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Edited Transcript of LBTYA.OQ earnings conference call or presentation 16-Feb-21 2:00pm GMT

·59 min read

Q4 2020 Liberty Global PLC Earnings Call LONDON Feb 16, 2021 (Thomson StreetEvents) -- Edited Transcript of Liberty Global PLC earnings conference call or presentation Tuesday, February 16, 2021 at 2:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * André Krause Liberty Global plc - CEO of Sunrise UPC Business * Charles H. R. Bracken Liberty Global plc - Executive VP & CFO * Frederick G. Westerman Liberty Global plc - SVP of IR & Corporate Responsibility * Lutz Schüler Liberty Global plc - CEO of Virgin Media * Michael Thomas Fries Liberty Global plc - Vice Chairman, President & CEO ================================================================================ Conference Call Participants ================================================================================ * Andrew Charles Robert Beale Arete Research Services LLP - Senior Analyst * Christian Fangmann HSBC, Research Division - Analyst of Telecoms * David Antony Wright BofA Securities, Research Division - Head of Developed EMEA European Telecoms Equity Research and Director * James Edmund Ratzer New Street Research LLP - Europe Team Head of Communications Services & Analyst * Michael Bishop Goldman Sachs Group, Inc., Research Division - Equity Analyst * Nick Lyall Societe Generale Cross Asset Research - Equity Analyst * Polo Tang UBS Investment Bank, Research Division - MD & Head of Telecom Research * Robert James Grindle Deutsche Bank AG, Research Division - Research Analyst * Stephen Paul Malcolm Redburn (Europe) Limited, Research Division - Research Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global's Fourth Quarter 2020 Investor Call. This call and associated webcast are the property of Liberty Global, and any redistribution, retransmission or rebroadcast of this call or webcast in any form without the expressed written consent of Liberty Global is strictly prohibited. (Operator Instructions) Today's formal presentation materials can be found under the Investor Relations section of Liberty Global's website at libertyglobal.com. After today's formal presentation, instructions will be given for a question-and-answer session. Page 2 of the slides details the company's safe harbor 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 certain risks that could cause actual results to differ materially from those expressed or implied by these statements. These risks include those detailed in Liberty Global's filings with the Securities and Exchange Commission, including its most recent filed forms 10-Q and 10-K as amended. Liberty Global disclaims any obligation to update any of these forward-looking statements to reflect any change in its expectations or in the conditions on which any such statement is based. I would now like to turn the call over to Mr. Mike Fries. -------------------------------------------------------------------------------- Michael Thomas Fries, Liberty Global plc - Vice Chairman, President & CEO [2] -------------------------------------------------------------------------------- Thanks, operator, and welcome, everyone. I appreciate you joining us today. As this is our year-end call, we've got a lot of ground to cover. I'm going to apologize upfront for the length of the remarks. But all my key execs are on the line, and I'll be sure to get them involved during the Q&A. And then as usual, Charlie and I will be speaking from slides, which are available on the website. So hopefully, you can access those and follow along. I want to begin on Slide 4 with some 2020 highlights. And by any measure, this was an extraordinary year for us, for our employees and our customers. Nobody was immune to the effects of COVID-19 in 2020, including us as you'll see. But we were lucky. Lucky to have some strong antibodies, so to speak, that emanated from the critical role we play in the lives of our customers and -- which allowed us to meet or exceed nearly all of our own internal forecast that we established pre COVID. Families, schools, hospital, businesses, big and small, saw their reliance on stable and robust connectivity rise to unprecedented levels. Average upstream and downstream traffic in January was still 90% and 60% above year ago levels. So we're still in this and doing quite well. As with any crisis, so many operating lessons were learned. For example, the importance of putting our people first, with flexible work arrangements, constant communication and attention to their well-being. We also experienced the goodwill that comes from going the extra mile for our customers and our communities, with more speed, more data, more entertainment and essential and low-cost access plans. And we quickly identified the significant benefits of accelerating the digital road maps we were already on for customer sales, care and retention. It's also fair to say that throughout the year, there was an underlying flight to quality among connectivity customers, which really played to our strengths. We already deliver the fastest speeds, the most reliable services, fixed mobile bundles and better customer experiences than our competition. And as the customer puts a higher value on these factors moving forward, we're committed to the investments and the innovation required to solidify that position. And you've seen that happening in our fixed mobile transformation, our launch of 1 gig broadband everywhere, our investments in digital customer journeys and our commitment to new connectivity and entertainment products, which I'll talk about here. So with all that said, perhaps not surprisingly, 2020 was a strong year for us operationally and financially. And there's a summary table on the right side of this slide and with the key numbers, but I'll just highlight a few things, beginning with our significant increase in subscriber growth. We added over 80,000 new fixed customers in the year, reversing the trend of customer losses, which stood at 74,000 last year. And broadband net additions, perhaps one of our most important measures of growth, were 242,000, up threefold from 2019. We even saw growth in postpaid mobile adds to 513,000 despite shop closures throughout the year. And there were plenty of key drivers behind these results. For example, all operations saw reduced churn and higher NPS, and that provided a tailwind. This was particularly evident in the U.K., where we delivered consistent growth on our BAU footprint and, of course, in new build territories. We also saw consistent sales and net add improvement in Switzerland every quarter, continuing the turnaround that began 10 years -- 10 quarters ago. Now Charlie will take us through the financial results, but the bottom line is we delivered. If you net out the impact of COVID on things like premium sports and mobile roaming, we generated positive revenue while at the same time, exceeding our original expectations for EBITDA and operating free cash flow. The standout number for me, and I'm sure for you, was free cash flow where we beat guidance with $1.1 billion this year, up nearly 40% year-over-year. Now you can do the math against our 580 million shares outstanding to arrive at free cash flow per share since apparently, we're discouraged in doing that for you, and you'll see that the implied yield on our stock is attractive. And moving to the second box, there's more good news here when you look at our Q4 results. We've been talking about low churn and record NPS most of the year, and this continued to drive sales and net adds higher in Q4, making it by far our best-performing quarter of the year. Virgin Media, in particular, saw its best customer growth in 12 quarters. And our Swiss operation, UPC, delivered positive broadband additions for the first time in 13 quarters, and that complements another strong quarter from Sunrise. At the foundation of this customer growth are key product launches around 1 gig, smart WiFi and our advanced entertainment platform. Again, I'll talk about those in a second. Now despite working from home and all of the related challenges of a pandemic, we made some pretty big strides on our fixed mobile transformation here with 2 large M&A transactions, and you're aware of these. I will just reference the acquisition of Sunrise closed in November, and I could not be happier with the progress we've already made on leadership, integration and commercial planning. We've got a rock star management team led by André Krause, who was the CEO of Sunrise, and including Severina Pascu, who launched the UPC turnaround and would now report to André in a COO role. The Swiss synergies have been validated. Commercial day 1 planning is well advanced. And momentum in the meantime continues to accelerate. So we should have much more to say about that on our second quarter call -- sorry, on the Q1 call. Now turning to the U.K. As we'd do quite a few times today, I'm happy to report that the regulatory review of the joint venture we announced last May between Virgin Media and Telefónica's O2 is right on track. Now we've been heavily engaged with the CMA and feel really positive about a midyear approval. Like Switzerland, everything we've learned