, I mean, if I could ask a question on the U K Opco trends I think the U K <unk> the fixed non op was down about 3% or so this quarter. Despite the.

Six 5% price increase you put through in EMEA, just curious to your thoughts in terms of hiring the next pricing increased lengths, obviously you've communicated.

The increase I wonder how much of that you thought would flow through into better off to and therefore, what's baked into your guidance would be helpful and just linked to if I can.

Be curious to know your thoughts around pricing.

Pricing in the U K clearly a lot of back book price increases, but the front book still very promotional.

All set.

Thank you.

I'll take the first one look you take the second one I think on the pricing I will say is that we anticipate.

Our mobile and fixed pricing to behave the impact of that pricing to be similar to prior years, and we said in the past I think what we believe generally happens in fixed pricing, where we get roughly half that if not more in mobile pricing a larger percentage.

And so for sure we expect to either do as good or better. It's a larger increase thats that certain in which case you might argue hey, it's going to be harder on the other hand, we have a lot more tools in place to manage.

Customers in this particular go around.

As you would have read in that going forward, we have put into the Ts and CS of contracts in the fixed side of our business.

In RPI plus three 9% moving forward. So now Youll know next year, what that price rises based on january's RPI. It wont be something we're making it won't be a decision we're making on a discretionary basis. It will look like Bt's Luke you want to handle the front book back book question.

Yes, maybe the only thing I would add on the pricing as Mike said, we have much more towards in place. So we are months into it.

And we know exactly how many customers of which cohorts have reacted in whatever way of fall and we also therefore understand exactly how much of the retained revenue.

We got and.

I won't disclose any number but so far we are fully on plan b.

Last year, you referred to that that two things right. One thing as you do a general price increase and you get a sudden reaction and then second during the entire year customers have been optimizing that irrespective of price for us because they don't want to keep using their landline or they want to get.

Great.

Mid tier video content to simply optimize and therefore, you are right last year. The net of the path have been negative now.

Not giving a guidance for this year, but we are guiding and overall revenue growth and so we are much more confident on this piece of it as well.

Front book back book So.

So in general Youre right. This is this is the strategic challenge right. So you will see price increases.

Now.

Across most of the operator.

But you still see high competition in the acquisition market.

We are dealing with it.

In a positive way is twofold one.

We are not offering.

Promotions on broadband, we're offering promotion for broadband around 'twenty, one 'twenty two pounds. So we are staying more closer to 30 pounds leveraging our speed advantage.

Promotions, you've seen from us the last three months selling moisture 50 Mac.

Close to 30 pounds and therefore, we have less of a back book front book issue and the second thing is we are also.

With our digital capabilities, we now can test different ways of selling so instead of an end of a promotion step up we are also offering within the minimum contract length that customers are paying half of it but in the minimum contract length then they.

Pay a higher price. So that's up so there's a lot of optimization going on and.

Stay tuned.

Great. Thank you so much.

Thank you Mr. Patrick.

The next question comes from the line of Robert Grindle with Deutsche Bank You May now proceed.

Yes, hi that I hope you can hear me.

The UK cable upgrades and new fiber JV.

One 5 million new fiber homes for the combination in 2023, it doesn't appear massive versus $1 million achieved in full year 'twenty two.

Being cautious here, perhaps it takes a while to get to run rate.

And perhaps related to the question is as you're looking at alternate acquisitions are you tilting away from build to buy and how quickly can vms to sell off.

The newbuild once that's happened.

Yeah, there's a handful of good questions there.

And I think on the speed point I would simply say that we've got till 2028. So this is not we've never given numbers or or.

Timeframes that we believe.

Probably this is going to happen overnight. So we think that it does take a bit of time to get the machine moving and the 50% uptick is reasonable but could be exceeded let's see.

It's not saying, it's a marathon, but it's not a sprint either we're hoping to have 80% of homes.

Covered by fiber here by 2028, and we think that is.

The right long term strategy, but it is a long term strategy. So we'll do it at the pace that makes sense for us.

I would say we sit today with the one gig network that reaches 16 million homes.

Offering an average speed of 300, Meg, which is five or six times faster than the average British households received from other providers. So we're in a great position, even while we build out it's not as if.

We have to convert a network from copper to fiber or in some sort of other foot race quite frankly, we are already leading the race and so we're just fortifying our long term position Luke you want take the second part.

Yes.

Can you repeat the question Robert.

What was it again.

How how how long does it take <unk> to sell off the new JV.

In our past.

Tilting more to buy than build and the JV homes.

Okay. So I mean, the first one.

Sure.

As you know very experience to get at.

The penetration on the licensing network.

Now next fiber that's not no change there right because <unk> is building the network for next fiber and Virgin Media is also the anchor tenant of it. So we are we.

We are selling into it and so you know that we are getting to a far higher penetration that any organ that got too.

And.

And also how quickly we ramp up.

So don't expect any changes here in the future. So we plan and exactly with the same.

And then obviously.

Yes.

Virgin media to us not a shareholder of next fiber. So this is more liberty global Telefonica and Favia.

Augments are getting under threat.

Our.

Perception the reason is.

They don't get to the penetration of they need to so according to our numbers. There is $7 6 million fiber homes in the UK from modern apps and the penetration is around 15% and from a pure wholesaler perspective, we all know you need 40% and cost of capitals are increasing so.

So opportunistically, we will look at it and we will take the opportunities as they come.

Thank you your next question operator.

The next question comes from the line of Louis Sanchez Lacrosse with Credit Suisse. You May now proceed.

Hi, Thank you for taking my questions I wanted to follow up on the previous question specifically.

Looking a little bit deeper on the $1 5 million.

For next year.

Can you give us the split between upgrade and greater scale rollout and then looking into the UK guidance.

Can you let us know if you are factoring in a construction revenues from the new fiber JV.

The retail business.

Thank you with that from from Greenfield area. Thank you.

Yes.

Yes, I mean, I think look we've said to split roughly 50 50, but I don't know and Charlie. This is a question for you whether we.

Identified the revenues.

Next fiber them out, but there will be revenue modest revenue.

Isn't it.

Correct.

So I mean.

This is not a massive number but there is some modest revenue.

Into our numbers.

Yes.

Yeah. So I mean next fiber right. We are building the network for that we are getting paid on the other hand side.

We are selling the network and for that we are now paying wholesale revenue.

So.

This is the changes in the P&L I think.

We haven't disclosed any number at the split between.

Expansion and upgrades.

So.

I think we don't want to do that the only thing I'm, saying.

These are two completely different activities.

Expanding obviously is much more heavy lifting.

It takes more work and I think what we have said.

Debt and 22, we have expanded faster than in 'twenty, one and in 'twenty three we have the ambition to expand faster.

Then in 'twenty two.

And on on the.

Upgrade right.

What we have to do it just to remind everybody is we have to pull fiber through our existing dock. This is much less of heavy lifting we have also guided that.

We are spending around 100 pounds per homes passed so which also explain that.

The work is significantly less and I want to simply reiterate the point Mike has made earlier.

We first leverage our coax network as much as we can and selling fiber too early it doesn't have really.

Our commercial benefit for us at that point in time, we have time.

Okay.

Thanks, Luke next question operator. Thanks. Thanks, Thank you Mr Lacrosse.

The next question comes from the line of Polo Tang with UBS you May now proceed.

Hi, Thanks for taking the questions I have two the first one is on Switzerland. So a question for Andre can you talk to the competitive dynamics in the Swiss market and maybe talking a bit more detail about the issues that you're facing with the retirement of the UPC brand and going forward should we expect maybe a relatively stable broadband performance in terms of <unk>.

Net adds for Switzerland, but maybe it's just a case of reprise III pricing, taking its time to work its way through Alternatively, where are the other moving parts that are driving the Swiss EBITDA declines in 2023 and the second question is really just the fiber wholesale in the U K. So I appreciate that you're still in the process of upgrading your cable net.

