Liberty Global and Proximus: Q2 2024 Earnings Reveal Contrasting Fortunes

Earnings call: Liberty Global highlights stable Q2 amidst strategic shifts By Investing.com

Liberty Global PLC (NASDAQ:LBTYA) discussed its strategic plans and financial performance during its second-quarter 2024 earnings call, highlighting a robust balance sheet and a focus on delivering shareholder value. CEO Mike Fries outlined the company's initiatives, including the Sunrise spin in Switzerland, a collaborative agreement with Vodafone (NASDAQ:VOD) in the UK, and progress in the Benelux region. Despite competition and challenges, particularly in the mobile sector, Liberty Global reported positive financial results for VodafoneZiggo and a steady broadband performance. The company's Ventures platform achieved significant noncore asset sales and is targeting further disposals before year-end. Liberty Global's consolidated cash balance stood at $3.5 billion, with the company aiming to close the valuation gap and unlock the remaining value in cash Ventures and other FMCs. Liberty Global's earnings call revealed a company strategically positioning itself for future growth while managing current market challenges. With a strong balance sheet and a clear focus on operational efficiency and shareholder value, Liberty Global is navigating a competitive landscape with a multifaceted approach. The upcoming Capital Markets Day in September is expected to provide further insights into the company's long-term strategy and market positioning. Liberty Global PLC's (LBTYA) latest earnings call underscores their commitment to shareholder value -- a commitment that is echoed in their financial metrics and strategic moves. With a market capitalization of $7.09 billion, the company's aggressive share buyback strategy and high shareholder yield stand out as key factors in their plan to close the valuation gap and enhance value for investors. InvestingPro Tips reveal that Liberty Global is trading at a low Price / Book multiple of 0.39, as of the last twelve months leading up to Q1 2024. This could indicate that the stock is potentially undervalued relative to its assets, which may appeal to value-oriented investors. Additionally, the company's impressive gross profit margins of 67.15% during the same period demonstrate efficient management and a strong competitive position in the telecommunications industry. While analysts do not anticipate the company to be profitable this year, and it has not been profitable over the last twelve months, the stock has been trading with low price volatility and is nearing its 52-week high, with the price at 94.36% of this peak. This could suggest a level of market confidence in the company's long-term strategy and operational execution. For readers looking to delve deeper into Liberty Global's financial health and future prospects, there are additional InvestingPro Tips available. By visiting https://www.investing.com/pro/LBTYA and using the coupon code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking further valuable insights. There are currently 9 additional InvestingPro Tips listed for Liberty Global, offering a comprehensive analysis for potential investors. Operator: Good morning, ladies and gentlemen and thank you for standing by. Welcome to Liberty Global's Second Quarter 2024 Investor Call. This call and the associated webcast are the property of Liberty Global and any redistribution, retransmission or rebroadcast of this call or webcast in any form without the express 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 fact. These forward-looking statements involve certain risks that could cause actual results to differ materially from those expressed or implied by these statements. These risks include those detailed in Liberty Global's filings with the Securities and Exchange Commission, including its most recently filed Forms 10-Q and 10-K as amended. Liberty Global disclaims any obligation to update any of these forward-looking statements to reflect any change 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 Fries: Okay. Hello, everyone. Thanks for joining the call today. We've got a lot of ground to cover, so I'm going to jump right into prepared remarks. My senior team is also on the line as usual. So I'll be involving them in the Q&A when we get there. So I'm starting on our Q2 highlights slide. On our year-end call in February, you'll all remember that we laid out what I think is a clear strategic plan which included 3 core elements: first of all, maximizing the intrinsic value of our FMC operations, that's critical; second, using the Ventures portfolio to create liquidity to support those operations and to invest in strategic platforms and then most importantly, putting all that together to both create and deliver value to you, shareholders. At the top of this slide, we provide an update on each of these core initiatives beginning with Switzerland, where the Sunrise spin which we have talked quite a bit about, is on track for the fourth quarter of this year. The purpose here is to hand shareholders a significant and well-deserved dividend of what analysts are estimating is around $12 per Liberty Global share. As a reminder, Sunrise represents only about 20% of our proportionate EBITDA and that excludes, of course, the value that might be attributed to cash and Ventures in our stock price. Now those Sunrise valuations of $12 of Liberty Global share are supported by CHF1.5 billion of deleveraging that we will fund pre-spin and it's supported by a commitment for Sunrise to pay an annual dividend of CHF240 million beginning next year in 2025. So those 2 things are anchoring at $12 per share. Now we scheduled the Sunrise Capital Markets Day. I'm sure you saw that for September 9 in Zurich. Of course, there's going to be a live webcast and replays and management is going to hit the road right after that. So hopefully, you'll have a chance to connect with Andre and his team. They are an outstanding group. I'm sure you'll see that immediately. You also should stay tuned for more deals on the spin mechanics and logistics as we finalize the SEC process and start working towards the shareholder meeting in the fall. So a lot of communication will be heavily engaged in making sure we understand everything that's happening there. Now we have got 3 key strategic updates in the U.K. as well along the same strategic path. Earlier this month, we announced a fairly comprehensive agreement with Vodafone in the U.K. which strengthens and extends our mobile network sharing agreement which we've had for some time and that's going to occur whether or not the merger with 3 [ph] goes through. And it includes the right for VMO2 to purchase spectrum, should the deal be approved. And both of these address some of the concerns raised by the CMA, including rebalancing spectrum among operators but in either case, are highly accretive to VMO2. Then on the fixed network front in the U.K., we've now reached 5 million fiber homes across VMO2 and next fiber and that build-out and upgrade is ramping up and accelerating. Also, our announced plans to create a U.K. NetCo on track in the first half of 2025 with financing discussions probably commencing really Q4 this year and I'll give you a bit more on the developments in a moment. Moving to the Benelux, where we are also making meaningful strategic progress at the country level in Belgium and Holland and that progress is going to support our ambition to create a general operating platform with scale, with synergies and with strategic optionality. So for example, in Belgium, we announced a preliminary agreement or MOU with Proximus to avoid overbuilding each other with fiber in about 2 million homes. And just as importantly, for each of us to use the other's network, in those areas so we can maximize utilization. In the Netherlands, the 5G spectrum auction finally occurred and we were able to recently acquire 100 megahertz of 3.5 gig spectrum well below the expected price we thought we'd pay. And then sticking with Holland, we could not be happier of the hiring of Stephen van Rooyen, who will become CEO of VodafoneZiggo in September. I've known Stephen a very long time and this is not the first time I've tried to hire him by the way, both we and Vodafone recognize right away his deep expertise and brand and production and innovation that he's developed over 17 years at Sky. And we're convinced he's going to bring the right energy, operational focus and strategic direction to this critical market. And then finally, as I just mentioned, we're using our Ventures platform to provide a source of capital that we can rotate into other strategic opportunities and also an investment vehicle for innovation and new skill-based