in the meantime just reaffirms our confidence in this combination financially and operationally. As reported, the Swiss and U.K. deals together represent about $12 billion of synergies on an NPV basis, and that's at today's FX rate, around 65% of which should accrue to us. Now you can do the math on that in terms of potential value creation. And I'd also just point out, as with our Belgian and Dutch integrations, we have a pretty good track record of underpromising and overdelivering on synergies. Now you probably noticed that VodafoneZiggo reported around 6% EBITDA growth and $1.2 billion of operating free cash flow for 2020, with all expected synergies achieved a year earlier than planned. And as I mentioned on the last earnings call, VodafoneZiggo is a great case study for how fixed mobile convergence delivers growth and stable free cash flow even before the more strategic opportunities are factored in, which is a great segue to our 2021 priorities. And I'll start with our commitment to 2 initiatives that are very, very important to all of us. First of all, I'm extremely proud of our work in diversity, equity and inclusion across Liberty Global. Now we've been focused for some time on gender equality and supporting the less fortunate in our communities with broadband access, but we can and we will do more. So we established our first global DE&I Council last year, which I co-chair. We've ramped up both our internal and external work around 5 pillars: ethnicity, gender, LGBTQ, ability and generational equity. This build on our programs already in existence and turbocharges others. But the bottom line here is that we will hold ourselves and the entire company accountable to greater awareness and tangible goals that reflect our culture and our purpose. I'm equally committed to our ESG programs where we're already a recognized leader. Most of you know that we've been in the Dow Jones Sustainability Index for years and are currently #3 in the telco media sector. We're also in the top 15% of S&P sustainability performance measures, among other acknowledgments. And like many of our peers, we're squarely focused on our net-zero targets, which we will announce later this year. Now let me quickly hit on 5 other key priorities for 2021. First of all, as you'll see later in the presentation, each of our core markets is planning to deliver positive revenue growth this year, reflecting continued momentum in customer additions, expected or announced price rises and progress in our B2B divisions. Just a footnote. That assumes modest, not necessarily heroic improvement in the COVID crisis throughout the year. Second, I'm nearly certain that despite $45 billion of accretive M&A last year, 2021 will be equally busy and exciting for us on the strategic front. And becoming a fixed mobile champion and #1 or 2 in our markets delivers more than competitive stability and long-term growth. It also gives us the scale to shape our markets and drive even greater value creation, which we will do. And third, we'll continue to optimize our portfolio of venture investments in 2021 to bring greater transparency to the assets that we believe already represent about $4 per share, and I'll come back to that in a moment. And then fourth, we're laser-focused on the free cash flow growth. Charlie will take us through the guidance in greater detail in a few slides, but I'll steal the headline, which is that we're forecasting a 25% increase in free cash flow over the year. And when you factor in our commitment to buybacks, with $1 billion we purchased last year at about $19 a share and a new $1 billion buyback authorization in place for this year, we should see an even bigger increase in free cash flow per share. Now let's dig a bit deeper on our operational performance on Slide 5. And the purpose here is to lay out visually the acceleration in customer growth we saw throughout the year, side-by-side with the core product innovations that stimulated and supported that growth. So starting on the left-hand side of the slide, you can clearly see the significant sequential improvement each quarter in customer and broadband net additions, by far, our most important measures of growth. Fixed customer adds went from negative 19,000 in Q1 to 56,000 in Q4, almost in a straight line. And we set new highs in broadband with 242,000 total adds, and I just said, up threefold from last year. And again, steady sequential improvement quarter after quarter. Now the biggest contributor to this growth was our biggest market. Virgin Media added over 100,000 new broadband subs last year, drawing from, again, both the BAU and Lightning footprint, and in the fourth quarter, grabbed nearly 45% of all broadband net adds in the market, even though we only reach half the country. So many things are coming together right now in the U.K. Lutz and his team have done a fantastic job. We've seen better base management and record low churn. They brought calls centers onshore but still increased the percentage of digital sales to 50%. The network is resilient, and they've rolled out a bunch of new products like 1 gig, fixed mobile bundles, 5G, TV 360 and Intelligent Wifi. And those same growth drivers are being activated across our European footprint. So in the middle of the slide, you can see that we doubled the number of homes commercially available for 1 gig broadband to 20 million at the end of the year, with most markets at 100% coverage today. So back to the U.K., our Gig1 commercial rollout reached 7.3 million homes by December, almost twice the number of BT Openreach, and of course, we're only half the market. And we'll be firing up the remaining 8 million gigawatt homes throughout the balance of 2021. That will significantly widen the gap of BT and provide a great tailwind for Virgin Media. To be clear, it's early days in the marketing of 1 gig services for sure. And you can see that in the middle of the slide, with just under 200,000 gigabit subs in our footprint today. But we know speed matters to customers. We know what matters now more than ever. Today, over 90% of our broadband subs are on 100 megabit or higher service, and half of our subs are at the 200 meg or higher level. And we've seen this movie before. It's just a matter of time before 1 gig product gains traction, and we would lead the market again. Now turning to video quickly on the bottom left of the slide. You can see the improvement in video losses from 74,000 in Q1 to just 10,000 in Q4. Total losses of 180,000 in the year were 30% fewer than last year and represented around 2.5% of our video base. That's meaningfully better than the U.S. Now we've talked a lot about the differences between Europe and the U.S. many times. We have lower video ARPUs, so less pressure on subs. We have a stronger free-to-air broadcast sector, which keeps more eyeballs on linear and time-shifted television. And we have widely available fixed mobile bundles, where we know the video product is a key component for customers. On top of that, we continue to roll out the most advanced video devices in the market, like TV 360, which I've mentioned in the U.K., which has our latest UI and now shows an NPS improvement of 50 points, and our new IP box that we call Apollo, which is a 4K app-centric box, very inexpensive device. It actually fits in your palm and allows us to upsell the traditional video products. The entertainment road map, in my opinion, has never been more robust, with all countries on the same platform for the first time. And I'll just close this slide out by saying the momentum you see building on this chart has largely continued into 2021. With modest price increases, continued churn management and product innovation, this should be a strong year for our B2C business. Now of course, that assumes the availability of vaccines will reduce the need for further lockdowns as I already mentioned. In other words, we do expect to slow the steady improvement in economic activity throughout the rest of the year. By the way, just a footnote. We have given you an update on each country in the appendix, including data on Project Lightning, which I know you're always interested in. And I'll just say Project Lightning continues to perform brilliantly. So look for that information. I'm going to end my remarks with a few words on our ventures portfolio. Last quarter, we provided a teaser for you, and with highlights on a handful of investments, but really not much granularity. And given that we believe the total portfolio is worth $2.4 billion today or a little over $4 per share, we thought it might be useful to provide a bit more detail on these investments. So on Slide 6, you'll see the 4 verticals that comprise that portfolio: tech, content and sports, sort of emerging markets and a catch-on really and infrastructure. And as you'll quickly spot, 90% of the value resides in the first 2 buckets on the left. So that's where I'll spend my time, starting with our tech ventures portfolio. As some will know, we began investing in tech about 12 years ago. It was a small dedicated team in Denver and Silicon Valley, which remains very small today. And during that time, the goal hasn't wavered really. We're looking at mostly modest investments in early- to mid-stage