The fiber, but have you had any discussions with other communication providers about wholesaling on the <unk> network and do you think that this could be a meaningful revenue stream going forward Alternatively as the equinox to pricing from Openreach now an unstoppable train, meaning you have no chance.

Well, let me take the second one first and Andre you can work up an answer to the first one.

I just mentioned, but we are building a network, we think will reach 80% of the market.

It's going to happen over a extended period of time is not happening tomorrow and what any investor in.

Yes.

Telecom market requires or would like to see is some long term certainty and a level playing field.

Equinox too.

From our point of view is unlikely to make a long term impact on our plans, but in the short term feels to us to be a bit desperate and premature by BT, reflecting.

I would say an overreaction to the market more broadly.

For whatever reason they felt that was necessary on the other hand, we think Ofcom get the larger picture here and is likely to.

Look at Equinox too.

And Ah.

Really a comprehensive way and we look forward to the consultation process, but.

From our point of view.

<unk>.

Whether we are providing wholesale services tomorrow or next year or the year. After remember that in the upgrade of our fiber homes, which we announced sometime ago.

Upgrade of the 16 million homes, we did not say at that point in time that that decision to spend 100 pounds per home was based upon the need can realize wholesale revenue. In fact, we said the exact opposite which was we believe this makes sense relative to DOCSIS four.

Regardless of wholesale revenue that doesn't mean, we don't have ambition just means to say that our economics are sound either way the net fiber JV clearly would love to expand wholesale revenue beyond Virgin media <unk> as its anchor tenant.

And in that instance, that particular joint venture will make the argument that needs to make in and pursue the strategic ambition it needs to pursue so hopefully that puts a little bit of context around how we see the market. This is a long term process here. This isn't something that any one move by any one operator is going to derail in our opinion and we.

<unk> committed Andre.

Yes in regards to competitive dynamics I would say Q4 has seen a lot of liquidity in the markets also seasonally black Friday was probably the biggest sales then.

In the last year.

As such we have also seen a very high level of promotional activity.

<unk> from that from a customer perspective, as youll see not only us but also competitors gained quite a lot of new customers in the markets, but the pricing levels of the discount levels on those promotions are not really sustainable.

Also causing some of the pressure that we have with the migrations at customers that are looking at the front book prices.

Migrated back book prices. There is of course attention that is not making our life easy was all of the customers that we want to migrate over to the new Sunrise portfolio.

As a result of that we have started already in Q1 to reduce our promotional aggressiveness mainly on the main brands, our flanker brand will not be.

Yes addressed by that mainly because the flanker brand has a different role and needs to play the role of being more price aggressive but on the main brands, we want to protect the bank.

With lower promotional aggressiveness in particular with promotions that do more also a discount over the source to contract term, but at Mexico only half of the first contract terms with our customers get again used to actually pay the normal this price now.

In terms of dynamics for next year.

Clearly the main driver for next year.

Those light pricing of the mainly fixed customers coming from UPC.

Roughly less than sort of our total customers and not all of those customers will be necessarily a drag to up the direct to our revenues, but some of those are if you think about it I mean, there are of course certain customers that are sitting on one or two products, where we still have good opportunity to cross and upsell.

<unk> provides multiple same.

For example, or multiple more while there is a certain segment of customers. It has already maxed out the product.

Range and is sitting on all plays the price point that no longer exists on the new front book and in order to maintain those customer relations healthy and to continue working with them. We are doing is right sizing exercise. The main drag I would say also on the top line for next year.

And on top of it I would say on the EBITDA guidance. We of course continue to actually put the business can capture growth going forward. So we continue to actually do.

Opex investments on the digital side. We also do have some increase in opex that is coming from cloud applications <unk> moving from Capex to Opex.

And we have a number of I would say marketing activities for the first time will hit.

Our full year range like for example, the Swiss ski sponsorship, which we only started in 'twenty two but we will see for the full extent only in <unk>.

But the major driver I would say of the headache, as we leave as wide pricing in that relatively small fixed customer segment. All other growth engines. If you look at mobile if you could get it to be if you can give some anchor blend maintain healthy.

But we are accelerating this exercise now to actually create a growth platform that we can start from going forward.

I'll, just add that I have confidence and Andre and the team.

To manage through this.

Deep knowledge and understanding of the market.

And this is a blip not a change in direction on the other hand, I would also point out that Charlie skipped over in his guidance slide. The fact that Switzerland is guiding to $320 million to $350 million of free cash flow in 2023, which I am going to guess here boundary I think is up 30% to 40% over 2022.

So that's great.

The challenges that Andre is working through at the revenue and customer level, which I'm sure. We will get through the business is generating significant free cash flow and on pace for the kinds of free cash flow results. We had initially anticipated when we made the acquisition.

Clear thanks.

Yeah.

Thank you Mr. Zhang.

The next question comes from the line of Steve Malcolm with Redburn you May now proceed.

Yes, good afternoon, guys and I'll go for one and a half questions.

Okay. Just a quick follow up on that question first just going back to the UK and the price moves.

And I think at the moment I guess, if I look at 2022.

No I didn't.

My perception would be the fixed volume price rises doesn't run probably costs why don't you'd hoped on the mobile price sorry, just maybe one little bit better.

No that's wrong, but that's my impression is you go into 2023.

Said, you've got more tools you dispose of Autosave.

It's a very very big price right. So I guess the distinctive reaction would be that youre going to see more churn youre going to have more promotional activity but.

But could you just elaborate maybe on those.

Actions that you can take to prevent that and give us sort of a bit more confidence that we don't see.

The orca reactions that we sold following the price rise last year that'd be great and then just coming back to the point on Vodafone.

Mike You said that the recent investment was not to sort of create more touch points with Vodafone.

What's that exactly was it just because you got the shares were cheap.

That is the case could you maybe give us some sort of guidelines as to what is sort of your scope.

Is it just sort of contiguous sector telco or media or anything that you think.

Or does it have to be some kind of existing relationship for you to invest shareholders money.

It looks like waterfront. Thank you.

Nick do you want to start with that.

Okay.

So I mean your high level observation is right.

Last year, but I think the reason.

A bit different so if you if you park the price rise for a second right.

On the fixed side customers optimizing their bill because simply right. The average up to 50 pounds. So if you want to optimize household spent you look more at the fixed side.

And so irrespective of price rise customers are canceling their landline because they use their mobile and customers optimizing and picking more of the video content that really need. This is this is what we have been seeing.

In the mobile side, you don't see that what you see on the mobile side and that is they keep using their old phone for loan growth right. So if you. These are developments that would have been happening with price flat or with our price rise due to the cost of living price now the price rise.

This is then the question how do you define that last year and I think this is what Mike said earlier on.

You would say well everything.

Take into account two months after customers have seen the first Bill then you can say that also on the fixed side we landed.

Something like 50% of the price rise.

On the mobile side, because it's only on app not on half. The overall number of the prize for US is much lower and it is embedded in the Ts and CS. So you see barely very little better zero or very little reaction to it now what does this mean for this year.

And we are not guiding on fixed op you, but.

We have been.

We're doing a lot of things different number one.

We are sending out the letters to customers over the period of two months.

The second approach.

This is number one that has two benefits one we always can ensure we have enough agents dealing with it so which werent the case, 100% last year and second we have really.

Real time data. So we can see how many customers are calling and.

What is the best possible retention for them in terms of customer and <unk> and then we see within 24 hours delay what is actually happening.

And when you take this all into account there is a lot of room for optimization, we can leverage convergence of our fifth fixed customer must be cancer mobile we can sell in.

Interesting content, we can tell in hardware.

And I'm not disclosing anything, but so far as I said early on we are on plan with a fixed price right and on the mobile side. We have landed also now right. So its communicated and out and the reaction. So far we have been seeing are not higher than a year ago.

Hope that helps.

Thank you the correct looking on Vodafone Vodafone.

Vodafone.