businesses that align with our core value creation goals. Now we're delivering on that first objective. With $650 million of asset sales in the last 6 months. A large portion of which will support deleveraging of Sunrise pre-spin and we remain focused on larger platform opportunities, as you can tell by our plans to increase our stake in Formula E and our increasing commitment to digital infrastructure and I'll talk about those in a moment. And moving from those strategic initiatives at the top of that page to our regular Q2 highlights, I'll start with our balance sheet and capital allocation model which are in great shape as we point out on every call, our debt profile is long term. Fixed rate and siloed with no debt at the parent company and no material maturities until 2028. We're also sitting on a cash balance equal to roughly half our market cap. And by the way, we continue to shrink that market cap through an aggressive buyback program which saw us repurchase 5% of our shares year-to-date, towards a planned 10% of shares through year-end. We also continue to both invest in growth and execute at the core FMC operating level and that includes powering through headwinds. We talk about this as do our peers, every quarter, we are facing an increasingly competitive marketplace with consumers who continue to feel the stress of inflation and macro challenges. You'll see in a moment, while our fixed ARPUs are rising or stable and that's great news, we're feeling pressure in the mobile sector from promotions and from flanker brands. Despite that, we are confirming all of our 18 different guidance metrics, that's right, 18 different guidance metrics we provided with the exception of one which is revenue growth at VMO2. We are lowering that as a result of slower hardware sales in the Mobile business. Now these are low-margin revenue sales at best. So we're still going to hit our EBITDA and free cash flow guidance in the U.K. That's important. In this slide by emphasizing that we are also seeing some tailwinds, in particular, as we begin to reap the benefits of 4 things: number one, our investments in fiber and 5G which remains substantial. number two, the growth in our flanker brands; and number three, our access to new revenue streams and new homes generated by our fixed network strategies and then last, the hidden value of our digital infrastructure assets. I'm going to touch on all of these but the punch is that we feel we have a pretty good operating and strategic toolbox here to help us work through this transition and ultimately deliver that value to shareholders we've been talking about. So moving to operating highlights. -- until we provide our traditional KPIs on this slide, the big FMC OpCo's. I'm going to move clockwise from top to left. Starting at the top left, you'll see that Sunrise had a really strong quarter, leading into the spin which is always good. Broadband and postpaid mobile ads were 38,000. That's nearly double the prior year and up around 20% sequentially. This is also the third straight quarter of broadband growth improvement in Switzerland driven by reduced churn on the main brand and continued strong inflow. We're also benefiting from progress on the migration of the UPC base which we've talked out for 4 or 5 quarters now. And that should be largely completed by year-end. Those factors, along with the price rise last summer have helped deliver 4 straight quarters of fixed ARPU improvement. Sunrise also delivered another strong quarter of mobile postpaid growth, supported by improved churn and our flanker brand Yallo. The market continues to be highly competitive and this is a theme everywhere with Budget brands, heavily discounting and that's adding pressure to mobile ARPUs. Moving to Belgium; Telenet's results were largely consistent with prior quarters and up from Q2 and Q3 last year when the company was managing through IT challenges. We lost around 5,000 broadband and postpaid mobile subs in the quarter in a very competitive Flemish market, with intense promotions, by the way, ahead of this anticipated mobile launch from DIGI. To combat that, we are executing a multi-brand strategy, as you know. Most importantly, though, we now have a nationwide FMC flanker brand that's available not only in the Flanders but also in the South of Belgium, where we've just launched and are targeting a modest 10% market share. Everything is off to a good start there. And then finally, fixed ARPUs at Telenet continue to grow mid-single digit. That was helped by the price rise last year with this year's price rise of 3.5%, taking effect early June and also landing well. And then moving to VodafoneZiggo, while it was a challenging quarter in the Netherlands operationally. The financial results were outstanding. Charlie will cover those numbers. VodafoneZiggo delivered a steady quarter on broadband with slightly improved losses of $23,000 in a highly competitive market. The good news is that churn is declining on the back of extensive programs that provide more value to customers including speed increases or entertainment, customer experience improvements, fixed ARPU continues to grow in the mid-single-digit range in Holland, supported by the retention of last year's 8.5% price increase. And after steady gains, postpay mobile subs turned negative in the quarter but that was driven primarily by the loss of low-ARPU B2B contracts with local government. Similar to fixed postpaid, mobile ARPU was up mid-single digit, supported by the price rise last October. And looking forward, Ziggo implemented a 2.5% fixed price rise in July which is landing well. And it is also supported by our exclusive UEFA broadcasting rights, a strong FMC proposition and I think importantly, our successful loyalty program called Priority. And then finally, in the U.K., despite a tough trading environment, Virgin Media O2 delivered its fourth straight quarter of improved fixed ARPU results with 3% year-over-year growth in the second quarter reflecting our focus on value over volume and the retention of price rise benefits. We continue to take a higher share of gross adds in the broadband market as broadband growth in the nexfibre footprint continues to be steadily and is expected to ramp in the second half. However, as with any price rise quarter, we have seen a moderate increase in churn with overall broadband losses of $12,000 [ph], broadly in line with the prior year. The postpaid mobile market in U.K. continues to be soft. You're hearing that, I think, from all of the operators, especially at the premium end, weakness in the handset market continuing. Now while O2 churn remained stable, Lutz and the team are implementing a series of measures to rebuild postpaid mobile momentum in the second half. That includes proactive campaigns to drive retention, strong offers around new hardware launches from Samsung (KS:005930) and Google (NASDAQ:GOOGL) and iPhone later this year, renewed energy and our FMC packages and better performance in the indirect channel. So 2024 is a transition year, as we've said in the last few quarters here and we are focused -- I know the team is focused on preparing VMO2 for a strong 2025. Again, each of [indiscernible] are on the call, so we can dig into any of these markets during Q&A. Now I move to the next slide. We've talked a lot about our fixed network strategies, in particular, our fiber build plans. And then more recently, our efforts to dealer certain of our businesses by separating out our fiber and HFC networks from the service platforms. Now we've already achieved this in Belgium and we talked about it with the formation of wire which together with our partner, Fluvius, now owns and controls the Telenet HFC network passing 4 million homes plus or minus, with a commitment to deliver fiber to 80% of those homes over time. Wire is already wholesaling network to Telenet and Orange Belgium across vendors and representing about 50-plus percent utilization of the network. And they also recently announced you might have seen an MOU with Proximus to share the fiber build-out in around 2 million homes and to whole buy access from each other which would bring utilization of the wire network in those areas to over 80%, it's among the highest in the world. Similarly, we've announced our intention to create a NetCo, light wire [ph] from our 16 million fixed network passings in the U.K., 3.8 million of which have already been upgraded to fiber, together with our JV which we call nexfibre, VMO2 will ultimately have access to between 21 million and 22 million fiber homes in the U.K. and that's about 80% of the urban market. And the combined network would be available to third parties, potentially driving utilization and newfound wholesale revenue. So