companies that provide products or services we can exploit in our operations. Historically, the team has been focused on verticals like infrastructure and cloud and machine learning, with some blue-sky investments in things like gaming or augmented reality or advanced advertising. Now while the value we deliver to the portfolio company can be significant because we're typically a customer, that's why we get asked to be in a lot of deals, we don't include the value that the portfolio company brings to us in our returns. And trust me, there have been many examples where that number is large. Today, we have around $250 million currently invested in 40-plus companies, which we value at nearly 4x that amount. This excludes the $180 million that was previously invested in the ventures fund and has already returned $350 million of capital to us, which we've just moved into our consolidated cash balance. The team -- they've historically invested around $50 million per year, but they have made some really smart bets. And we've shown a couple here on the slide. Skillz, for example, is a mobile gaming platform that we invested $14 million in back in 2017, anticipating our role in the mobile business, and today is publicly listed with a market cap of just under $14 million, valuing our stake at $450 million. Plume is a -- is principally a supplier of smart WiFi devices in the home that improve or extend reach but also service gateways for device management. We rolled it out in Europe. Comcast is the largest distributor in the U.S. And we began working with Plume in 2014 as a potential supplier and ultimately invested $25 million. And based on our latest funding around that stakes, worth around $170 million, and we have an incredibly strong relationship with this strategic vendor. There are a host of other examples in the tech portfolio. In fact, the team believes we're currently invested in no fewer than 9 companies that either are or we think will be unicorns. Now like any good venture investor, we have and we will continue to monetize these positions when the opportunity arises and then return that cash to corporate. The second large bubble represents our investments in content and sports valued at $1.25 billion today. And this includes our stakes in companies like ITV, All3Media, Lionsgate and Formula E. Now as most of you know, we acquired 10% of ITV around 7 years ago at an average cost of GBP 2.16. Not surprisingly, and as most have figured out, we fully hedged that position at the time with a collar. And as those collars will expire soon, we have begun unwinding that position and lowering our cost basis in the shares. Currently, we're long about 7% of ITV at 75p, and the stock closed Monday at 1 13. And the balance remains collared, and we may or may not close that out. We'll see. We did the same thing with our hedge position at Lionsgate when the stock was in the mid-single digits or thereabouts and now trades at 13. So let me preempt the question by saying right upfront that these steps do not pretend anything strategic with these companies. We're just taking advantage of market dislocation to materially average down our cost in these positions like any smart investor would do. And just a quick word on Formula E, which is starting its 7th season of 8 races later this month in Saudi Arabia. I don't think I have to explain why this racing series is well positioned, right? With manufacturers like Mercedes and Porsche now in the series, everyone appreciates the future of driving and racing is electric. And we have about $150 million invested and a 33% stake that we conservatively value at $250 million. And yes, many SPACs have been circling. We'll see what happens. But the only other thing I'll mention briefly is our growing investment in infrastructure, which we believe holds immense untapped potential for us. And I'm referring to both our own infrastructure like cabinets, real estate and towers, which we're rapidly organizing into separate units where necessary; and third-party investments in businesses like EdgeConneX, for example, where we rolled our stake into EQT's $2.7 billion acquisition of EdgeConneX for a 2 extra turn in the seat at the table with what is arguably the smartest investor in infrastructure in Europe. So there's lots of exciting things happening in the ventures front. Historically, we've been pretty quiet about our activities. And certainly, they're not taking resources or focus away from our primary business. But there is real value here and real strategic connection to our operations, and you can expect us to be more transparent moving forward. So let me recap. A strong 2020 operationally and financially and a great start to the year, you'll see that. Our 2 big fixed mobile combinations in Switzerland and the U.K. are right on track. And with $6 billion of liquidity at year-end, we continue to invest our capital exactly how we signaled we would: so first, building FMC champions in our core markets, we've done that; second, opportunistically investing in ventures that are both strategic and financially rewarding, and you are seeing the fruits of some of that work right now; and third, buying back our shares, which, obviously, we believe are undervalued relative to almost any measure. So I'm excited to take your questions. But first, over to you, Charlie. -------------------------------------------------------------------------------- Charles H. R. Bracken, Liberty Global plc - Executive VP & CFO [3] -------------------------------------------------------------------------------- Thanks, Mike. And now turning to our consolidated numbers. I'm starting on a page entitled Underlying Revenue Stable. Total group revenue saw a decline of 0.5% in Q4, resulting in a full year decline of 1.5%. We estimate the negative impact of COVID to be around $54 million in Q4 and around $200 million for the full year, which negatively impacted our growth rate by around 1.8%. Without that, we believe the group would have seen positive broad-based revenue growth for the full year. On the right-hand side of the page, for each of the last 3 quarters, you will see the 5 key areas impacted by COVID. In general, COVID impacted our business much less in Q4 than it did when the pandemic first hit in Q2. The impact of not having access to premium sports in Q2 was $34 million. And with sports probably to return by Q4, the downside was only around $7 million. Handset sales and roaming revenues were impacted by the pandemic, and we estimate contributed to a $16 million drag in Q4, while the impact on our broadcasting businesses was around $6 million for the quarter. There was some impact on our B2B businesses, we estimate around $22 million in Q4, but it was largely due to reduced sales. Fortunately, to date, we haven't seen a material impact on bad debt and late charges on either our B2B or consumer businesses. On the next slide, we provide details of our adjusted EBITDA. For the full year 2020, we delivered minus 3.9% adjusted EBITDA growth, which was in line with our expectations. As we called out in our Q3 results presentation, Virgin Media declined 11% rebased versus Q4 2019. Now this was driven by $7 million of costs related to the O2 merger and some other growth investments, particularly $21 million in the accelerated digitization and onshoring of our customer content platforms as well as an $18 million increase in marketing, which did result in accelerated subscriber growth. The remaining difference versus Q4 of 2019 is the impact of end-of-contract implications, network taxes and the deferral of our price rise from Q4 to Q1 2021. Swiss trends continued to gradually improve, with a 7.9% decline in Q4, partially explained by a 4% drag from $10 million of costs to capture our estimated synergies. While Sunrise's rebased results improved since completion had 0 impact on our year-on-year financials, the stand-alone business has reported around 2% full year growth based on the historical IFRS reporting policy. Turning to operating free cash flow. We delivered 5% operating free cash flow growth for the full year, which is in line with our guidance of mid-single-digit growth. This is despite $26 million of costs to capture, which is equivalent to more than 1% of growth. Our capital intensity declined to 22.5% in 2020 or 19.6%, excluding CapEx related to Project Lightning. And -- but the costs to capture in Switzerland, all markets would have returned positive OFCF growth year-on-year. The standout result is our deconsolidated joint venture in the Netherlands, which grew 9% year-on-year, delivering $1.2 billion of operating free cash flow. Turning to our 2020 free cash flow results. We delivered 39% growth or $300 million compared to 2019 and reported $1.1 billion of consolidated free cash flow, ahead of our $1 billion guidance. This was despite some currency headwinds versus the guidance assumptions and a $60 million drag from working capital, which we generally believe should be broadly flat for telecoms companies such as ourselves. Our cash flow was further suppressed by $329 million of capital expenditures related to our U.K. network expansion Project Lightning. On the page entitled 2021 Outlook, we provide details of our expectations for our