What we've said publicly yet the stock seems undervalued to us there's a lot of undervalued stocks out there by the way ours included and that's why we spent $1 $7 billion last year buying it.

But certainly there's one also looks undervalued with some near term catalysts that.

Should play out here, we think in a positive way.

And it was a relatively small investment if you look at the if you see through how we.

Financed the position.

Now we have a lot of touch points with Vodafone as I, just mentioned and I look forward to a very constructive dialogue with the current and future CEO wherever that will be.

Around all of those particular issues and if necessary with the board. So as I mentioned, we're not an activist here, but we certainly hope to be engaged in understanding of what their strategy isn't perhaps even influenced that if it makes sense, but we're not doing this to to create tension or stress, we're not trying to rattle. The cages here we thought it was.

An opportunistic transaction that was financed we thought very effectively with <unk>.

Small amounts of capital we could put the risk.

And the stock that was at or near a 25 year low. So that's really the way to think about it or are we going to do 10 more of these no no, but we will always be opportunistic in situations that we think are strategically and financially aligned.

We have time for one or are we calling it.

Yes.

Go ahead.

Okay.

Sorry. It was just too would you say catalysts can you elaborate on what that might be.

Well I can't give you anything that hasnt been talked about 100 times publicly U K mobile consolidation and rationalization in Spain, and Italy pending vantage deal.

Towers in the U K and then now a German strategy evolution et cetera.

Africa.

After I read the press.

There's a handful where youre right there.

Okay. Thanks, a lot.

You got it Rick I don't know if we have time for one more hour six minutes past should I close at all.

Let's take one more Mike and then shut it down okay, alright, thanks for hanging in guys. We will take one more.

We'll take the last question from Carl Murdock Smith with Ferring Baird you May now proceed.

Alright, thanks, very much for the question and taking the time for one last one so I'll just ask one.

I think slide nine has a very powerful one on the long term buyback commitments over time.

Obviously, you've committed to a floor of 10% of buyback.

That commitment with first actually my two and a half years ago. The Q2 2021 results and kind of I think that long term commitments as also shown on slide nine is very very important.

Did you talk think about giving a longer term buyback commitment relative done just committing to the 2023.

Buying back.

How should we be thinking about your ongoing commitments.

In future years. Thanks.

Yes.

Good question Karl I. Appreciate you asking that we are not today, providing any additional long term guidance, but.

You don't have to do much reading between the lines too to conclude based on everything I said in my remarks that we're committed to shareholder remuneration. So.

You should expect over time, we will continue to provide updates on that long term strategy.

And.

I think past is prologue.

Hope that helps okay. That's great. Thank you very much you guys think you got it thanks, everybody for hanging in I. Appreciate you enduring the long remarks, if youre still on we had a lot of info and a lot of.

Talk about end of <unk>.

Very strong 22, and I think all the building blocks in place for a strong 23, and most importantly for value creation. So appreciate your support and we're always around for questions. If you have any follow up thanks, everyone.

Ladies and gentlemen, this concludes Liberty Global's fourth quarter 2022, Investor call. As a reminder, a replay of the call will be available in the Investor Relations section of Liberty Global's website.

There you can also find a copy of today's presentation materials have.

Have a good day.

Okay.

Yeah.

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Now like the call turn the call over to Mike Reed you.

You May now proceed.

Okay welcome everyone and thanks for joining our year end results call I hope, you're all doing well as usual we have some prepared remarks, and Charlie and I will manage and then we'll get right to your questions and for that I'll bring my key leaders, who will be ready to respond as needed.

We're working off of slides as we usually do and they can take quite a bit of good information. This time, so I will assume you've got those in front of you or your all access them at some point just warning. This is our year end call. So there is a bit more information than usual, but bear with us we'll try to keep it Chris I'll begin on slide three with some highlights for the quarter and the full year.

And I have to start by saying that I'm extremely proud of my team in each of our operating businesses for how they executed through a challenging year just when we thought things were getting better Europe was hit with a war in Ukraine, rising energy costs record inflation and cost of living prices that impacted customers really across the region, but despite these head.

Winds, we hit or exceeded all 16 guidance metrics for our big FMC operating companies that we established a year ago, and we beat our forecast for distributable cash flow at the Liberty global level by $100 million and that's using guidance FX. So this is the third year in a row that we were faced with external uncertainty, but still managed to deliver.

On our public targets second and perhaps not surprisingly Q4 was a very strong quarter for us across the board and we delivered positive broadband in postpaid additions in every market fueled by convergence offerings in Black Friday campaigns, and our largest operation Virgin media delivered their best financial result, yet with a double digit EBIT.

Growth figure supported by price adjustments synergies in net adds and then third we continued to benefit from consistent and steady revenue growth in our three most important segments, which are b to b broadband and mobile and just as importantly, we're actively addressing headwinds in our BDC fixed businesses more broadly with smart network and product innovation.

And I'll dig into both of these topics in a moment.

And then fourth we've maintained a clear and consistent approach to capital allocation in 2022, we bought back 40% more stock than we guided to a total of $1 7 billion or 14% of the shares outstanding and we're on track for at least another 10% this year and in a few slides I'll expand a bit on how we see our capital allocation framework going forward.

And then finally I'll, let Charlie cover the details of our guidance, but I will just highlight upfront that despite continued investment in fiber <unk> and digital this year, we expect to generate another $1 6 billion and distributable cash flow in 2023, so a strong year for us operationally and financially and as we'll discuss in a moment, we're well positioned to drive value for shareholders.

Moving forward slide four is our standard schedule showing connectivity trends for our four large FMC telcos over the last five quarters. One quick observation is that for the first time in over five years every market experienced positive broadband and postpaid mobile adds in the fourth quarter. The top left shows Vmware too, which has delivered three straight quarters.

Orders of sequential growth in both broadband and postpaid net adds despite intense competition and a cost of living pressures in the U K broadband speed upgrades together with strong momentum from our volt bundle drove our best broadband quarter of the year by the way, we outperformed BT again and regarding an even higher share of national gross adds than we did a year ago.

<unk> also saw strong pickup in postpaid net adds.

Always an important trading period for mobile and the <unk> brand continues to perform very well, especially at the top end of the market with sector, leading churn well below 1% now Sunrise in Switzerland also had a strong fourth quarter with 53000 broadband in postpaid adds importantly, after two quarters of losses in Switzerland, we delivered positive broadband growth.

<unk> helped by a strong black Friday period focused on one gigabit offers and a new Netflix bundle, we put into the market. This was particularly good performance given the continued higher churn we've experience related to the UPC brand migration that we flagged really mid year last year now in postpaid summarized delivered another strong quarter with 34000 ads.

Supported by the Sunrise brand refresh and interestingly, our Swiss ski sponsorship, which is off to a great start now that the ski season is fully underway after nine quarters of broadband losses, Vodafone Ziegel delivered 7000 net adds in Q4 in part supported by its zero sprinter and Black Friday campaigns.

The Dutch market remains highly competitive with price and quality of service now becoming more important in fiber when you look at customer churn incidentally KPN lost broadband subs in the quarter put up once it goes 26000 postpaid adds were negatively impacted by the loss of some corporate accounts, but were still higher than KPN in the quarter. It's also interesting that T Mo tooker.

Some pricing in January up 9%.

Across the four main FMC op goes and then broken down by revenue segment. So there's five key takeaways here first if you look at the total revenue growth for each FMC Opco Youll see that revenue remained resilient with broadly stable to positive trends across the group.

As you move down the chart, however, youll see that consumer fixed revenue as a whole is consistently negative from negative one to negative 4% and thats impacted by losses in video and voice are to use something you are well aware of as well as pressure on our <unk> and mixed during this cost of living crisis, but interestingly, while we continue to lose video subs.

Right.

<unk> of what's happening in the U S video is now only about 15% of our revenue.

I'll spend a moment on how we're addressing the headwinds in fixed on the next slide.