why are we doing all this? What is the rationale for what appears to be from the outside of relatively complicated restructuring of our operations into NetCos and ServCos in these 2 markets? I think the answer is pretty straightforward, actually. On the NetCo front, once the physical infrastructure is isolated in these platforms, they can generate made stable and high-margin cash flow driven primarily by the fixed monthly wholesale payment they receive from retailers for utilization of that network. As the utilization rate climbs, the cash flows improve, driving long-term returns to financial and strategic investors. These platforms also allow us to attract new capital which helps accelerate our network upgrade and extension plans and they can facilitate in-market consolidation of both network and operating platforms. The remaining ServCo can also benefit from the separation which we end up with is an asset-light, typically a digital-first business model that prioritizes customer experience in order to differentiate from other retailers. There's more focus inevitably on innovation to drive new revenue streams as well as the opportunity for end-market consolidation of other B2B and B2C service providers. On the far right-hand side of the slide demonstrates the hidden value in our network assets. What we show here are 9 recent fiber transactions that have been concluded in Europe where the median EBITDA multiple in those deals was about 18x. Of course, there's a wide variance of valuations which reflect things like the CapEx profile, the amount of overbuild in the market, forecast and utilization rates and what the wholesale revenue opportunity is. But we pair that to integrated telco multiples of mid-single digit where most of us are trading, this is obviously a significant premium. Now these are not easy transformations. The execution risk can be high but we're focused and we have focused our resources on the 2 markets where this will most easily be achieved. And I think where the dynamics will generate the most significant value creation for shareholders. So stay tuned. Now before handing it over to Charlie, I'm just going to spend a moment on some development in our $3 billion Ventures platform. To begin with, in October last year, we cited the $500 million to $1 billion of noncore asset sales before mid-2024. Good news, we've achieved that goal with over $650 million of proceeds through Q2 and we're targeting another $100 million to $150 million before year-end. This is consistent with our strategy of rotating capital as I said, out of Ventures and other noncore holdings and into higher growth or higher return opportunities. Obviously, the sale of All3Media and the use of that $400 million to deleverage Sunrise pre-spin is an excellent example of that. We also remain focused on building larger positions in scale businesses like Atlas (NYSE:ATCO) Edge in the digital infrastructure space where our portfolio now totals $1 billion. And Formula E, where we just announced our intention to increase our stake from 38% to 65% and what we believe a very attractive valuation. Now interestingly, I haven't talked a lot about Formula E. So on the right-hand side here, we provided a short update of this platform. After just 10 seasons, this is 1 of the fastest-growing motor sports in the world with over 400 million global fans, races that span 4 continents and revenue growth of nearly 20% As a reminder, we have an exclusive license with the FIA for electric racing that runs another 15 years. And we're riding the tailwinds, obviously, riding the tailwinds of vehicle electrification with the support of car brands like Porsche (ETR:P911_p), Jaguar, Maclaren, Messarati and Nissan (OTC:NSANY), who are also committed to that. Next season, the Gen3 EVO car be 30% faster than an F1 car at the zero to 60-mile per hour range with massive headroom on speed and performance moving forward. And the format of this racing is extremely exciting with nearly twice as many competitive overtakes per race as F1 and every champion pretty much so far being decided on the final weekend of the season. Also important to note, Formula E has been Net Zero since day zero which is another major selling point for sponsors and for fans. We definitely have work to do, particularly on the monetization of media rights globally. Another thing, this is work in progress after 10 seasons only. I think it took Formula 1 75 years to get to where it is. And we're going to continually refine the racing series, along with the FIA and with iconic racing partners like Andretti and Penske, I think the bottom line is with final future investment, the upside here, we believe, is significant and we are squarely focused on realizing that potential. So Charlie, over to you now. Charles Bracken: Thanks, Mike. The next slide sets out the quarterly revenue in EBITDA for each of our 4 key markets: we saw similar trends to Q1 with broadly stable reported revenues across all our OpCos in the second quarter. Sunrise delivered stable revenue in Q2, supported by the July 2023 price rise and continued growth in mobile subscriptions and B2B. Now because there's no price rise this year, the second half of the year will be a price rise benefit, Telenet too posted stable revenue in Q2 despite slightly weaker mobile performance. And Virgin Media O2 reported broadly stable revenue but excluding the impact of the nexfibre construction, saw a revenue decline of around 4%. Now, the key driver of this decline continues to be lower year-on-year hardware sales which are only a very low margin and have a limited impact on the EBITDA of the company do impact top line growth. Now despite this, overall mobile service revenue and fixed subscription revenues did grow. And encouragingly, as Mike noted, in fixed, we saw improved ARPU trends supporting fixed revenue growth. At VodafoneZiggo, revenue was up 1.5% this quarter, supported by price indexation, continued growth in mobile and B2B fixed revenue. Q2 was another record quarter on mobile service revenue growth. Moving on to adjusted EBITDA performance this quarter; Sunrise posted stable adjusted EBITDA growth, including cost to capture driven by the revenue increase in the quarter and lower OpEx, particularly in labor costs and marketing spend. Telenet's EBITDA was down around 9% year-over-year, reflecting a tough comparison base against Q2 of last year. Now this included a EUR 10.5 million onetime benefit they got last year. In addition to this, the decline was due to higher staff-related expenses following the mandatory 1.5% wage indexation and growth in our overall FTA base. This quarter, we also had increased sales and marketing expenses, including the FMC launch in the south of the country compared to the same period last year when we scaled back our spending due to IT platform migration issues. Virgin Media O2's adjusted EBITDA decreased 1%, including nexfibre construction, as the quarter saw a reduced contribution from B2B fixed, Additionally, in Q2, VMO2 continued to invest in the future growth drivers, largely in IT and digital efficiency programs. And VodafoneZiggo delivered around 8% EBITDA growth driven priority by the reversal of energy cost headwinds and lower consultancy service costs. Now this is partly offset by wage increases due to the new collective labor agreement. Turning to the next slide, we give an update on the key metrics underpinning our capital allocation model. In the first half of 2024, we saw consolidated free cash flow and central spend on track. And as is the case in previous years, I anticipate cash distribution of the JVs will be realized in the second half of the year. In relation to our cash position, our consolidated cash balance was $3.5 billion at the end of Q2 2024. And the quarter saw cash inflow related to operations of $0.3 billion. We realized net cash from our Ventures of $300 million and share buybacks were around $170 million during the quarter, consistent with our guidance for up to 10% buyback in 2024. On Ventures, we closed Q2 fair market value of around $3 billion following the All3Media disposal. We made net investments of around $100 million in Ventures focusing on AtlasEdge and EdgeConneX, both the data center assets and part of our infra pillar, where we see strong growth potential and are focused on creating new unicorn assets. And finally, change to our some of the parts, we'd like to highlight the key value drivers of our stock on a per share basis. We believe the current share price of $18 to $19 per share still does not reflect the inherent value of the business and we're committed to closing this valuation graph and the Sunrise spin is the first step to do it. Encouragingly, the current average analyst valuation for Sunrise