Liberty Global's Q3 2025: Contradictions Emerge on Network Ownership, UK Broadband Churn, and Cost Savings

Guidance:

• Liberty Global Services & Corporate adjusted EBITDA for 2025 improved to $150M; visibility to ~$100M in 2026.
• Virgin Media O2: consumer and wholesale revenue growth confirmed; Daisy contribution ~£125M of revenue in 2025.
• All other OpCo guidance remains unchanged.

Business Commentary:

• Strong Operational Performance:
• Liberty Global reported strong sequential improvement in broadband net adds across all four markets, despite intense competition.

• This trend reflects the effectiveness of operating performance improvements and the value creation from strategic network expansions, such as 5G expansion in the UK and network rationalization in Belgium.

• Financial Resilience and Debt Management:

• The company has refinanced over $9 billion of 2028 maturities, including a debt financing for Telenet, reducing leverage and maintaining the average debt life.

• This proactive refinancing was possible due to favorable credit spreads and market conditions, enhancing Liberty Global's financial resilience.

• Liberty Growth and Investment Strategy:

• The Liberty Growth investment portfolio increased to $3.4 billion, reflecting the value in premium media, sports, and digital infrastructure assets.

• The focus remains on generating $500 million to $750 million from non-core asset sales, with significant progress already made, including the partial sale of the ITV stake.

• Corporate Cost Reduction Initiatives:

• Liberty Global achieved a net corporate cost reduction to $150 million for 2025, with visibility to further decrease to $100 million in 2026.
• This was driven by a significant reshaping exercise within Liberty Corporate and Liberty Tech, involving both voluntary and involuntary redundancies, leading to annualized cost savings of $100 million.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted a "strong third quarter" with sequential broadband net-add improvements, refinanced over $9B of 2028 maturities, Liberty Growth value at $3.4B, and improved corporate cost guidance to $150M in 2025 with visibility to $100M in 2026 — framing progress on deleveraging and value-unlock initiatives.

Q&A:

• Question from Maurice Patrick (Barclays): Given the FT article re Netomnia and ahead of Tele2’s CMD, what’s your outlook on UK fiber investments — could the NetCo sale plan be resurrected; buy vs build view and at what cost would you consider buying rather than building?
  Response: Will continue upgrading own fiber and expanding reach; open to consolidation/rationalization opportunities if economics comparable; supportive of deals that rationalize altnets but will not comment on any specific transaction now.

• Question from Polo Tang (UBS): Can you discuss Dutch competitive dynamics and the broadband improvement — how confident are you to stabilize broadband in 2026, will that hurt ARPU, and is FWA impacting the market?
  Response: Plan focuses on materially reducing churn to restore broadband growth over the balance of next year; market is competitive but rational; FWA is a variable; priority is churn reduction rather than broad ARPU sacrifice.

• Question from Joshua Mills (BNP Paribas): Color on UK competitiveness — fixed ARPU was negative despite April price rise; on B2B (given Daisy) what would underlying B2B growth have been this quarter?
  Response: Fixed market extremely price driven with heavy promotions; losing 28k customers and only a ~1% ARPU dip seen as a reasonable outcome; the B2B connectivity business moved into O2 Daisy is in decline and VMO2 will provide separate Q4 disclosure on the impact.

• Question from Robert Grindel (Deutsche Bank): On central costs and the $100M annualized savings target: what are the costs to achieve this, payback period, any meaningful CapEx or frictional costs?
  Response: Savings have a short payback (under 12 months), minimal incremental CapEx and low restructuring friction; largely achieved via headcount reductions and reorganization.

• Question from Nick Lyle (Berenberg): Why prioritize Benelux for value-unlock actions and not VMO2 in the UK — is it size or specific criteria not yet met in the UK?
  Response: Benelux markets present a clearer Sunrise-like path (rational three-player markets, Netco/Servco separation enabled by the Wyre financing), so execution is further advanced there; UK remains strategic but requires JV partner alignment and is more complex.

• Question from David Wright (Bank of America): On UK guidance and perimeter changes with Daisy — should revenue guidance have been adjusted ex-Daisy; and do Telefónica rights/puts/calls affect your options?
  Response: VMO2 is a 50/50 JV and management is aligned with Telefónica; O2 Daisy (70% owned) changes the reporting perimeter — B2B connectivity placed into Daisy is in decline; detailed financials and perimeter impact (and any governance/put-call implications) will be provided in Q4.

• Question from Ulrich Rathe (Bernstein): Regarding the recent refinancings, can you confirm you’ve adhered to prior treasury policies — currency matching to operating units and using fixed-rate swaps as before?
  Response: Yes — refinancings follow prior policies: currency exposure matched to operating units, bonds issued are swapped to fixed where appropriate, hedges maintained and average fixed-rate profile is being preserved (~3–5 years depending on market).

• Question from James Ratzer (New Street Research): VMO2 targets 4–5x leverage in the medium term — will that be achieved organically or require inorganic steps (dividends, asset sales, capital injections)?
  Response: Objective is to achieve 4–5x primarily via organic EBITDA growth (plus potential synergies from O2 Daisy); management is open-minded on other levers (e.g., asset monetizations) but is not committing to specific inorganic actions now.