This is a function of strong postpaid additions of course and price adjustments through the year and then fourth <unk> remains a growth engine across all assets with revenue, increasing one 5% to 4% and significant upside as we expand our reach in market share and then finally as the pie charts at the bottom may clear, we have a highly diverse and arguably defensive revenue mix.

With mobile both B to C and B to B now representing almost half of our turnover and b to b itself, comprising 20% to 25% of revenue slide.

On slide six types, a bit deeper into our fixed consumer business and how we're addressing some of the headwinds today I'll start by showing fixed <unk> trends on the top left which as you can see have been relatively stable in Belgium, and Holland, even slightly up with both markets spending down price rise as well and dealing with limited front book back book dynamics in the U K.

Switzerland, However, we've seen around a 3% decline in fixed <unk> related partly to the fact that we start with very higher RPC in each market and then thats compounded in the UK by declining video voice and cost of living pressures and in Switzerland. As we discussed we are managing through a migration from UPC Sunrise, which has impacted our booth. So what are we doing here.

First of all we're taking price increases on fixed do you know that around 14% in the UK and mid single digit in Belgium, and Holland and those are outlined on the bottom left you can see what we've done secondly, we're implementing a number of commercial initiatives.

A critical here by far the most important is our broad convergence strategy, which as we've demonstrated helps improve churn NPS and cross sell opportunities we've talked about it before in Holland FMC households have on average 20 points higher NPS and 50% less churn is a real not theoretical benefits to the fixed base as we converge.

We're also focused on rolling out all IP and at first video devices across our markets in the UK. For example, we're now adding video subscribers not losing video subscribers actually adding video subscribers in January as a result of our stream <unk> launch.

And then our investments in digital are reducing friction and costs and the fixed consumer business. The tools. We're rolling out are driving more online sales, reducing call center interactions improving self install rates and driving cross sell opportunities and then finally, we're making good progress on new revenue streams and these include things like home security or telehealth and energy.

Which we provide an update on slide seven.

Also important remind folks that we are the broadband leader today in Europe with over $31 million gigabit homes ready for service and just as importantly, we have a clear path to 10 gigabit speeds in every market with mostly creative structures really creative structures that will ensure we are optimizing capex intensity. So the chart on the bottom left shows you that.

By 2028 will be 70% fiber to the home across what will then be a 36 million home footprint now that excludes whole buy arrangements in markets like Switzerland, and Ireland that add another 4 million fiber homes take us to $40 million and brings at fiber percentage to 75%. So we could be as many as 40 million homes.

By 2028, that's good organic greenfield growth and our plans to get there are summarized on the right you are familiar with our approach in the UK, we added or upgraded 1 million fiber homes in 2022 and that will accelerate by at least 50% in 2023 again most of that Capex, especially the Newbuild capex is being invested through our.

JV with Telefonica and infer VSO off balance sheet in Belgium, We've announced the deal with <unk> you are aware of that to build fiber across Flanders net coaster of cost structure that you closed this summer and in the meantime, we've agreed a reciprocal wholesale access deal with Orange that ensures that telenet is the undisputed leader in the north of 70%.

Utilization and also capable of entering the south and we completed our one gig upgrade and hollered last year and in Switzerland. As you know, we're going to use a hybrid approach with DOCSIS fiber and whole buy and then finally in Ireland will be our first market to launch wholesale services on our own fiber network in 2023, and that's after announcing the wholesale agreement with Vodafone. So we have a sound.

And we think efficient set of plans in every market to remain the speed and quality leader in fixed connectivity and you should expect that we'll keep you posted on progress here every quarter now moving to slide eight we decided to hit the valuation question head on this quarter. So if you back off and squint your eyes, a little bit this might look like a complicated slide but it's really quick.

Simple the purpose here is to help decipher the valuation gap in our stock a bit and focusing on our FMC opco. So one way to look at our current market valuation is to break it down into three parts as we've done on the left side of the chart. So assuming full value for our cash balance and our ventures portfolio the implied value.

<unk> of our FMC op codes at the $21 price level is roughly five five times EBITDA and around 13 times operating free cash flow using our actual and reported figures for 2022.

The way cash is cash and our venture investments are conservatively marked they are held in very tax efficient structures and we've already returned over $500 million to the parent.

Interestingly the free cash flow yield at $21. Once you reduce the market cap by ventures, and cash is well over 30% and.

Now moving to the middle of the slide the analyst community as an average price target on our stock of $30 that implies a 40% premium to our current market price of $21.

So running the same math and attributing all of that premium to the FMC Telcos result in an EBITDA multiple of around six five and an operating free cash flow multiple of about $14 five by the way our peer group trades between six five and seven five and some as high as eight five times EBITDA.

The free cash flow yield of $30 by the way is still compelling at around 15%. So while our peers would be really mid to high single digits and the analysts correctly site in our view a handful of narrative to support their price targets right and this includes things like telco sector tailwind in Europe .

Where we can now have pricing power market rationalization, and mobile revenue growth and regulatory relief and we agree with that but there are arguments also typically include three other drivers like the benefits. We're realizing from our sub base that is now 50% converged or the expectation of continued and on target synergy realization in the UK and Switzerland and the inherit.

Free cash flow profile of our businesses, especially given that we believe we're in a peak capex period right now so.

And I guess the message is at $30 doesn't seem like a big stretch to US one of the reasons is that we don't believe analysts have captured all of the drivers that in our view support a premium market valuation, we don't specifically quantify what a premium market price it looks like our lawry's wouldn't let us do that but we do identify the key elements that should support values well above our stock price.

Perhaps even twice analyst price targets those are summarized on the right hand side of the slide.

To begin with we had been on the receiving end as most of you know of six private market transactions in the last six years, where EBITDA multiples were as high as 12 and OFC F multiples exceeded 20, admittedly synergy did factor into some of those valuations, but these were subscale cable television operations not fully converged FMC champions.

You can run your own numbers, but in today's environment. We believe eight to 10 times EBITDA and 18 to 20 times operating free cash flow are not unrealistic multiples in our base. If you look at historical transactions for high quality FMT businesses in Europe .

In addition, there are a handful of other value drivers that we believe would support a premium valuation that analysts don't cover first.

Only beginning to realize now the benefits from new revenue streams like security gaming and <unk> all of which we have launched and finally, we are arguably at peak capex levels. This year, which will result, obviously, an even greater long term cash conversion and we add to this equation our unique approach to value creation that relies on agile capital allocation that leverage but derisked balance.

And I can think of buybacks you've got a winning combination so building on that last point about our levered equity model slide nine digs a bit deeper into our capital allocation framework and we know this differentiates us from our peers. It all begins with shareholder remuneration, which we show graphically on the left hand side of the slide.

As you know we've now retired over 50% of the shares in the last six years, averaging 11% per year and in 2022.

Exceeded our initial buyback authorization as I mentioned by 40% by 14% of the shares and returning all distributable cash flow of $1 7 billion to shareholders. Now for 2023, we remain committed to the 10% buyback floor again, and we are well underway. There on the right hand side, we tried to put the buyback into context, if you look at our overall capital allocation frame.

We have three principal sources of cash of course, we start with our existing cash balance at the corporate level of $3 4 billion and the modest interest we earn on that before investments then you add the $1 6 billion of distributable cash flow that we receive from our operating companies that we just guided to which includes recaps and then finally we.

Cash proceeds that's the bottom line from the sale of venture investments in noncore assets over time that we're clearly a cash generative business, so where do we invest that capital first as you would expect we do prioritize our network. So our fiber and <unk> investments are important to us at the company level, none of that PP&E is funded out of <unk>.

Our cash balance since we generate free cash flow at the opco level, but we mentioned it since it does impact the amount of distributable cash flow, we receive and therefore it is a capital allocation decision and as I mentioned on the previous that we see ourselves right now.

Peak levels of capital intensity by far the largest use of cash is directed towards our buyback programs, where we've allocated over $12 billion. Since January 2017, and we are committed to this strategy again this year.