of CHF8.4 billion which is up from CHF8 billion in Q1, now implies a $12 per share contribution to the current Liberty Global stock price. And as we go through the Sunrise spin-off execution, our aim is also to unlock the remaining value sitting in cash Ventures and the other FMCs, with Sunrise in the run trade separately. So when taking the book value of cash, listed stakes and unlisted Ventures which sums to around $14 per share and combining with the Sunrise $12 per share, the implied value of a Liberty Global share is around $26 per share. This is even without attributing any value to the remaining FMCs. The implied value of current average analyst target price of $25 a share but if the Sunrise value is realized over time does imply very substantial upside on non-core from a preferred value of $7 a share to $13. Turning to our debt stack, we continue to have a strong position, maintaining long-term fixed debt profile of around 5 years. We also continue to hold our cash and liquidity at the parent company with the debt stack siloed at the key FMC assets. Now our debt silos do not face material maturities until 2028 and we remain proactive in extending the tenure. This is facilitated by our extensive swap portfolio with the swaps independent of the underlying bank debt. And importantly, this allows us to be opportunistic and strategic in the market and strengthens our attractive debt position. At Sunrise, we're proactively deleveraging ahead of the spin to ensure an initial leverage range of 3.5x to 4.5x. The CHF1.5 billion deleveraging which is approximately $1.7 billion will be funded by Liberty Global Corporate cash, summarize 2024 free cash flow and the all 3 media proceeds which we received in Q2. And lastly, I'd like to give you an update on our 2024 guidance. At VMO2, the company expects to deliver a low- to mid-single digit decline in revenue excluding nexfibre construction. Now this is a decline as a result of the lower margin hardware revenue which continues to be a headwind. However, the other revenue teams are expected to be stable and adjusted EBITDA, adjusted free cash flow and all other 2024 guidance is reiterated at VMO2 as the company continues to invest in its growth drivers. To underpin this, VMO2 has had a solid start to the year with a slightly better than 2% EBITDA decline. I also want to additionally reconfirm all other guidance at Telenet, Sunrise and VodafoneZiggo. And that concludes our prepared remarks for Q2 2024. And I would like to hand over to the operator for Q&A. Operator: [Operator Instructions] The first question is from the line of Carl Murdock-Smith with Berenberg. Carl Murdock-Smith: I just wanted to ask about Virgin Media O2 and the fiber rollout. So fiber now passes 5 million premises. But of that, how many are actually ready for sale? And how many broadband customers do you have on the fiber infrastructure, particularly in upgraded cable areas? The reason I'm asking is there were a few reports a few months ago that you faced delays in being able to launch services to fiber customers in project Mustang areas, where there was previously cable network. Michael Fries: Well, I mean, I'll let Lutz dig into the details. I'm not sure we're disclosing that much information, Carl. But the $5 million breaks out into both, nexfibre about $1.3 million, I believe and the balance on our VMO2 upgrade or fiber up as we call it, we're connecting customers on nexfibre. I'm not sure we disclosed our penetration rate, Lutz. And Charlie jump in here, if you think we have, I'm pretty sure we have it. And then we're taking our time on converting HFC customers to fiber, just getting ourselves ready to do that more than anything. And that's as much around how we package and market products and services than where we build or where we don't build. So in terms of homes ready for service. Lutz, I don't believe we're providing that detail. That's how the fiber homes break out. But clearly, we're gearing up to take advantage of these fiber homes or we wouldn't be building them in the first place. But jump in here, do you think there's more we're going to say, Charlie, or Lutz. Lutz Schüler: I mean, we are only selling... Charles Bracken: Sorry. Lutz, I was just saying we haven't provided final [ph] numbers. Michael Fries: Yes. Okay. Go ahead, Lutz. Lutz Schüler: Yes. I was -- the only thing I can add is that at the moment, we are well positioned with our HFC work with our 60 million homes. So therefore, we have taken a conscious decision not to start selling fiber -- but as Mike has said, we will do and you see in our churn numbers that, at the moment, customers are not leaving our network because of fiber. Operator: Next question is from the line of Maurice Patrick with Barclays (LON:BARC). Maurice Patrick: It's Maurice here from Barclays. Sorry for the U.K. question. But I see in the financial, you lost, I think it was 12,000 broadband customers but you had growth in nexfibre. I'm just conscious listening to the -- looking at the BT (LON:BT) numbers yesterday, they saw $190,000 losses of customers in Openreach, they said they were seeing increased loss to competitors but also a soft pull by markets. So just curious as to given you presumably you lost about $30,000, $40,000 of our legacy footprint, are you seeing more impact from altnets? Is it a soft market? What's driving that shift? And should we see improvement in the coming quarters? Michael Fries: Go ahead, Lutz. Lutz Schüler: Yes. Thank you for the question, Maurice. So in the net add development outside nexfibre, we are a bit better this year in a price rise quarter compared to last year. So therefore, yes, I agree altnets are increasing their activities, right? They're built less but they try to sell more and therefore, you see aggressive promotions. But in the scheme of things, we managed to keep our base stable in the price rise quarter. And we have now managed also to increase the ARPU and the fixed service revenue first time in 3 years. And this is a result of a completely different way of working, right? We understand every household we are serving. We have -- we run 25,000 campaigns in parallel. And we come up with individual product and price combination and therefore, we are able to maximize retained revenue. Something we have achieved for several years and it starts now to really pay off since Q3 last year. On the nexfibre area, we haven't disclosed any numbers but it is fair to say that we are a bit behind in our ambition. The reason for that is that fiber is a new product. So we had to also deliver the video product. It's a bit of different sale, it's a different sale process. It's a different provisioning process but we are getting better and better. And we stick to our ambition that end of this year, we have sold so many fiber customers into the nexfibre area that turns into a growth driver for '25. But I think it is simply a ramp time. We lost a couple of months there. But month over month, we faced record months in sales and provisioning. And we want to sell and we will much -- sell much more in second half. I hope that answers your question. Maurice Patrick: Yes. Just maybe on the phasing, sorry for a quick follow-up. But if you look at the cadence of net-adds and ARPU, it should be maybe different this year given the way the price increases put through? Lutz Schüler: I mean, it could be but the majority of our customers are in contract. So we know exactly how many will be out of contract. So we don't expect a massive different phasing there, a little bit, it could be. Operator: The next question from the line of Ulrich Rathe with Bernstein Societe Generale (OTC:SCGLY) Group. Ulrich Rathe: I wanted to ask a little bit about the Belgian memorandum of understanding. So the idea for the mutual wholesale access, could you just confirm that's at the active for the passive level? And also when you envisage sort of an agreement eventually, obviously, the terms aren't really announced and probably not finalized it. But do you essentially foresee this JV to -- JV, sorry, this carve up to offer terms to each other, to the partners on a reciprocal level that are different from the terms that are offered to other takers? A virtue of the underlying agreement? Or are the wholesale essentially going to be open to all take us at the same level? Michael Fries: Yes, it's a really important question. And just to remind everybody that -- the contract is under -- is now being reviewed the regulators. So we're hopeful they'll see it -- the way we see it as a very constructive development for the market and for the operator. John, Do you want to address the specific issue around wholesale rate to the extent we're disclosing that at all? John Malone: Yes. But first of all, for