key assets going forward. Given that we fully expect our U.K. business will be deconsolidated into a joint venture by midyear and with VodafoneZiggo and Telenet already providing stand alone guidance, going forward, we'll provide our key financials guidance not on a group consolidated basis, but from each business unit. At the group level, we will be guiding only to consolidated free cash flow, which we expect to grow more than 25% to $1.35 billion for 2021 based on the assumption of the JV closes of midyear. In the U.K. and Ireland, we expect to return to top line growth despite an increased year 1 impact from end of contract and best tariff notifications, although costs to capture synergies will weigh on adjusted EBITDA and OFCF growth. For the full year, we would expect stand-alone Virgin Media to decline low single digits across both metrics. We also expect a return to revenue growth in Switzerland for the combined UPC Sunrise business, though we expect a low single-digit adjusted EBITDA decline and a mid-single-digit OFCF to decline. And that's because we're spending over CHF 150 million of costs to capture synergies. But on the underlying business, we think there'll be growth. Telenet, our Belgium operations, has guided to 1% to 2% % adjusted EBITDA growth and continued free cash flow growth, expecting to generate EUR 420 million to EUR 440 million. VodafoneZiggo, our Dutch JV, has guided to 1% to 3% adjusted EBITDA growth and increased year-on-year cash distributions to shareholders and guided to a range of EUR 550 million to EUR 650 million or $677 million to $800 million. And with that, operator, over to questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) We'll take the first question from Robert -- excuse me, James Ratzer. Pardon me. It is going to be from Robert Grindle with Deutsche Bank. -------------------------------------------------------------------------------- Robert James Grindle, Deutsche Bank AG, Research Division - Research Analyst [2] -------------------------------------------------------------------------------- Okay. Okay. That's me, I think. May I ask about U.K. And I saw the strong Lightning take-up stats, but the Lightning build was lower than the previous 3 years. Is that COVID? Or are you hanging fire a bit pending the O2 merger? Or I think you mentioned in the slides that passive infrastructure access is not really available at the moment. Is that what you're waiting for? And what's the prognosis there? -------------------------------------------------------------------------------- Michael Thomas Fries, Liberty Global plc - Vice Chairman, President & CEO [3] -------------------------------------------------------------------------------- Well, I'll just make a couple of comments, and Lutz, you can work up a more detailed answer. If you look at the last 4, 5 years, we've always built between 400,000 and 500,000 homes per year. Last year, we did 426,000, and we've done 2.5 million to date. I wouldn't read anything into it. It's more about just optimizing our overall financial picture. Could we build a few more? Yes. Could be build a few less? Probably. The PIA is reducing our costs pretty considerably to below GBP 600, which is a great thing. And the more we use of that, of course, it could accelerate both the capital we spend and the number of homes we build. So it's all good news there. There's really no -- nothing negative. Our coverage is growing. Our penetration remains strong. Our ARPUs are strong, and the returns are high. So the Lightning Project, as it sits today, is in great shape. Certainly, when the merger closes or -- so the joint venture closes, we will sit down with Telefónica when we're allowed to and really reevaluate the entire picture around our fixed networks in the U.K., specifically, the pace of Lightning build, secondly, our broader ambition to expand the network beyond our Lightning footprint aggressively, the path we'll take to 10 gig. Will we bring in financial partners? How will we accretively and aggressively take advantage of our network leadership in this market and ensure we remain network leaders for some time, that's a real opportunity here. Any other color, Lutz? -------------------------------------------------------------------------------- Lutz Schüler, Liberty Global plc - CEO of Virgin Media [4] -------------------------------------------------------------------------------- You said it all, basically. I think the only thing I would add is that the Lightning team, on top to the network expansion for homes, is also now going to connect more and more base stations for 5G, right? We closed 2 big deals, 1 with Vodafone, 1 with [Edge] 3G. And obviously, here, also, you see now an acceleration of really connecting circuits. And so if you take both into account, then it runs at pace. And as Mike said, I think we have to review the strategy together then after the preview with Telefónica. -------------------------------------------------------------------------------- Operator [5] -------------------------------------------------------------------------------- (Operator Instructions) The next question is from Christian Fangmann with HSBC. -------------------------------------------------------------------------------- Christian Fangmann, HSBC, Research Division - Analyst of Telecoms [6] -------------------------------------------------------------------------------- Yes. Great. I have actually a question on Switzerland. So it looks like a good outcome, back to broadband growth in that market on an underlying basis at UPC stand-alone. My question is more on the integration costs and the phasing. You mentioned CHF 150 million. Can you maybe give us a split between OpEx and CapEx here? And also what you expect in terms of synergies already in 2020, kind of the phasing over the next few years, just at least broadly speaking, that we can model it properly. I think a bit more color or guidance around that would be nice. -------------------------------------------------------------------------------- Michael Thomas Fries, Liberty Global plc - Vice Chairman, President & CEO [7] -------------------------------------------------------------------------------- Yes. I don't -- André is on the call. I can ask him to address to some extent. We're being obviously a little careful about annual synergy expectations. But I'll tell you that in 2021, the synergies are expected to be relatively nominal. I think maybe in the CHF 30 million range, something like that, against the CHF 150 million costs to capture. But it ramps pretty quickly. So I think in 2022, it's 4 or 5x that number, and then it grows sort of ratably to the 2024, 2025 time frame. And it's not going to look materially different than the Belgian synergy model or the Dutch synergy model in terms of how much is revenue, how much is cost avoided and so how much is cost savings based on a 2020 cost base, and it's about 85%, 15%, 15% revenues, and those are really in the later years. So it's a conservative synergization in our view. André, I don't know what other color we're providing on those sorts of numbers, but I'll let you wrap that up. -------------------------------------------------------------------------------- André Krause, Liberty Global plc - CEO of Sunrise UPC Business [8] -------------------------------------------------------------------------------- Well, I think you outlined it well. I think on the costs to capture, of course, we try to be pretty front-loaded. We are moving fast. Integration is progressing quite well. And obviously, some of the OpEx stuff is going first, whereas some of the investments are coming later on as we go through it. And I would expect that the largest part of the total costs to capture should be done by the end of '22. And in terms of synergy phasing, of course, there's always a bit of a question mark around the revenue synergies, how quickly they're going to run through. But as Mike has pointed out, I would fully confirm the shape of the trajectory. -------------------------------------------------------------------------------- Operator [9] -------------------------------------------------------------------------------- The next question is from James Ratzer with New Street Research. -------------------------------------------------------------------------------- James Edmund Ratzer, New Street Research LLP - Europe Team Head of Communications Services & Analyst [10] -------------------------------------------------------------------------------- Yes. Question from me really was around your cash return thoughts from here. I mean firstly, on the buyback, I noticed the pace of that seemed to slow in the fourth quarter. So I was wondering if there was any logic behind that. And should we be expecting the pace of buyback to be accelerated during the first half of this year? And just -- I mean, given the strong cash flow guidance that you're giving and the rate of buyback, I mean, you'll still end this year at the current run rate, with well over $3 billion of cash on the balance sheet. So I was wondering if you could give any further thoughts around timing of that potentially being returned to shareholders or other uses of that capital. -------------------------------------------------------------------------------- Michael