From time to time, we will allocate capital to our FMC opco for strategic transactions that create value. A. Good example of this is the next fiber JV and the U K or even the acquisition of Sunrise and then finally, we have been building a sizable portfolio of strategically aligned assets in tech media and infrastructure.

You look at the top of slide 10 on the left hand side in my last slide Youll see a familiar chart that breaks down to $3 1 billion ventures portfolio into principally tech content and infrastructure and then a few notes beneath that on how that value moved modestly in the fourth quarter as a reminder.

Well, we have 60 plus investments in our tech portfolio.

Five of those investments five companies today represent about 75% of the value and we've listed them here for your reference three of these are companies that provide innovative cloud based solutions plume well in bid side is the cyber security business. Our net investment in these five companies is about $100 million and they are conservatively valued today at 700 million.

Importantly, each of these companies is currently doing or planning to do business with our FMC op goes and Thats part of the flywheel, we provide invested companies and quite frankly, why our pipeline of deals is so robust. The bottomline is that our tech ventures team has an eight year track record of making money and strategically aligned product service and technology.

And it's already returned $500 million to the parent next you'll also see our three largest infrastructure investments Atlas edge. Our 50 50, JV with digital bridge the edge connect data center business, where we are 5% shareholder with EQT and next fiber of the JV. You have described discussed already with Telefonica and <unk>, that's going to build five to 7 million fiber homes in the UK in.

Each case here, we are using either existing opco assets or our strategic position in a market to create and benefit from these infrastructure platforms. It's also important to point out that these figures do not include our tower assets in markets like the UK and in <unk>, which we owned two joint ventures.

And then on the far right. We provided just a few bullets on the announced Vodafone investment I'm not sure there's much to add to what we've said publicly we do think the stock is undervalued and there are a handful of near term catalysts that should be beneficial. We've also put in place a very clever structure, which minimize the amount of equity we had to put up while protecting our downside by the way there is no scenario, where we would have.

To invest further capital beyond the relatively low cost of borrowing which is partially offset by dividends. We also intend to replenish that equity investment as we said in the press release with asset sales and there are more than a handful that we're focused on presently.

I suppose it's good to see that the Vodafone stock is up since our announcement, we don't take credit for that but obviously, that's a positive and then finally on the bottom right.

Provided a few points and how we see this part of our business evolving and.

Our equity of situations that we feel are strategic distressed or provide a unique opportunity to put capital to work across the first three pillars are investing principles are straightforward. We're looking for businesses that provide significant growth opportunities typically in these businesses with scale sector, <unk> and strategic benefits to both our op coast or perhaps other portfolio.

Investments. We're also interested in companies built around new or disruptive innovation that either diversify our amplify our core businesses and then lastly, we intend to be extremely disciplined here with exits in what we refer to as capital rotation. We've already begun to evaluate every position and believe there are more than a handful of assets it could be monetize both in the vent.

<unk> group and outside the portfolio like towers for example.

So those are the core building blocks of value creation first we are going to continue to drive growth in free cash flow in our FMC champions and optimize our ownership positions in these businesses over time. This may include capital investment and M&A or strategic growth in some of those markets also will be very flexible and agile about as we've said in the past listings or spins.

Secondly, we're going to continue to put our capital to work in an efficient buyback program as we've consistently done in the third.

We're going to remain opportunistic about investments that we feel are strategically aligned with our core mission and with within our capability set and this last one is not easy right.

Surely earned the credibility to work here, given our history of building buying and exiting assets in our sector over time.

I wanted to be on this call in three years' time sitting on $3 5 billion of corporate cash and 6 billion of liquidity I don't think you want that either so we're focused on value creation first and foremost and I think we're in a great position to do that Charlie over to you.

Thanks, Mike on the next page, we provided a summary of the revenue profile in our four key markets.

2022 saw stable revenues in three of our four markets and slight growth in Belgium, despite the challenging macroeconomic environment.

Fixed consumer revenue pressures across our markets was softened by sensible price adjustments in Benelux and in the U K and we saw strong mobile <unk> growth across our portfolio.

Virgin media to delivered stable revenues in Q4 and across 2022, we've continued pressures on fixed consumer <unk> and challenges in b to b being offset by strong mobile subscription revenue growth.

So it's been so Q4 revenue growth decline has continued strong mobile growth was offset by weaker b to b wholesale revenues and continued pressure on the consumer <unk> as the business reset the pricing of as UPC customers and the migration to the Sunrise brand.

In the Netherlands, Despite our strong net add performance, we saw a slight decline in revenue growth due to weakness in the consumer fixed business, partially offset by price adjustments, which we implemented in July .

We delivered mobile service revenue growth of six 3% in Q4, which was supported by a middle price adjustment in October .

Belgium delivered Q4 revenue growth of one 7% and one 5% across 2022 as the mid June price adjustment continues to support top line fixed sell through growth in the second half of the year.

The next slide sets out our adjusted EBITDA performance in the quarter.

Standout performance in Q4 within about Virgin media to posting full year adjusted EBITDA growth of 6%.

In Q4 virtually go to delivered accelerated EBITDA growth of 10% driven by synergies from the merger and the continued impact of price rises during the year.

This was despite $40 million of Costa capture which hits the Opex line this quarter.

Summarize sort of an EBITDA decline of eight 1% in Q4 as tailwind from the Nbn synergies stated combined with a continued weaker fixed off who mix.

This continues to be as a result of the rotational churn challenge associated with UPC migrations of the Sunrise brand.

We expect headwinds from this migration to continue to impact EBITDA trends in 2023 and in particular impact the Q1 numbers.

But if I think I saw a slight decline in EBITDA growth in Q4, driven by cost inflation headwinds, which offset the impact of price adjustments.

We expect cost inflation headwinds in particular and energy to impact our 2023 outlook with an estimated EBITDA hit of about 100 million euros from energy and wages.

The next slide provides a more detailed update on our energy costs before the Ukrainian basin energy typically accounted for a low single digit percentage of operating costs and historically, our policy was to hedge those costs forward on a rolling 12 month basis.

This hedging policy helped soften the impact of rising energy costs in our 2022 results.

We were able to absorb the impact of the unhedged cost and still meet our EBITDA guidance in our op Cos.

However in 2023, you will see a full impact of the increased energy cost, resulting from the innovation and as you can see from the slides we have broadly hedged the energy cost in each of our markets for 2023, but this has been a significantly higher rates in 2021 and 2022.

We've highlighted the impact on each of our markets, but if you were to add them all up and used today's dollar exchange rates broadly 2021 energy costs of around $219 million increased to around $410 million in 2022 and will be around $600 million in 2023, representing a hit to free cash flow across our portfolio.

Around $330 million as a result of the invasion.

Like everyone else, we don't know where energy prices will settle out but in the meantime, we continue to execute on a rolling 12 month hedging program.

Just thoughts on what 2020 for hedges, which thanks to recent price declines are at lower prices and we've locked in between 23.

We're also investigating longer term fixed rate deals through PPA agreements.

The next slide gives an update on our progress on the U K and Swiss synergies, resulting from the <unk> merger and someone's acquisition.

We remain on track in both the UK and Switzerland, with our overall synergy targets with a very strong finish to the year in the U K and just to remind you. It does give me joy to we expect to deliver $6 2 billion pounds of NPV synergies or an annualized run rate target of 514 million pounds from the Goto merger.

In 2022, we comfortably delivered over 30% of our synergies in the first 18 months of the combined business and are on track to deliver over 50% by the end of 2023.

Meanwhile, Costa capture peaked in 2022 with over 300 million pounds recorded out of a total of 700 million pounds cost to capture envelope.

Cost to capture are expected to roughly half in 2023 falling to around 150 million pounds as investments in mobile capacity to support the <unk> migration took place in 2022.

In 2023 trends are expected to benefit from the continued flow through of synergies along with the unlocking of further synergies streams, including labor and commercial.