clarity, it is a passive -- reciprocal passive deal ultimately with Proximus, where Telenet will be building 60% and Proximus 40% in the collaboration zone which is about $2 million of the homes path in Flanders. The principle of it being open and nondiscriminatory is already a public principle articulated by the regulator. And we do have a regulatory process which will be underway here very shortly. But like I said, the principle of a nondiscriminatory regime will be in place in part of that agreement. Operator: The next question is from the line of Polo Tang with UBS. Polo Tang: It's on Switzerland. Can you maybe talk through what you're seeing in terms of competitive mix in the Swiss market? And can you maybe comment on a few specific factors. So for example, what's happening with promotional activity, specifically in the Swiss market. Also, is there still a drag on financials and KPIs from the retirement of the UPC brand. And then also going into Q3, Q4, should we expect your Swiss financials to see slower growth as you start to lap your 4% price rises from July 2023. Michael Fries: I mean I'll let Andre address the competitive dynamics. And I think I mentioned in my remarks, Polo, we believe the UPC migration will be done by year-end and we'll have an increasingly smaller and smaller impact on results. And I don't believe we've provided quarterly guidance but take a look at where we are year-to-date through the midyear and where we ought to get to the full year guidance. So I think you can do that on your own. Do you want to talk about the competitive dynamics andre? André Krause: Sure. Yes. Thanks for the question, Polo. So I would describe the competitive dynamics as promotional intensity being high but at the same time, we are seeing a bit of a worrying off effect. Meaning liquidity in the marketplace is somewhat reducing. I guess, customers are increasingly getting tired of the ongoing price promotions being the only argument being raised. On the back of that, I think our inflow was benefiting from 2 additional features that we have launched. One was the Flex (NASDAQ:FLEX) upgrade program on hardware which is a very strong driver of our inflow at this moment. So that's perceived as a differentiating factor. And second to that, we have also announced that we are increasing our HFC speeds for 70% of the population in Switzerland to 2.5 gig. That's another differentiating factor. Very relevant one, we believe, because, a, of course, there's only 40% of the country today covered with fiber and all additional HFC coverage is having a unique situation, not only delivering 1 gig but now 2.5 gig which we think is also strengthening our position with customers when fiber rollout will increasingly get to areas where we have been a unique selling proposition with HFC so far. So I think that's positive. Additionally, I think worthwhile mentioning where we have seen good dynamics on our own info. You've seen 33,000 and 5,000 on mobile and broadband, respectively, on broadband; now the third quarter consecutively where we have been in the positives. That is not only on the back of strong inflow but furthermore we have reduced churn which is on the back, again, of increased retention activities, increased and improved service capabilities and our ability to differentiate through the product additions that I mentioned. So I think overall, it remains an intense market but we see some wearing of promotional activity, I would say, to consumers. And on the back of that, we just recently also have seen that the amount of discounts being granted has been slightly reduced. So I think that's a positive indication going forward and we will continue to drive that trend. Michael Fries: And as with other markets, having this dual-brand strategy is making a world, a difference because you can compete with Salt on one hand and Swisscom on the other hand, with products that match their offers and the customers they're targeting. Polo Tang: Just on the dual-brand strategy. You don't have one in terms of the U.K. because you have a premium Virgin Media O2 brand. So that's a different setup from other markets now. Michael Fries: No, we have giffgaff. Giffgaff is our, well, flanker brand, if you will, in the U.K. and arguably one of the stronger elements of growth. giffgaff is a really digital-first incredibly popular mobile brand which at some point, could be a broader telco brand. But that's our brand in the U.K., giffgaff. Do you want to say any more about that, Lutz? Okay. Operator: The next question is from the line of David Wright with Bank of America (NYSE:BAC). David Wright: I guess, Mike, Lutz, just more of a question on U.K. potential consolidation. I'm just wondering whether this dynamic of the altnets maybe focusing the financial resources more on loading the network and provisioning rather than building. Does that create any potential sort of hurdles to consolidation, the fact that you might -- any of these businesses might have incumbent subscribers, maybe on discounted pricing, could that create any more regulatory challenges? And I guess there's an obvious kind of TalkTalk has, I think, even themselves have made it quite clear the there's an element of distress around that business at the moment. Do you think given the kind of going concern risk that the U.K. regulator could even consider customers from TalkTalk possibly even being acquired by the 2 biggest network operators yourselves and BT? Michael Fries: Well, I'm not going to speak about TalkTalk. You can read about their situation. And it's premature to determine or even guess to what the regulator may or may not do and what they may or may not do. We're not assuming TalkTalk is doing anything but competing with us until they're not. So not much to add to that. On the altnets question, I mean you are seeing what you described which is a slowdown in build as financing and capital slowly dries up and I think that will continue. There will be winners and losers in that game. Some continue to raise capital. Others will consolidate and others will stop build. And so inevitably, one way to improve their prospects is to start selling more directly and perhaps more competitively, it's still very early days. It's too soon to tell whether this will have an impact on the broader market, whether it will have an impact on their futures and -- or our ability to consolidate or not in this market. But I think the trend is the same and I'll let Lutz if he wants to -- or Andrea, if you want to speak to it. The trend is the same. There are companies like -- nexfibre which is fully financed at GBP 4.5 billion that we own a piece of, that is going to be building, full stop and is going to generate -- get to 5 million to 7 million homes in home. No question about it. There's VMO2 which is going already at 16 million [ph] and 3.5 million, 4 million of which are fiber and is going to get to full fiber, full stop. So there's going to be platforms like ours with 21 million to 24 million homes and that's a certainty and BT is a certainty. And the rest, we'll see how it shakes out. I think it's -- the writing is on the wall, so to speak but that doesn't mean between here and there, it's a straight line. There will be puts and takes. We look at M&A prospects along 3 or 4 levels. First of all, what's the overbuild with us, if we can upgrade at GBP 100, what's it worth it to us to acquire an existing fiber home that somebody spent GBP 500 to build. Secondly, the quality of that network, obviously, what it would cost us to get to our sort of level of sophistication. And thirdly, is there a customer base. And maybe your main question is, does the existence of a customer base on an alternate change that dynamic materially. And I would say no. If there are customer and we would look to see how those could be integrated or required or migrated. That in and of its doesn't change the principal analysis. It's more about where they built, how much they've spent to build and how it fits with our broader strategy. I'll maybe pass Andrea, do you have anything to add to that as the Chairman of nexfibre. Andrea Salvato: No, I think you've summed it. Yes, Mike. I think you summed it up well, Mike. I would simply say that there's also a certain amount of value expectations, I think that need to get reset in the market, before we can start to see material consolidation. So I think that's one of the other issues that people are struggling with at the moment. David Wright: Just put the -- you just put the infrastructure multiple out there, haven't you guys in one of your early slides, I think you've given the market its price point. Michael Fries: Well, I would say those are pure NetCos with scale and cash flow. So it's a little different. That kind