Thomas Fries, Liberty Global plc - Vice Chairman, President & CEO [11] -------------------------------------------------------------------------------- Well, we can't identify any other uses of the capital beyond what I've said generally, which is we remain opportunistic around strategic transactional ideas that might occur in our core markets and maybe continued modest investment in ventures. Nothing else that's jumping out of us at this point for -- that would require meaningful amounts of capital. So buybacks remain front and center. And as you said, just looking at last year, you'll remember that we started out at a normal pace. When, of course, the stock declined, we ramped up and bought most of our stock in that period of time, Q2, Q3. And from our perspective, we'll do the same this year. So I think the end of the year was a bit of an odd period, both related to where we were on our 10b5-1 plans and our material nonpublic information. And having it just announced or about to announce the increased authorization, we wanted to get through the year, if you will, with what remaining we had. So I think you should expect us to look at the situation dynamically. And it wouldn't surprise me if we ended up buying more stock in the first half than the second half because we believe our operating and financial story continues to look better and better. But let's see how the things evolve. But we've got the full $1 billion available. We have been spending more daily in this year than we were in the fourth quarter, and that shouldn't surprise you, but let's see how things evolve. We can't be more specific than that, James. -------------------------------------------------------------------------------- Operator [12] -------------------------------------------------------------------------------- The next question is from Michael Bishop with Goldman Sachs. -------------------------------------------------------------------------------- Michael Bishop, Goldman Sachs Group, Inc., Research Division - Equity Analyst [13] -------------------------------------------------------------------------------- I'd love to just try and pull together a couple of things on the free cash flow guide. It feels like the step-up to $1.35 billion is largely driven by the higher VodafoneZiggo distribution and then obviously, the growth and the accretion that Sunrise brings. Is there anything else you'd call out as driving that $1.35 billion given it looks like you're guiding that operating cash flow will be modestly down for a couple of the assets like the U.K. and Switzerland. And then if I could ask like a sort of more forward-looking question on the cash flow, which is related. It sounds like we should take the $1.35 billion and then effectively, if you want to think about that on a run rate basis going forward, you'll be spending at least $150 million on integration costs in Switzerland, $15 million in the U.K. But then you probably spend some for the second half as the deal in the U.K. closes. So simplistically, should we think about the underlying cash flow being quite a bit above $1.5 billion? -------------------------------------------------------------------------------- Michael Thomas Fries, Liberty Global plc - Vice Chairman, President & CEO [14] -------------------------------------------------------------------------------- Good questions. Charlie? -------------------------------------------------------------------------------- Charles H. R. Bracken, Liberty Global plc - Executive VP & CFO [15] -------------------------------------------------------------------------------- I think the -- you're quite right that we saw the acceleration in VodafoneZiggo, which continues through a cash machine. There's some acceleration, as you all know, in Telenet based on that guidance. In the U.K., it's more flat probably before we close the deal, but also because of the costs to capture and also the Lightning build. And again, I would emphasize that conceptually, you could switch off the Lightning construction CapEx, and that would increase our free cash flow pretty materially if we wanted to, [but we're] not going to take that as an option. And then in Switzerland, I think you rightly point out that we're getting some good free cash flow growth, not least because we are getting from financial synergies as a result of the transaction. So I think the message is that we've got a real cash flow machine. I think Mike made the point about the synergies. There's a lot more to go from here. We would expect continued free cash flow growth as we monetize those synergies as well as we see continued good operational performance particularly in the turnaround in the U.K. -------------------------------------------------------------------------------- Michael Thomas Fries, Liberty Global plc - Vice Chairman, President & CEO [16] -------------------------------------------------------------------------------- And as I said in my remarks, you would already know, Michael, the free cash flow per share figure would be even obviously more robust on a growth rate basis, just given our repurchase of 8%, 9%, 10% of our market cap every year. So if you're looking at it integrated, the free cash flow underlying operating free cash flow story, as Charlie said, and as you pointed out, is strong, and then you're able to accelerate that on a free cash flow per share basis just by virtue of our buyback activity. -------------------------------------------------------------------------------- Michael Bishop, Goldman Sachs Group, Inc., Research Division - Equity Analyst [17] -------------------------------------------------------------------------------- And am I right? So the second half the -- sorry, just to follow up, on the second half of the year in the U.K. So I'm sort of right to think that, that will be effectively a small net cash outflow that's also in the $1.35 billion because then, like Switzerland, your integration will be more than the synergy that you deliver? -------------------------------------------------------------------------------- Michael Thomas Fries, Liberty Global plc - Vice Chairman, President & CEO [18] -------------------------------------------------------------------------------- Well, we're trying to let you -- go ahead, Charlie. -------------------------------------------------------------------------------- Charles H. R. Bracken, Liberty Global plc - Executive VP & CFO [19] -------------------------------------------------------------------------------- Yes. I was going to say, I mean, the way we actually look at it, is it's actually broadly flat because of seasonality in the free cash flow in the U.K. So I mean, again, we think the deal will close. We'll give you updated assumptions when we close it because obviously, we don't have a lot of inside of insight on what's going on with O2. But our best guess is that if we don't close or close, it's probably about the same free cash flow. There's a lot of variable in that assumption. I wouldn't (inaudible) Lightning or underlying (inaudible) -------------------------------------------------------------------------------- Michael Thomas Fries, Liberty Global plc - Vice Chairman, President & CEO [20] -------------------------------------------------------------------------------- That -- you're coming through a little bit fuzzy, Charlie. But I think the point was that the guidance is provided, assuming that the deal doesn't close, just to be clear for folks and give them a baseline, on top of which they can overlay the JV. And as Charlie indicated, interestingly, whether we consolidate Virgin Media for the entire year or just half a year, interestingly, the free cash flow number won't be meaningfully different because we'll be then distributing that cash in the second half of the year back up to the parent. So I think you can look at it, yes, either way, Michael, and you're not going to get a materially different number, if that makes sense. -------------------------------------------------------------------------------- Operator [21] -------------------------------------------------------------------------------- The next question is from Nick Lyall with SocGen. -------------------------------------------------------------------------------- Nick Lyall, Societe Generale Cross Asset Research - Equity Analyst [22] -------------------------------------------------------------------------------- Just one on Switzerland, please, Mike, if I could. Just on -- the underlying competition still looks a bit tricky. You talked about discounts, I think, in the statement, again, on the front book. So is that doing anything in terms of your plans for price changes? Could you maybe just discuss at what point you think the new company can cope with price changes? And also what are the plans for the brands in Switzerland as well, please? -------------------------------------------------------------------------------- Michael Thomas Fries, Liberty Global plc - Vice Chairman, President & CEO [23] -------------------------------------------------------------------------------- Sure. In fact, André, why don't I let you take both of those since you're running it. Go