Moving to switch them, we reaffirm our targets to deliver $3 7 billion NPV Swiss francs of synergies I think 400 million Swiss francs of overall cost capture Tony.

2022 represents the peak here because the capture is approximately 140 million Swiss francs of Costa capture supported the business and achieving nearly 50% of our synergy run rate target.

The added benefit of MBNA synergies supporting half one trends in 2022.

The business aims to deliver around 60% of the synergy run rate target by the end of 2023 with key focus areas being the buildup of the DSL migration and head count synergies and delivery of the synergy projects will be supported by unexpected 50 million Swiss francs of cost to capture spend in 2023.

Turning to capital allocation Q4 saw a step up in capital intensity across our key operations as soon as we expected and was consistent with our full year capital intensity guidance of the group.

Moving to distributable cash flow, we achieved distributable cash flow guidance delivering.

Delivering a $1 $7 billion of full company distributable cash flow in 2022 based on the FX rates at the time of our 2022 guidance.

On a reported basis for the full year distributable cash flow was around $1 6 billion, including $455 million of dividends from Virgin media row, two along with $478 million coming from Russia, the recapitalization of that company and $321 million from Vodafone Zika.

Finally, our outlook for 2023 and I appreciate there's a lot on this slide but to help you understand our current view on the <unk>.

23 key financial drivers and ultimately the free cash flow and cash flow distributions about key assets. We've added our view on some of the drivers behind those assumptions.

Now these numbers are excluding cost to capture for the year, we expect opex and capex cost of capture of around 100 billion pounds, which is still within our multiyear expectation of 700 million pounds.

On cash distributions to shareholders, but let Jimmy drove two has got into around $1 eight 2 billion pounds versus $1 6 billion pounds distributed in 2022.

Turning to summarize we expect low single digit revenue decline for the year, along with low to mid single digit adjusted EBITDA decline, including cost to capture as the business continues to navigate the impact of the UPC brand migration and lower tailwind from the synergies in 2023.

We guide to property and equipment additions as a percentage of sales to be around 15% to 17% also including cost to capture.

Cost to capture spend will drop this year falling to around 50 million Swiss francs of which 10 million Swiss francs is expected to be attributed to the opex.

But if anything has got into an improved revenue profile supported by pricing actions and low to mid single digit adjusted EBITDA decline as the business will be impacted by cost inflation headwinds of around 100 million euros for managing wages.

Property and equipment additions as a percentage of sales is expected to be 21% to 23%.

And finally on an IRS basis, telling are guiding to revenue growth of 1% to 2% supported by price adjustments and broadly stable adjusted EBITDA impacted by wage and energy inflation headwinds.

Property and equipment additions as the proportion of sales are expected to be around 26% with an adjusted free cash flow outlook of 250 million euros for the year.

This is lower versus the 409 million euros delivered in 2022 as free cash flow will be impacted by higher capex on <unk> fiber build.

And finally on group distributable cash flow guidance, we're guiding to $1 6 billion of distributable cash flow in 2023 at guidance FX rates.

We reiterate our commitment by about 10% of our shares outstanding in 2023.

And with that operator, let's turn to questions.

The question answer session will be conducted electronically if you would like to ask a question. Please do so by pressing the star are strictly followed by the digit one or your phone in order to accommodate everyone. We request that you ask only one question.

Is that a speaker phone. Please make sure your mute function is turned off to allow your signal to reach our equipment.

For just a moment to give everyone the opportunity to join the queue.

The first question comes from the line of Sam Mchugh with Zhang.

You May now proceed.

Thanks very much for the question.

I'm just trying to wrap my head around slide 21 in the central cost that kind of.

Two part question.

First just I see that there is some changes happening with the PMA allocations just to confirm that's already captured.

Opco guidance that you gave separately for example, like the Switzerland, Opex charge shift that's already in the Swiss guidance and then secondly, how should we think about the cash burn and central in 2023 relative to what looks like maybe 200 million loss in 2022.

Thanks very much.

Charlie.

Yes, so yes I confirm.

One understands what goes on we do this without joint venture as well as a wholly owned companies.

What we call technical service agreements to really support the tech spend which has been coming down nicely over the years.

That's baked in at the Opco level, we've actually got a renegotiation with one of them pending but broadly speaking, it's all fully baked in and then.

<unk>.

As you know we've been running around this 200 million type number.

And takes on that depending a little bit on how much money, we spend on development in those new areas, but I think you should assume it's going to be broadly consistent around that number for the upcoming years.

Okay.

Thanks very much.

Yes.

Thank you Mr Mcniel.

The next question comes from the line of James Ratcliffe with Evercore you May now proceed.

Thank you two if I could one sort of big picture and one more specific.

Yes.

Talked about that Youre seeing for converged customers higher NPS scores lower churn et cetera.

What's the comparison to that because I.

Imagine that if somebody isn't happy with their broadband service are probably not going to add the mobile service as well. So can you talk about what sort of the comparisons that in for specific customers, who do add on broadband, but what youre seeing versus customers, who don't convert shroud.

And secondly, just on the Vodafone investment.

Now a meaningful holder of <unk>.

Core partner of Yours could you talk about anything that that would facilitate or anything that would make more difficult or limit in terms of relationships around the JV if in particular thanks.

Thanks, Dan.

Listen on the convergence figures you rune is on the cog and let him chime in a little bit too, but in the case of Holland, which we site regularly I think we are simply comparing.

Fancy converged customers to non converged customers now fair point, if thats, one youre, making there could be some sort of self selection. There. If you are happy with US then you're likely to buy more products, which means youll become happier, whereas people who are not happy with us generally may not buy more product in which case you might say well clearly there.

Not happy customers at the same time, there is no other way to do it.

You're either converted or youre, not and when you. When you can drive 20 points of MTS and have your churn that's a big enough.

The gap so to speak to support the premise that convergence works.

Now, we can maybe endeavor to provide a bit more color and detail around that going forward, but that is the basic set of statistics.

On the Vodafone stake we are good partners with Vodafone, we do business together quite frankly in three countries.

We own our network together through this beacon arrangement in the UK, We just signed a wholesale deal to provide them fiber access in Ireland and of corporate partners and haulage. So our touch points with Vodafone are many.

<unk>.

This may or may not change that dialogue, we will see it certainly not the reason we did it.

No direct reason, we did it but I think it doesn't hurt to have.

To ensure that our conversations with them going forward about all of these business arrangements are open indirect.

I would say there.

Great. Thank you.

You got it.

Thank you Mr Ratcliffe.

The next question comes from the line of Maurice Patrick with Barclays. You May now proceed.

Thanks, guys. Thanks for taking the question if I could ask a question on the U K Opco trends I think the UK I'll pose the fixed non op is down about 3% or sorry. This quarter. Despite the six 5% price increase you put through in the year just curious to your thoughts in terms of how you and the next pricing increased lengths, obviously you've communicated the.

The increase I wonder how much of that you thought would flow through.

To better off to and therefore, what's baked into your guidance would be helpful. Just linked to if I can.

Be curious to know your thoughts around pricing in the U K clearly a lot of bank, but price increases, but the front book still very promotional what do you think about sector scenario. Thank you.

I'll take the first one look you take the second one I think on the pricing I will say is that we anticipate.

Mobile and fixed pricing to behave the impact of that pricing to be similar to prior years, and we said in the past.

I think what we believe generally happens in fixed pricing, where we get roughly half that if not more in mobile pricing a larger percentage.

And so for sure we expect to either do as good or better.

The larger increase that that certain in which case you might argue hey, it's going to be harder on the other hand, we have a lot more tools in place to manage.

Customers in this particular go around and as you would have read in the going forward, we have put into the Ts and CS of contracts in the fixed side of our business.

Yes, maybe the only thing I would add on the pricing as Mike said it we have much more towards in place. So we are months into it.

And we know exactly how many customers of which cohorts have reacted in whatever way of fall and we also therefore understand exactly how much of the retained revenue.

We got and.