of is a little different market. Yes and existing customers; but a fair point. Yes, there you go. Operator: The next question is from the line of Joshua Mills with BNP Paribas (OTC:BNPQY). Joshua Mills: It comes back a bit to the cable versus fiber debate. And my question is, how do you -- can you talk a bit about how you're testing DOCSIS 4.0. And then going back to Andre's comment earlier of the improvement in speed in the Swiss cable network, can you maybe give any stats about the kind of commercial benefits you're seeing where you do upgrade can to faster speeds and maybe just give us a sense of how much the network longer term will go to that? And maybe if I could tack on 1 small question. One of the points of the Proximus sale today is they're now going to be wholesaling from you on cable in 700,000 homes. I think in the past when you've talked about your cable versus fiber strategy. One of the points about the U.K. was a benefit of upgrade to fiber gives us that opportunity to wholesale. Now you're doing that just on the cable network, so you don't need to make that investment. Do you think this could be a template for other markets in the future as well? And how should we think about that? Michael Fries: Yes. That's a good question. And Josh and I'm not sure we have enough time to answer it but I'll take a quick crack on it and maybe Enrique can chime in here, too. First of all, we have been wholesaling cable or a hybrid fiber coax in Belgium [ph], I don't know, 5 years or something like that. We were regulated in Belgium and obligated to open up the cable network and Flanders. And we did and Orange Belgium is a very happy customer on our cable network and has hundreds of thousands of customers and will be and has already committed exclusively to our fiber build as we do that through wire. So there are situations where either it's HFC or fiber, wholesalers are happy as long as they're getting the speeds they want the service, the quality, it works fine. We haven't done it anywhere else. We haven't been obligated to do it anywhere else. It doesn't mean we couldn't do it elsewhere. But I think when you step back and ask the question, why wouldn't we do it, in say, the U.K., principally, it's because the cost to upgrade the fiber and the cost to upgrade to DOCSIS 4 in the U.K. is about the same within spitting distance, so to speak and when you have the choice of upgrading to DOCSIS 4 or fiber in a market like the U.K. where you own your own DOCS, it's pretty clear that fiber makes more sense for the long term when you -- might need to look at DOCSIS 5, DOCSIS 6. But more importantly, when the entire wholesale market is working off of a fiber platform, beginning, of course, with Openreach and even altnets then to be competitive to be in that marketplace, you're going to need to go fiber. So there's a market check. What's needed at the commercial level, what's the rest of the sector doing in that market around access or kind of technology. So that's driving the decision in that market. In Belgium, we are happy as HFC wholesalers and we'll continue to do that for some time. But slowly and over time, we'll migrate that network to fiber as we've discussed and clarify today with that MOU. And then Switzerland, we're taking an even different approach which is let's use the best technology for the particular customer in a particular region. And so in that market, we have a complete option, a menu. We can access our 2.5-gig HFC platform. We can access the Swiss -- Swisscom's fiber platform. We can build fiber. We really have the best of all options there. Clearly, we'll migrate as many customers as we can to our own infrastructure because that benefits margins but we really have the flexibility to be competitive from a retail point of view with whatever technology makes the most sense. So there's not one size that fits all in this equation but it typically revolves around the cost to upgrade, the market realities of the competitive environment, the wholesale environment, the revenue opportunity in wholesale and whether or not regulators are requiring us to do one thing or another as they did in Belgium, for example. So I think we're taking the right approach. If you dig into each and every one of them, you'd see that they are the correct way to attack the economics, the technology, the customer opportunity, the competitive environment. And it's great to have that ability to be flexible. So I hope that's addressing your question. But if there's anything further, maybe follow-up and let's make sure we've done it. Joshua Mills: Yes, that's very clear. And I'm guessing the -- any detail on how faster broadband speeds on the cable out in Switzerland, as the old cable network might wait for the C&V now [ph]. Luigi Minerva: It's about the Netherlands and your pricing strategy. If I think about your broadband price increase last year, I think you just did exactly what KPN did back in July 2023. Now this year, KPN is going for 3.8% growth. And VodafoneZiggo is going for 2.5%. And I was wondering what is the rationale behind this and how you see competitive dynamics in that market? Michael Fries: Yes, we've got Ritchy on, who's our interim CEO. I think it's as much as anything to do with the fact that we're trying to remain competitive in a declining inflation market which doesn't call for the same sort of increases. But Ritchy, do you want to provide more color on our price increase level? Ritchy Drost: Yes, for sure. Thanks, Mike. The 2 things. First and foremost, we do a price increase both on the back-book and front-book. It's not similar to the others in the Dutch market. But also keep in mind that the inflation in the Netherlands is falling. Last year, we had about 10% inflation. And we did an 8.5% fixed price increase. This year, the inflation is 3.8% and we're doing 2.5%. The price increase in itself is, I would say, not a reflection of the competitive position in the market but it's all about price value perception. We do see that customers who decide to leave us, use cost of subscription as a main reason for them to churn. And hence our decision to go slightly below the inflation level to make sure that the price sort of value perception stays in balance with market expectations. Michael Fries: Last year, as you recall, KPN took a price increase on their back-book and lowered their front-book. So some of this is signaling to perhaps. We've always taken price increases on both front book and back book. So hopefully, there's a more rational market here. Operator: The next question is from the line of James Ratzer with New Street Research. James Ratzer: So if it is possible, just go back to talk about TalkTalk in a little bit more detail. I know you might be limited in what you can say. But are there any scenarios, you can see in which you might interest in acquiring some of the asset or the rate at which customer base is declining at the moment just makes it kind of too risky to get involved like the asset you think you see now that when it comes to closing. [Indiscernible] you had on that particularly would be really interesting. Michael Fries: James, I want to make sure I heard the first part of it. I got the jist of the question around M&A but which entity are you referring to? James Ratzer: TalkTalk, in particular in the U.K. because that -- [indiscernible] so just to get your thoughts on that, though it is too risky an assets to be looking at right now, given the rate customers are coming down? Michael Fries: Yes. No, I got you -- I just didn't hear that first part, you're coming in and out a little bit. I don't think we have anything to say about TalkTalk today. I mean we watch as others do, with great interest of what's happening across the sector in the U.K. but obviously, with TalkTalk, they're competitor. And we certainly are watching what they're doing and what they're considering doing and with their B2B, with their network, with their consumer business, it's really outside of our control. And if there were opportunities, you should assume we would be looking at them but there's nothing I can say about that today. Operator: The next question is from the line of Matthew Harrigan with the Benchmark Company. Matthew Harrigan: I think I'm last American [indiscernible] these days. Conceptual question really at the some various other industry organizations, I think you had some consultancies, like McKenzie really commented on how you've had trillions of dollars of equity value created, Silicon Valley and other places of telecom networks and you've really obviously borne the cost without necessarily having that much impact. Is there anything that's different about the service code that would enable you to participate better in fintech, entertainment, health