ahead. -------------------------------------------------------------------------------- André Krause, Liberty Global plc - CEO of Sunrise UPC Business [24] -------------------------------------------------------------------------------- Yes. Sure. Thanks for the question. So I would say overall, yes, the market is quite competitive, and there's quite a lot of tension on the front book. However, I would say that both businesses, Sunrise and UPC operating still majorly independent in Q4, have seen one of the best quarters for the year and not only for this year, but for the last 3 years, probably. So that is showing that we have a very competitive offering. Now looking forward for us, of course, combining, fixed mobile convergence is the name of the game, and we have still a lot of opportunity on both businesses to actually drive more value to our customers while not necessarily destroying value, but rather creating value. So I think that's 1 key lever that we want to pull. In regards to brand consolidation, that's something we are currently looking into. Most likely, we'll probably operate with 2 brands. We have seen that working out quite successfully in the past couple of quarters within Sunrise. And it's probably a strategy we will embrace also for the combined business. But we haven't taken a final decision on what those spreads going to be. -------------------------------------------------------------------------------- Operator [25] -------------------------------------------------------------------------------- The next question is from David Wright with Bank of America. -------------------------------------------------------------------------------- David Antony Wright, BofA Securities, Research Division - Head of Developed EMEA European Telecoms Equity Research and Director [26] -------------------------------------------------------------------------------- Yes. It's just on the U.K., I really don't want to downplay the achievement of Lutz and team, but a lot of the commercial momentum has come with the delay in the price rise. So I guess the question is to what extent is that a factor. And as you bring pricing into the customer base in end of Q1, early Q2, I believe, how do you think those KPIs could respond? Is the commercial activity driven more by price right now, do you think? Or more by the quality of service and the branding in the product? -------------------------------------------------------------------------------- Michael Thomas Fries, Liberty Global plc - Vice Chairman, President & CEO [27] -------------------------------------------------------------------------------- I'll just say and I'll let Lutz provide a bit more color. This began building early in the year, David. So if you look at the U.K. broadband adds: first quarter was about 8,000, I think; second quarter, 33,000; third quarter, 47,000; fourth quarter, 54,000. And it's our view that, that is sort of undeniable -- that's an undeniable trend regardless of any announcements that may or may not have been made on price increases. And as I mentioned in my remarks, lots of positive things driving that. And Lutz, why don't you flesh that out a bit more? -------------------------------------------------------------------------------- Lutz Schüler, Liberty Global plc - CEO of Virgin Media [28] -------------------------------------------------------------------------------- Yes. Exactly. So I mean, we put together a strategy to get back to sustainable growth in 2019: fixed mobile convergence, one; a lot of innovations, like Mike has already called out; and better base management; onshoring of customer service; huge efforts in digital. And so this has led to reduced churn and increased sales. And you're right, obviously, waving a price rise in 2020 has helped here. So if we would have done one, the numbers would be a bit lower, the net adds growth. However, it would be still substantiable higher than 2019. And maybe I'll give a bit flavor of the price rise, how it's going. So I mean, we are -- we've got very rational reaction from the public. So right in the press and in customers, it was well received. We're in the middle of it at the moment. And it seems that the demand for higher speeds in the pandemic, especially, right, is increasing. When you have kids doing home schooling, parents working and stuff, you need higher speeds. And so we're offering that. So therefore, obviously, Q1 net adds, while you're doing a price rise, cannot be higher than the 55,000 broadband net adds you have seen in Q4. However, I would not be surprised if we would have still positive net adds in Q1. -------------------------------------------------------------------------------- David Antony Wright, BofA Securities, Research Division - Head of Developed EMEA European Telecoms Equity Research and Director [29] -------------------------------------------------------------------------------- And can I just ask as a follow-on, the commentary you made on the demand for higher speeds, perhaps deriving from COVID, et cetera. Also, you have seen some competitors announce some fairly substantial price rises in the U.K., too. After a couple of choppy years, do you feel like the U.K. market is returning to more rationality, perhaps supported by that COVID effect? -------------------------------------------------------------------------------- Lutz Schüler, Liberty Global plc - CEO of Virgin Media [30] -------------------------------------------------------------------------------- Yes. Well, I think all the players have big investments on one hand side, right, in next-generation networks on the fixed side and 5G on the mobile side. Sky does also a big investment on the content side. So that's one. Second, usage has increased dramatically, as Mike has pointed out, so that means also, obviously, that all needs some funding. And therefore, I think price rises have been done by almost everybody, right, BT, CPI, plus 3.9%. I think Vodafone, the same. I think just today, Sky has announced their price rise for this year as well. And we have done it in January. So I would say on price rise, very rational and, I think also, however, well received by the customers, I said before. There is still higher competition on the acquisition side, right? So here, right, prices -- if you compare price development, for, for instance, products like in the 60 meg space, prices are lower, yes? So that is the dynamic. We haven't followed that so much as Virgin Media, and we get our fair share. -------------------------------------------------------------------------------- David Antony Wright, BofA Securities, Research Division - Head of Developed EMEA European Telecoms Equity Research and Director [31] -------------------------------------------------------------------------------- Very good point. -------------------------------------------------------------------------------- Michael Thomas Fries, Liberty Global plc - Vice Chairman, President & CEO [32] -------------------------------------------------------------------------------- Yes. By the way, the prices are lower in those lower tiers, but we're actually offering generally faster speeds. So BT might offer a 38 meg or Sky might offer a 60 meg product, we're at 100 meg for that same customer -- target customer base. So our price per megabit, if that's something we want to look at, is much more attractive. And as people get smarter and more focused on the broadband product, that's not even irrelevant stat. We're always faster even if the prices are comparable. -------------------------------------------------------------------------------- Operator [33] -------------------------------------------------------------------------------- The next question is from Polo Tang with UBS. -------------------------------------------------------------------------------- Polo Tang, UBS Investment Bank, Research Division - MD & Head of Telecom Research [34] -------------------------------------------------------------------------------- So the first one is for Mike. You talked earlier about how you'd be busy on the strategic front in 2021. So can you maybe just elaborate on those comments? And were you referring to completing the U.K. deal? Or are you doing new additional things that you'd maybe give us some sense in terms of the areas that you're looking at? And really, just have a follow-up question, which is really just about Sky. Because Dana Strong has obviously taken over as CEO of Sky, and she obviously knows Virgin Media very well. So do you see scoop for a closer cooperation with Sky going forward, for example, maybe Sky co-investing alongside you guys in terms of a fiber footprint expansion? Or maybe doing cable wholesale? -------------------------------------------------------------------------------- Michael Thomas Fries, Liberty Global plc - Vice Chairman, President & CEO [35] -------------------------------------------------------------------------------- Well, I'll take those. First, with respect to Dana, of course, she is very well-known to us. She worked for us, for me for over 2 decades, and I consider her to be an outstanding executive. So obviously, we're happy for her, and I think it helps for us to have somebody in that seat, who we know well, who knows us well and I think