Don't disclose any number but so far we are fully on plan.

The last year, you referred to that.

Two things right. One thing is you do a general price increase and you get a sudden reaction and then second during the entire year customers have been optimizing that irrespective of price rise because they don't want to keep using their landline or they want to get rid of mid tier video content to simply.

Optimize and.

And therefore, you are right last year, the net of the parts have been negative now we are not giving a guidance for this year, but we are guiding and overall revenue growth and so we are much more confident on this piece of it as well.

<unk> put back book.

So in general Youre right. This is this is the strategic challenge right. So you see price increases.

Now.

Across most of the operator.

But you still see high competition in the acquisition market.

The way we are dealing with it.

In a positive way is twofold one.

We are not offering.

Emotions on broadband, we're offering promotion for broadband around 'twenty, one 'twenty two pounds. So we are staying more closer to 30 pounds leveraging our speed advantage.

The promotions you've seen from us the last three months.

Selling more throughout 50 Mac.

Close to 30 pounds and therefore, we have less of a back book front book issue and the second thing is we are also.

Pay a higher price so that's up a chunk so theres a lot of optimization going on and.

Stay tuned.

Great. Thank you so much.

Thank you Mr. Patrick.

The next question comes from the line of Robert Grindle with Deutsche Bank You May now proceed.

Yes, hi that I hope you can hear me.

The UK cable upgrade and new fiber JV.

One 5 million new fiber homes for the combination in 2023 doesn't appear massive versus $1 million achieved in full year 'twenty two.

Being cautious here, perhaps it takes a while to get to run rate.

And perhaps related to the question is as you're looking at Alt net acquisitions are you tilting away from build to buy and how quickly can the ml to sell off.

The newbuild once that's happened.

Yeah, there's a handful of good questions there.

And I think on the speed point I would simply say that we've got till 2028. So this is not we've never given numbers or or.

Timeframes that we believe.

Probably this is going to happen overnight. So we think that it does take a bit of time to get the machine moving and the 50% uptick is reasonable but could be exceeded let's see.

It's a not saying, it's a marathon, but it's not a sprint either we're hoping to have 80% of homes.

Covered by fiber here by 2028, and we think that is.

The right long term strategy, but it's a long term strategy. So we'll do it at the pace that makes sense for us.

As Lutz would say we sit today with the one gig network that reaches 16 million homes.

Offering an average speed of 300, Meg, which is five or six times faster than the average British household receives from other providers. So we're in a great position, even while we build out it's not as if.

We have to convert a network from copper to fiber or in some sort of other foot race quite frankly, we are already leading the race and so we're just fortifying our long term position loot you want take the second part.

Yes.

Can you repeat the question Robert.

What was it again.

How how how long does it take <unk> to sell of the new JV what terms are passed.

Tilting more to buy than build and the JV hands.

Okay. So I mean, the first one.

Sure.

As you know very experienced forget.

The penetration on the Lightning network.

Now next fiber that's not no change there right because <unk> is building the network for next fiber and Virgin Media is also the anchor tenant of it. So we are we.

We are selling into it and so you know that we are getting to a far higher penetration that any ultimate got too.

And.

And also how quickly we ramp up.

So don't expect any changes here in the future. So we plan on exactly with the same.

And then obviously.

Right.

Virgin Media, which was not a shareholder of next fiber. So this is more liberty global Telefonica and Favia.

<unk>.

<unk> are getting under threat.

Our.

Perception the reason is.

They don't get through the penetration they need to so according to our numbers. There is $7 6 million fiber homes in the UK from Rosneft and the penetration is around 15% and from a pure wholesaler perspective, we all know you need 40% and cost of capitals are increasing so.

So opportunistically, we will look at it and we will take the opportunities as they come.

The next question comes from the line of Louis Sanchez <unk> with Credit Suisse. You May now proceed.

Hi.

For taking my questions I wanted to follow up on the previous question specifically.

Look a little bit deeper on the $1 5 million.

For next year.

Can you give us the split between upgrade and greater scale rollout and then looking into the UK guidance.

Can you let us know if you are factoring in a construction revenues from the new fiber JV.

The retail business.

Thank you with that from from Greenfield area.

Yes.

Yes, I mean, I think look we've said to split roughly 50 50, but I don't know and Charlie. This is a question for you whether we.

Identified the revenues.

Next fiber called them out, but there will be revenue and a modest revenue.

Isn't it.

Correct.

And so what it is.

Yes.

It's not a massive number but there is some modest revenue baked into our numbers.

Yes.

Yeah. So I mean next fiber we are.

Building the network for that we are getting paid on the other hand side.

We are selling the network and for that we are now paying wholesale revenue.

Sure.

This is the changes in the P&L I think.

We haven't disclosed any numbers split between.

Expansion and upgrades.

So.

And I think we don't want to do that the only thing I'm, saying.

These are two completely different activities.

Expanding obviously is much more heavy lifting.

It takes more work and I think what we have said.

In 2002, we have expanded faster than in 'twenty, one and in 'twenty three we have the ambition to expand faster than that in 'twenty two and on on the.

Upgrade right, what we have to do it just to.

Remind everybody is we have to pull fiber through our existing DUC.

Much less of heavy lifting we have also guided that we will.

We are spending around 100 pounds per homes passed so which also explain that.

The work is significantly less and I want to simply reiterate the point Mike has made earlier.

We first leverage our coax network as much as we can and.

Selling driver too early doesn't have really.

Commercial benefit for us at that point in time, we have time.

Okay.

Next question operator.

Thank you Mr Lacrosse.

The next question comes from the line of Polo Tang with UBS you May now proceed.

Switzerland, but maybe it's just a case of request repricing, taking its time to work its way through Alternatively, where are the other moving parts that are driving the Swiss EBITDA declines in 2023 and the second question is really just the fiber wholesale in the U K. So I appreciate that you're still in the process of upgrading your cable network.

The fiber hub.

You had any discussions with other communication providers about wholesaling on the <unk> network and do you think that this could be a meaningful revenue stream going forward Alternatively as the equinox to pricing from Openreach now an unstoppable train, meaning you have no chance.

Well, let me take the second one first and Andre you can work up an answer to the first one.

Just mentioned, but we are building a network, we think will reach 80% of the market.

It's going to happen over a extended period of time is not happening tomorrow and what any investor in.

Telecom market requires or would like to see is some long term certainty and a level playing field.

Equinox to from.

Our point of view is unlikely to make a long term impact on our plans, but in the short term feels to us to be a bit desperate and premature by BT, reflecting.

I'd say, an overreaction to the market more broadly.

For whatever reason they felt that was necessary on the other hand, we think Ofcom get the larger picture here.

And is likely to look at equinox too.

Hopefully a comprehensive way and we look forward to the consultation process, but.

From our point of view.

Whether we are providing wholesale services tomorrow or next year or the year. After remember that in the upgrade of our fiber homes, which we announced sometime ago.

Upgrade of the 16 million homes, we did not say at that point in time that that decision to spend 100 pounds per home was based upon the need to realise wholesale revenue. In fact, we said the exact opposite which was we believe this makes sense relative to DOCSIS four <unk>.

Committed Andre.

Yes in regards to competitive dynamics I would say Q4 has seen a lot of liquidity in the market also seasonally black Friday was probably the biggest sales event.

The last year.

We have also seen a very high level of promotional activity, we were benefiting from that from a customer perspective as you've seen.

In the us, but also competitors gained quite a lot of new customers in the markets, but the pricing levels of the discount levels on those promotions are not really sustainable and also causing some of the pressure that we have with the migrations at customers that are looking at the front book prices.

I migrate to effective prices. There is of course attention that is not making our lives easy was all of the customers didn't want to migrate over to the new Sunrise portfolio.

As a result of that we have started already in Q1 to reduce our promotional aggressiveness mainly on the main brands, our flanker brand will not be.

Yes address, but that's mainly because the flanker brand has a different role.