care, et cetera? Is that like a -- at least complementary rationale for doing this relatively complicated structure? Michael Fries: Well, possibly, Matt. I mean, I think both entities, Netco and the ServCo are probably better positioned to compete long term and take their fair share of that ecosystem. I mean, you correctly point out that net neutrality as a whole, created haves and have nots, right? And the haves are anybody in the big tech space, selling apps and access largely for free. And we in the infrastructure, connectivity space have obviously experienced more competition, higher CapEx and higher usage and capacity requirements. So with some ability to pass that a lot of consumers but not as much as we'd like. So going forward, there's a handful of things the industry in network-as-a-service. I'm sure you're following that, new products and services in the home and how we might take advantage of that. AI which is going to give us a much stronger, some more sophisticated way to manage customers and our networks. But the Netco cervical model itself certainly should create a more agile ServCo management team and product and brand, looking at accessing the NetCo as well as perhaps other networks to try to drive services into the home and into business. And the NetCo itself will become really a connectivity provider first but also depending on who the user is, more sophisticated transport hub. So I don't think it, by definition, makes it easier to ensure that the next 10 years don't look like the last 10 years but I think it certainly bends that way. And I think in some instances, depending on how well we execute and kind of structure we put in place and the capital we have, think it could actually that but we've got things to do the board even in our integrated businesses to make sure that the next 10 years look different than the last 10 years. And I think the toolbox, as I said, the outset is pretty good to make that happen. Operator: There are no further us time. So I would hand the call back to Mike Fries. Michael Fries: Great. Thanks, everybody, for joining. I hope you have incredible summer wherever you are, whenever you're doing and do please put in your calendar September 9 in Zurich or September 9, wherever you'll be, be connected, of course, to our Capital Markets Day. For Sunrise, we really look forward to getting that process moving in earnest in the fall. So thanks and we'll speak to you soon again. Operator: Ladies and gentlemen, this concludes Liberty Global's second quarter 2024 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 the presentation materials.

Liberty Global Ltd (LBTYA) Q2 2024 Earnings Call Transcript

Michael Fries - Vice Chairman, President & Chief Executive Officer Charles Bracken - Executive Vice President & Chief Financial Officer Lutz Schüler - Chief Executive Officer, Virgin Media John Malone - Chairman André Krause - Chief Executive Officer, Sunrise UPC Business Andrea Salvato - Executive Vice President & Chief Development Officer Ritchy Drost - Chief Financial Officer Good morning, ladies and gentlemen and thank you for standing by. Welcome to Liberty Global's Second Quarter 2024 Investor Call. This call and the associated webcast are the property of Liberty Global and any redistribution, retransmission or rebroadcast of this call or webcast in any form without the express 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 fact. These forward-looking statements involve certain risks that could cause actual results to differ materially from those expressed or implied by these statements. These risks include those detailed in Liberty Global's filings with the Securities and Exchange Commission, including its most recently filed Forms 10-Q and 10-K as amended. Liberty Global disclaims any obligation to update any of these forward-looking statements to reflect any change in its expectations or in the conditions on which any such statement is based. Okay. Hello, everyone. Thanks for joining the call today. We've got a lot of ground to cover, so I'm going to jump right into prepared remarks. My senior team is also on the line as usual. So I'll be involving them in the Q&A when we get there. So I'm starting on our Q2 highlights slide. On our year-end call in February, you'll all remember that we laid out what I think is a clear strategic plan which included 3 core elements: first of all, maximizing the intrinsic value of our FMC operations, that's critical; second, using the Ventures portfolio to create liquidity to support those operations and to invest in strategic platforms and then most importantly, putting all that together to both create and deliver value to you, shareholders. At the top of this slide, we provide an update on each of these core initiatives beginning with Switzerland, where the Sunrise spin which we have talked quite a bit about, is on track for the fourth quarter of this year. The purpose here is to hand shareholders a significant and well-deserved dividend of what analysts are estimating is around $12 per Liberty Global share. As a reminder, Sunrise represents only about 20% of our proportionate EBITDA and that excludes, of course, the value that might be attributed to cash and Ventures in our stock price. Now those Sunrise valuations of $12 of Liberty Global share are supported by CHF1.5 billion of deleveraging that we will fund pre-spin and it's supported by a commitment for Sunrise to pay an annual dividend of CHF240 million beginning next year in 2025. So those 2 things are anchoring at $12 per share. Now we scheduled the Sunrise Capital Markets Day. I'm sure you saw that for September 9 in Zurich. Of course, there's going to be a live webcast and replays and management is going to hit the road right after that. So hopefully, you'll have a chance to connect with Andre and his team. They are an outstanding group. I'm sure you'll see that immediately. You also should stay tuned for more deals on the spin mechanics and logistics as we finalize the SEC process and start working towards the shareholder meeting in the fall. So a lot of communication will be heavily engaged in making sure we understand everything that's happening there. Now we have got 3 key strategic updates in the U.K. as well along the same strategic path. Earlier this month, we announced a fairly comprehensive agreement with Vodafone in the U.K. which strengthens and extends our mobile network sharing agreement which we've had for some time and that's going to occur whether or not the merger with 3 [ph] goes through. And it includes the right for VMO2 to purchase spectrum, should the deal be approved. And both of these address some of the concerns raised by the CMA, including rebalancing spectrum among operators but in either case, are highly accretive to VMO2. Then on the fixed network front in the U.K., we've now reached 5 million fiber homes across VMO2 and next fiber and that build-out and upgrade is ramping up and accelerating. Also, our announced plans to create a U.K. NetCo on track in the first half of 2025 with financing discussions probably commencing really Q4 this year and I'll give you a bit more on the developments in a moment. Moving to the Benelux, where we are also making meaningful strategic progress at the country level in Belgium and Holland and that progress is going to support our ambition to create a general operating platform with scale, with synergies and with strategic optionality. So for example, in Belgium, we announced a preliminary agreement or MOU with Proximus to avoid overbuilding each other with fiber in about 2 million homes. And just as importantly, for each of us to use the other's network, in those areas so we can maximize utilization. In the Netherlands, the 5G spectrum auction finally occurred and we were able to recently acquire 100 megahertz of 3.5 gig spectrum well below the expected price we thought we'd pay. And then sticking with Holland, we could not be happier of the hiring of Stephen van Rooyen, who will become CEO of VodafoneZiggo in September. I've known Stephen a very long time and this is not the first time I've tried to hire him by the way, both we and Vodafone recognize right away his deep expertise and brand and production and innovation that he's developed over 17 years at Sky. And we're convinced he's going to bring the right energy, operational focus and strategic direction to this critical market. And then finally, as I just mentioned, we're using our Ventures platform to provide a source of capital that we can rotate into other strategic opportunities and also an investment vehicle for innovation and new skill-based businesses that align with our core value creation goals. Now we're delivering on that first objective. With $650 million of