who Comcast knows well. So it's a good decision, and we're -- of course, we're in touch with her and working very closely on a number of things. She's also quite deliberate and careful, so she'll take her time to evaluate opportunities in the marketplace. Having said that, I have no reason to believe she wouldn't be just as strategic as Jeremy was around their long-term strategy in this marketplace and what options they have to secure owner economics or reduce costs to serve and all the things that anybody who's doing a business or rebuilding a business in some cases what would look to do. So I mean, I couldn't be happier with her and more proud of her. On the other hand, I think it does give us a great dialogue and a great opportunity to continue to talk about each of our strategic futures here. We can't do much until the deal is approved as you could imagine. And you're unlikely to read or hear anything between now and then. But I wouldn't surprise me if we reengage on a number of topics with Sky, who are a very important partner for us in this market. On the M&A side or the strategic front, I wasn't referring to anything specific. But clearly, if I go through those 3 buckets again, core markets, ventures and buybacks, our core markets, I think we've done exactly what we said we would do. In the last 5 years, we've done something like $80 billion or bigger, actually, $80 billion plus of transactions, allowing us to exit markets at double-digit multiples where we didn't have scale and bed down markets for fixed mobile convergence becoming a champion in markets where we did have scale. And I think the way we've done it depends on the market, we've either exited, bought or merged. And we think in all cases, we've done the right thing. So we now have the #1 or 2 player in each -- in these markets, and that gives us the scale to be, I would say, opportunistic and creative. So if you're now the #2 player in each of these markets relative to the incumbent, you're in a different position when you look at those core markets strategically. Just -- and you can imagine what those might include. In the markets that we haven't yet done anything, in Ireland and Poland, for example, of course, we're going to continue to evaluate what the right long-term future for those markets is in terms of their strategic footprint and whether there's a fixed mobile opportunity, et cetera. So you should assume that, that's high on our list, and it would be surprising to me if we ended 2021 without continued transformation even in those 2 markets, whatever that might look like. The only other thing you might have heard me reference indirectly is that we are really excited about the infrastructure space, not surprisingly. We sit on massive infrastructure ourselves, both fiber based, we have towers directly and indirectly. We have real estate. Charlie and his team have done a great job extracting property assets from joint ventures and opcos, allowing us to look at the future of edge computing. So you should assume that we are being about as creative as opportunistic as we can be in infrastructure. We're not going to go compete with the big players, [Selmex,] et cetera, that's not necessarily what I'm referring to. But there are going to be opportunities for us to partner, raise capital, monetize. And that will keep us busy because those are -- we know the underlying value of our networks is significant, and there is massive amounts of money looking to invest in those networks. So it will be creative to see if there are ways for us to create value. I mean that's what we do, Polo. You know that. We're not -- anything we would do, though, would be accretive to our base case plans, our guidance, whatever we might be referring to at the time. But it's exciting to me and something that we'll be working on closely in 2021. -------------------------------------------------------------------------------- Operator [36] -------------------------------------------------------------------------------- We'll take the next question from Steve Malcolm with Redburn. -------------------------------------------------------------------------------- Stephen Paul Malcolm, Redburn (Europe) Limited, Research Division - Research Analyst [37] -------------------------------------------------------------------------------- Yes. I'll try and go for a couple if I can. I have quite quick ones. First of all, just on VodafoneZiggo, I guess, paradoxically, it's delivering the best financial numbers in the group, but the operational KPIs are amongst the weakest. You've lost 60-odd thousand RGUs in the last couple of quarters. Do you feel that you've got the balance right there between volume and price, particularly as KPN ramps up its fiber build over the next 3, 4, 5 years? Can I just hear your thoughts on that? And then just swinging back to the U.K., can you just help us understand the sort of evolution of the -- of broadband's ARPU for the year? Obviously, you've had best tariff notifications, skipped the price rise. You get the price rise in the first quarter, best tariff beginning to lap, I guess, towards the back end of the year. Could you even get that U.K. offer back to flat? How should we think about the progress of that number through 2021? -------------------------------------------------------------------------------- Michael Thomas Fries, Liberty Global plc - Vice Chairman, President & CEO [38] -------------------------------------------------------------------------------- Steve, you're moving pretty quick on the U.K. question. Could you repeat that just a bit more slowly? Not all of it, just... -------------------------------------------------------------------------------- Stephen Paul Malcolm, Redburn (Europe) Limited, Research Division - Research Analyst [39] -------------------------------------------------------------------------------- I just wanted to understand how we should think about the evolution of the U.K. ARPU through 2021. I think you had back guidance of like 4% in Q4. You obviously had best target notification, you skipped the price rise, you get the price rise in Q1 back end. You get -- begin to lap the best tariff impact through the second half of the year. So just trying to understand whether you think you can get that number back to stable full year volume growth, but the ARPU picture is a bit blurry (inaudible) '21. -------------------------------------------------------------------------------- Michael Thomas Fries, Liberty Global plc - Vice Chairman, President & CEO [40] -------------------------------------------------------------------------------- Okay. Lutz, do you want to tackle the ARPU question, give your two cents on that or provide more color to? -------------------------------------------------------------------------------- Lutz Schüler, Liberty Global plc - CEO of Virgin Media [41] -------------------------------------------------------------------------------- Yes. Yes. So I mean you called yourself the key levers. So price rise will give us a good tailwind to get the ARPU growth again. On the other hand side, there is EOCN (sic) [ECN] and ABTN, right, average best tariff notifications, which hasn't really kicked in into 2020, but which will kick in, in 2021. So in our plan, we are careful. So we have contributed quite some revenue loss to ABTN. So therefore, we think we are more coming to ARPU flipped into '22 rather than '21. But it won't shrink a lot, but it might be a little. It all depends on customer reaction on ABTN. -------------------------------------------------------------------------------- Michael Thomas Fries, Liberty Global plc - Vice Chairman, President & CEO [42] -------------------------------------------------------------------------------- Yes. And at Dutch market -- in the Dutch market, I think (inaudible) and the team -- and Charlie, you can do up in here, too, have -- had it figured out pretty well. Clearly, it's a competitive market, and the KPN has made announcements about getting to roughly 50% reach of fiber, which we always assumed would be the case. But we've now got 1 gig everywhere, 6 million homes and are marketing aggressively. So I think this is just a breather, if you will, the synergies and the execution have been intense, and the rollout of new products has been successful. I think '21 is not indicative, as we look at it, of the longer-term opportunity in the marketplace. And I think the guidance here just reflects a bit of a breather, if you will, not necessarily a discernible trend over the next 3 years. And I have confidence in their ability to optimize price volume to look at these -- this market dynamically. Already, I mean, if you just compare them to KPN in 2020, which probably many of you do, it's not a very fair comparison. I mean it had an incredible year relative to KPN in terms of net adds, in terms of pretty much almost any metric. I think we grew revenue 2% and EBITDA 6%. KPN went back 4% and, I think, 4.5%. And we had about 270,000 mobile net adds. I think they had 55,000. Their broadband result was worse. But as with any market, Steve, you're going to have ebbs and flows, right? KPN's a good operator. They're not going to be down and out forever. Everybody comes back punching. So that's