It needs to play the role of being more price aggressive but on the main brands, we want to protect the bank better with lower promotional aggressiveness in particular with promotions that do no longer also a discount over the source to contract term, but at maximum only half of the first contract terms with customers get again.

Used to actually pay the normal this price now.

In terms of dynamics for next year.

Clearly the main driver for next year.

Those light pricing of the mainly fixed customers coming from UPC.

Roughly less than sort of volatile customers and not all of those customers will be necessarily a drag to the drag to our revenues, but some of those are if you think about it I mean, there are of course certain customers are sitting on one or two products, where we still have good opportunity to cross and upsell products.

<unk> provides multiple same for example, or multiple more while there is a certain segment of customers. It has already maxed out the product.

Range and is sitting on an old price the price point that no longer exists on the new front book and in order to maintain those customer relations healthy and to continue working with them.

Doing this right sizing exercise the main drag I would say also on the top line for next year.

On top of it I would say on the EBITDA guidance, we of course continue to actually push.

The business to capture growth going forward. So we continue to actually do.

Opex investments on the digital side, we also do have.

Some increase in Opex it is coming from cloud applications things moving from Capex to Opex.

We have a number of I would say marketing activities for the first time will hit.

Our full year range like for example, the Swiss ski sponsorship, which we only started in 'twenty two but we will see for the full extent only in <unk>.

But the major driver I would say of the headache is really this wide pricing in that relatively small fixed customer segment. All other growth engines. If you look at mobile if you could get it to be if you could give central brand maintained healthy.

But we are accelerating this exercise now to actually create a growth platform that we can start from going forward.

Yeah.

I will just add that I have confidence and Andre and the team.

To manage through this.

Deep knowledge and understanding of the market.

So that's great.

The challenges that Andre is working through at the revenue and customer level, which I'm sure. We will get through the business is generating significant free cash flow and on pace for.

Or the kinds of free cash flow results. We had initially anticipated when we made the acquisition.

Clear thanks.

Sure.

Thank you Mr. Zhang.

The next question comes from the line of Steve Malcolm with Redburn you May now proceed.

Yes, good afternoon, guys and I'll go for one and a half questions.

Okay. Just a quick follow up on that question first just going back to the U K on the price moves.

And I think at the moment I guess, if I look at 2022.

My perception would be the fixed volume price rises didn't land probably costs why don't you would hoped.

Price side, just maybe on that a bit better.

Wrong, but that's my impression is you go into 2023.

You said, you've got more tools at your disposal, but obviously, it's a it's a very very big price right. So I guess the.

That reaction would be that you're going to see more churn youre going to have more promotional activity.

You just elaborate maybe on most of those actions that you can take to prevent that and give us sort of a bit more confidence that we don't see.

The orca reactions that we sold following the price rise last year that'd be great and then just coming back to the point on Vodafone Mike.

Mike You said that the recent investment was not to sort of connect create more touch points with Vodafone.

What exactly was it just because you hold your shares were cheap.

It is the case could you maybe give us some sort of guidelines as to what is sort of your.

Scope.

Is it just sort of contiguous sector telco or media or anything that you think is appropriate.

Thanks.

Does that have to be some kind of existing relationship for you to invest shareholders money and folks like waterfront. Thank you.

Nick do you want to start with that.

Okay.

So I mean your high level observation is right for last year, but I think the reason.

Different so if you if you park the price rise for a second right.

On the fixed side customers optimizing their bill because simply right. The average up to 50 pounds. So if you want to optimize household spend if you look more at the fixed side at website and so irrespective of price rise customer cancelling the landline because.

They use their mobile and customers.

Optimizing and picking more of the video content that really need. This is this is what we have been seeing.

And the mobile side, you don't see that what you see on the mobile side and that is there.

I keep using the old phone for loan growth.

If you. These are developments that would have been happening with price on that or without prior five due to the cost of living crisis now.

This is then the question how do you define that last year and I think this is what Mike said earlier on.

I would say everything.

You take into account two months after customers have seen the Bill then you can say that also on the fixed side we landed.

Something like 50% of the price rise and on the mobile type because it's only on app not on hardware. The overall number of the prize for US is much lower and it is embedded in the Ts and CS. So you see barely very little better zero or very little reaction to it now what does this mean for this year.

Yes.

And we are not guiding on fixed op you, but.

We have been.

We are doing a lot of things different number one.

We are sending out the letters to customers over the period of two months and.

In a staggered approach.

This is number one that has two benefits one we always can ensure we have enough agents dealing with it so which werent the case, 100% last year and second we have really.

Real time data. So we can see how many customers are calling and.

What is the best possible retention for them in terms of customer and <unk> and then we see within 24 hours delay what is actually happening.

And when do you take this all into account there's a lot of room for optimization, we can leverage convergence of our fixed customers. We can sell mobile we can sell.

Interesting content, we can tell in hardware.

And I'm not disclosing anything, but so far as I said earlier on we are on plan with a fixed price right and on the mobile side. We have landed it also now right so as communicated and out and the reaction. So far we have been seeing are not higher than a year ago.

Hope that helps.

Thanks, Good correct looking on Vodafone Vodafone.

Vodafone.

Repeat what we've said publicly yet stock seems undervalued to us there's a lot of undervalued stocks out there by the way ours included and that's why we spent $1 $7 billion last year buying it.

But certainly this one also looks undervalued with some near term catalysts that.

Should play out here, we think in a positive way.

And it was a relatively small investment if you look at the if you see through how we.

Financed the position.

Now we have a lot of touch points with Vodafone as I, just mentioned and I look forward to a very constructive dialogue with the current and future CEO wherever that will be.

Around all of those particular issues and if necessary with the board. So as I mentioned, we're not an activist here, but we certainly hope to be engaged in understanding of what their strategy isn't perhaps even influence out if it makes sense, but we're not doing this to to create tension or stress, we're not trying to rattle. The cages here we thought it was.

An opportunistic transaction that was financed we thought very effectively with <unk>.

Typically small amounts of capital we could put the risk.

We have time for one more or are we calling it.

Yes.

Go ahead.

Okay.

Alright. Thank you Alright, I would just would you think catalyst can you elaborate on what that might be.

Well I can't give you anything that hasnt been talked about 100 times publicly UK mobile consolidation and rationalization in Spain, and Italy pending vantage deal.

Towers in the U K and then now a German strategy evolution et cetera.

Africa.

After I read the press.

There's a handful where you're right there.

Okay. Thanks, a lot.

You got it Rick I don't know if we have time for one more hour six minutes past should I close at all.

Let's take one more Mike and then shut it down okay, alright, thanks for hanging in guidance, we'll take one more.

We'll take the last question from Carl Murdock Smith with bearing Baird. You May now proceed.

Hi, Thanks, very much for the question and taking the time for one last one so I'll just ask one.

I think slide nine has a very powerful one on the long term buyback commitments over time.

Obviously, you've committed to a floor of 10% of buyback.

That commitment was first actually my two and a half years ago. The Q2 2021 results and kind of I think that long term commitments as also shown on slide nine is very very important.

Did you all think about giving a longer term buyback commitments relative on just committing to the 2023.

Buying back.

How should we be thinking about your ongoing commitments.

In future years. Thanks.

Yes.

Good question Karl I. Appreciate you asking that we are not today, providing any additional long term guidance, but.

You don't have to do much reading between the lines to conclude based on everything I said in my remarks that we're committed to shareholder remuneration. So.

You should expect over time, we will continue to provide updates on that long term strategy.

And.

I think past is prologue.

Hope that helps okay. That's great. Thanks.

Thanks, very much you got listen thank you got it thanks, everybody for hanging in appreciate your enduring the long remarks, if youre still on we had a lot of info and a lot of talk about and.

A very strong 22, and I think all the building blocks in place for a strong 23, and most importantly for value creation.

So appreciate your support and we're always around for questions. If you have any follow up thanks, everyone.

You can also find a copy of today's presentation materials have a good day.

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