• Question from Matthew Harrigan (The Benchmark Company): What are the longer-term implications of political/regulatory actions (e.g., UK infrastructure tax) on your business and investment plans?
  Response: Management sees regulatory stance becoming more growth-friendly overall, is actively engaging with policymakers; remains vigilant on specific risks like broadband taxes but views current regulatory trends as net tailwinds rather than headwinds.

Contradiction Point 1

Investment Strategy and Network Ownership

It involves Liberty Global's investment strategy and network ownership plans, which could have significant implications for capital allocation and strategic direction.

Given the recent FT article on Netomnia, what is your investment strategy for fiber expansion? Will the NetCo sale plan be resurrected? What is your view on a buy versus build approach? - Maurice Patrick (Barclays)

2025Q3: We continue to upgrade our own fiber and have access to 8 million fiber homes. We are supportive of opportunities to consolidate and rationalize the fixed network environment. I am not commenting on any particular deal, but we are open-minded and open for business for opportunities that would achieve rationalization. - Mike Fries(CEO)

Why hasn't the UK NetCo initiative been implemented and what challenges exist for Madrid? - Robert J. Grindle (Deutsche Bank)

2025Q2: Our partner has expressed their position on network ownership and financing, but we see alternative ways to achieve some of their goals through vehicles like nexfibre. We maintain a good dialogue and are committed to finding areas of agreement to move forward. - Michael Thomas Fries(Vice Chairman, President & CEO)

Contradiction Point 2

UK Broadband Market and Churn

It highlights differing perspectives on the UK broadband market and churn issues, which are crucial for understanding market dynamics and strategic priorities.

Could you elaborate on UK market competitiveness and ARPU trends? What drives B2B growth? - Joshua Mills (BNP Paribas)

2025Q3: The market is competitive with price-driven offers. We have the highest ARPU, but lower churn means some ARPU dip. Mobile remains stable with postpay ARPU growth. - Lutz Schuler(CEO)

How do you plan to reduce broadband declines in the UK for Virgin Media O2? - Polo Tang (UBS Investment Bank)

2025Q2: Churn is the primary issue due to aggressive pricing by competitors like ONE, who are paying GBP 300 to buy customers out. We're implementing a prevention machine to extend customer lifetimes and stabilize the situation, with July showing signs of improvement. - Lutz Schuler(CEO)

Contradiction Point 3

Cost Savings and Restructuring

It involves the company's cost-saving measures and restructuring plans, which are critical for financial management and operational efficiency.

What are the costs to achieve $100 million annualized savings, and is there any stock impact? - Robert Grindel (Deutsche Bank)

2025Q3: The savings have a one-year payback with minimal CapEx. The costs are considered necessary to run a telco, aligning with a telco multiple. There is some restructuring, but the payback is less than 12 months. - Charlie (CFO)

What creates value when assets are divested from the Liberty Global Group, and will the market value them higher? - David Antony Wright (BofA Securities)

2025Q2: We're in the middle of it, but we're nearly half done. We will complete in Q4. And as we complete it, we will be in a position to start to assess exactly how much CapEx we will avoid in the future and therefore, as a consequence, how much of those investments we can then do in other areas to continue to build out our network. - Michael Thomas Fries(Vice Chairman, President & CEO)

Contradiction Point 4

Fiber Network Investment Strategy

It highlights a shift in Liberty Global's strategy regarding fiber network investments, impacting potential consolidation and network upgrades.

Given the recent FT article on Netomnia in the UK, what is your outlook on fiber investments? Will the NetCo sale plan be revived? What is your stance on buy versus build strategies? - Maurice Patrick (Barclays)

2025Q3: We continue to upgrade our own fiber and have access to 8 million fiber homes. We are supportive of opportunities to consolidate and rationalize the fixed network environment. - Mike Fries(CEO)

Why did UK broadband additions decline, and what impact have One Touch Switch, market competition, and price increases had? - Carl Murdock-Smith (Citigroup)

2025Q1: We have no intention to build the NetCo. We will continue to invest in our network in the traditional way based on the economics. If we see opportunities that make sense for us to participate in that in the future, we will do that. - Mike Fries(CEO)

Contradiction Point 5

Mobile Market Competition and Strategy

It highlights differing perspectives on the competitive landscape in the mobile market, impacting strategic decisions and market positioning.

What is the competitiveness in the UK market and ARPU trend? What drives the underlying B2B growth? - Joshua Mills (BNP Paribas)

2025Q3: Mobile remains stable with postpay ARPU growth. The market is competitive with price-driven offers. - Lutz Schuler(Chief Executive Officer - Virgin Media)

How might AI-driven longer handset replacement cycles impact mobile operations in the UK and Benelux? - Matthew Harrigan (the Benchmark Company)

2024Q4: In the UK, mobile is stable, and we actually grew mobile ARPU in the quarter. - Mike Fries(CEO)