the nature of a competitive marketplace. And I have confidence that this management team has their -- has a good strategy in place for the longer term and, let's say, the medium term, and any one year won't be indicative of what you should expect. Any color on that Charlie... -------------------------------------------------------------------------------- Charles H. R. Bracken, Liberty Global plc - Executive VP & CFO [43] -------------------------------------------------------------------------------- No. I'd agree. The other thing I'd say, they've done a great job of B2B. I don't know if you've noticed, but they've moved their market share very materially on B2B, and there's still a lot of runway to go. So I actually think they do a terrific job of execution, perhaps amongst the best in the group. So I agree with everything Mike said. -------------------------------------------------------------------------------- Michael Thomas Fries, Liberty Global plc - Vice Chairman, President & CEO [44] -------------------------------------------------------------------------------- Yes. -------------------------------------------------------------------------------- Stephen Paul Malcolm, Redburn (Europe) Limited, Research Division - Research Analyst [45] -------------------------------------------------------------------------------- Okay. I know you said you will not give any guidance on VodafoneZiggo so I won't -- so -- can you hear me? -------------------------------------------------------------------------------- Michael Thomas Fries, Liberty Global plc - Vice Chairman, President & CEO [46] -------------------------------------------------------------------------------- Yes. I think the question, Charlie, was the decision not to give revenue guidance at VodafoneZiggo. Can you talk... -------------------------------------------------------------------------------- Stephen Paul Malcolm, Redburn (Europe) Limited, Research Division - Research Analyst [47] -------------------------------------------------------------------------------- Is that just because of the (inaudible) that you're talking about and giving some flexibility to this point (inaudible) situation. -------------------------------------------------------------------------------- Charles H. R. Bracken, Liberty Global plc - Executive VP & CFO [48] -------------------------------------------------------------------------------- No. I just think, to be honest with you, revenue guidance in a world of COVID is not the easiest thing. I think we all have a lot more confidence in cash flow guidance because who knows what the impact on sports and whatever. And this company is performing well. And I think you'll see some very good results. Management's famously quite conservative (inaudible) putting pressure on the (inaudible) but we'll see. -------------------------------------------------------------------------------- Michael Thomas Fries, Liberty Global plc - Vice Chairman, President & CEO [49] -------------------------------------------------------------------------------- I think we're at the mark here, Rick, or take another question or 2? -------------------------------------------------------------------------------- Frederick G. Westerman, Liberty Global plc - SVP of IR & Corporate Responsibility [50] -------------------------------------------------------------------------------- Last one. -------------------------------------------------------------------------------- Operator [51] -------------------------------------------------------------------------------- The last question is from Andrew Beale with Arete Research. -------------------------------------------------------------------------------- Andrew Charles Robert Beale, Arete Research Services LLP - Senior Analyst [52] -------------------------------------------------------------------------------- I want to come back to both VodafoneZiggo again, actually, and just ask you about some -- your background thinking around the possible IPO there. Obviously, you've just discussed the results in Holland. But I guess it's a business that's given you and continues to give you large dividends. So just wondering how you thought about the ongoing value from 50% ownership of those dividends in the business you like versus the opportunity to highlight equity value more broadly across your wider group operations. And obviously, I appreciate you've got a partner there. So there are things that you won't be able to talk about. But any background around that thinking, not just for VodafoneZiggo, but the sort of wider outlook for local IPOs. -------------------------------------------------------------------------------- Michael Thomas Fries, Liberty Global plc - Vice Chairman, President & CEO [53] -------------------------------------------------------------------------------- Yes. Good question. And of course, there's nothing to report. We do have a partner. They're quite busy right now on a number of other things and doing great stuff. My guess is if you ask each of us, we both like this business a lot. And not just because it's in a 3-player market. And really, in many ways, number one, in terms of market share in most of the B2C products and has great free cash flow profile as you've already indicated. Is it an IPO candidate? Potentially. We could look at that, depending on how the market evolves. I think there is a bit of a rotation occurring and long delay should be -- or happening, rotation occurring in Europe because you've got many tailwinds, I think. One, regulatory -- regulators are mostly focused on infrastructure and build-out, and they want to see companies in a fair bet environment where if they invest the money, they get a return. It's a good thing. You might even see further consolidation on mobile. We'll see. We've already pointed out how COVID can help those who are prepared with great products to grow, and consumption is never turning back. I mean consumption is growing -- is going nowhere but up. Multiples have been depressed for a period of time. There's a lot of positive things in our sector, which we're a little bit of an outlier because we're -- we feel more entrepreneurial, more profitable and more strategic than a lot of our peers. But nonetheless, the sector, in general, is possibly due for a pretty good year here. And would it be an opportunity to look at listings? I would say possibly. It's not up to us. We have to kind of -- we wouldn't want to do that with a partner who was resistant to it. Longer term, you should look -- there are built-in provisions in these documents for a reason. Each party can force an IPO. One party can force the sale of the company. And they're in there for a reason because nobody knows what 5 years, 6 years will look like. We're getting to those points. And so it's going to be an interesting 24 months. We're a very solid partnership. We'll have to come together and decide what's the right outcome for each of us in these particular assets and markets. And I'm thrilled to be in that position with a business that's actually hit the ball in the park and achieved everything we set out to always achieve. So it's all good news. But it's probably nice to say, it's delivering cash to the parent, really meaningful cash, and that's something we can bank on almost. And as you look at our free cash flow story, that's certainly an important piece to us, that business. And disrupting it or impacting the dividend or having your partnership to be e bit ruffled, that's also -- that's not something we're anxious to do. But keep your eyes on it, stay tuned. The next 24 months will -- I think you'll see activity on that front, and we'll certainly let you know when it happens. Well, anyhow, look, I'll close it out just briefly. Appreciate everybody joining the call. We felt that it was a difficult year for everyone on the planet, and we feel fortunate to have come through it with pretty strong operating and financial results and, as I mentioned in my remarks, results that mostly have continued through this year. So it wasn't a one-off in our mind. There's a lot of momentum going into 2021. And thus far, we're seeing that momentum continue, which is a really positive indicator for Q1. And strategically, I think we're focused on the right things. The ventures portfolio, give it a look. It's not something we're sharing with you for -- just because there's nothing else to talk about. We really believe that there is underlying value. We made smart investments. Now these are investments that enable our opcos and our operating businesses mostly, and that's something to be taken into consideration, and there could be more coming. And as ever, we're working on the value gap, doing our best to both execute on the business, but also be sure, strategically and financially, we're making it clear to investors where we see the value in the company. So I appreciate you joining us, and we'll speak to you soon. Take care. -------------------------------------------------------------------------------- Operator [54] -------------------------------------------------------------------------------- Ladies and gentlemen, this concludes Liberty Global's Fourth Quarter 2020 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.