asset sales in the last 6 months. A large portion of which will support deleveraging of Sunrise pre-spin and we remain focused on larger platform opportunities, as you can tell by our plans to increase our stake in Formula E and our increasing commitment to digital infrastructure and I'll talk about those in a moment. And moving from those strategic initiatives at the top of that page to our regular Q2 highlights, I'll start with our balance sheet and capital allocation model which are in great shape as we point out on every call, our debt profile is long term. Fixed rate and siloed with no debt at the parent company and no material maturities until 2028. We're also sitting on a cash balance equal to roughly half our market cap. And by the way, we continue to shrink that market cap through an aggressive buyback program which saw us repurchase 5% of our shares year-to-date, towards a planned 10% of shares through year-end. We also continue to both invest in growth and execute at the core FMC operating level and that includes powering through headwinds. We talk about this as do our peers, every quarter, we are facing an increasingly competitive marketplace with consumers who continue to feel the stress of inflation and macro challenges. You'll see in a moment, while our fixed ARPUs are rising or stable and that's great news, we're feeling pressure in the mobile sector from promotions and from flanker brands. Despite that, we are confirming all of our 18 different guidance metrics, that's right, 18 different guidance metrics we provided with the exception of one which is revenue growth at VMO2. We are lowering that as a result of slower hardware sales in the Mobile business. Now these are low-margin revenue sales at best. So we're still going to hit our EBITDA and free cash flow guidance in the U.K. That's important. In this slide by emphasizing that we are also seeing some tailwinds, in particular, as we begin to reap the benefits of 4 things: number one, our investments in fiber and 5G which remains substantial. number two, the growth in our flanker brands; and number three, our access to new revenue streams and new homes generated by our fixed network strategies and then last, the hidden value of our digital infrastructure assets. I'm going to touch on all of these but the punch is that we feel we have a pretty good operating and strategic toolbox here to help us work through this transition and ultimately deliver that value to shareholders we've been talking about. So moving to operating highlights. -- until we provide our traditional KPIs on this slide, the big FMC OpCo's. I'm going to move clockwise from top to left. Starting at the top left, you'll see that Sunrise had a really strong quarter, leading into the spin which is always good. Broadband and postpaid mobile ads were 38,000. That's nearly double the prior year and up around 20% sequentially. This is also the third straight quarter of broadband growth improvement in Switzerland driven by reduced churn on the main brand and continued strong inflow. We're also benefiting from progress on the migration of the UPC base which we've talked out for 4 or 5 quarters now. And that should be largely completed by year-end. Those factors, along with the price rise last summer have helped deliver 4 straight quarters of fixed ARPU improvement. Sunrise also delivered another strong quarter of mobile postpaid growth, supported by improved churn and our flanker brand Yallo. The market continues to be highly competitive and this is a theme everywhere with Budget brands, heavily discounting and that's adding pressure to mobile ARPUs. Moving to Belgium; Telenet's results were largely consistent with prior quarters and up from Q2 and Q3 last year when the company was managing through IT challenges. We lost around 5,000 broadband and postpaid mobile subs in the quarter in a very competitive Flemish market, with intense promotions, by the way, ahead of this anticipated mobile launch from DIGI. To combat that, we are executing a multi-brand strategy, as you know. Most importantly, though, we now have a nationwide FMC flanker brand that's available not only in the Flanders but also in the South of Belgium, where we've just launched and are targeting a modest 10% market share. Everything is off to a good start there. And then finally, fixed ARPUs at Telenet continue to grow mid-single digit. That was helped by the price rise last year with this year's price rise of 3.5%, taking effect early June and also landing well. And then moving to VodafoneZiggo, while it was a challenging quarter in the Netherlands operationally. The financial results were outstanding. Charlie will cover those numbers. VodafoneZiggo delivered a steady quarter on broadband with slightly improved losses of $23,000 in a highly competitive market. The good news is that churn is declining on the back of extensive programs that provide more value to customers including speed increases or entertainment, customer experience improvements, fixed ARPU continues to grow in the mid-single-digit range in Holland, supported by the retention of last year's 8.5% price increase. And after steady gains, postpay mobile subs turned negative in the quarter but that was driven primarily by the loss of low-ARPU B2B contracts with local government. Similar to fixed postpaid, mobile ARPU was up mid-single digit, supported by the price rise last October. And looking forward, Ziggo implemented a 2.5% fixed price rise in July which is landing well. And it is also supported by our exclusive UEFA broadcasting rights, a strong FMC proposition and I think importantly, our successful loyalty program called Priority. And then finally, in the U.K., despite a tough trading environment, Virgin Media O2 delivered its fourth straight quarter of improved fixed ARPU results with 3% year-over-year growth in the second quarter reflecting our focus on value over volume and the retention of price rise benefits. We continue to take a higher share of gross adds in the broadband market as broadband growth in the nexfibre footprint continues to be steadily and is expected to ramp in the second half. However, as with any price rise quarter, we have seen a moderate increase in churn with overall broadband losses of $12,000 [ph], broadly in line with the prior year. The postpaid mobile market in U.K. continues to be soft. You're hearing that, I think, from all of the operators, especially at the premium end, weakness in the handset market continuing. Now while O2 churn remained stable, Lutz and the team are implementing a series of measures to rebuild postpaid mobile momentum in the second half. That includes proactive campaigns to drive retention, strong offers around new hardware launches from Samsung and Google and iPhone later this year, renewed energy and our FMC packages and better performance in the indirect channel. So 2024 is a transition year, as we've said in the last few quarters here and we are focused -- I know the team is focused on preparing VMO2 for a strong 2025. Again, each of [indiscernible] are on the call, so we can dig into any of these markets during Q&A. Now I move to the next slide. We've talked a lot about our fixed network strategies, in particular, our fiber build plans. And then more recently, our efforts to dealer certain of our businesses by separating out our fiber and HFC networks from the service platforms. Now we've already achieved this in Belgium and we talked about it with the formation of wire which together with our partner, Fluvius, now owns and controls the Telenet HFC network passing 4 million homes plus or minus, with a commitment to deliver fiber to 80% of those homes over time. Wire is already wholesaling network to Telenet and Orange Belgium across vendors and representing about 50-plus percent utilization of the network. And they also recently announced you might have seen an MOU with Proximus to share the fiber build-out in around 2 million homes and to whole buy access from each other which would bring utilization of the wire network in those areas to over 80%, it's among the highest in the world. Similarly, we've announced our intention to create a NetCo, light wire [ph] from our 16 million fixed network passings in the U.K., 3.8 million of which have already been upgraded to fiber, together with our JV which we call nexfibre, VMO2 will ultimately have access to between 21 million and 22 million fiber homes in the U.K. and that's about 80% of the urban market. And the combined network would be available to third parties, potentially driving utilization and newfound wholesale revenue. So why are we doing all this? What is the rationale for what appears to be from the outside of relatively complicated restructuring of our operations into NetCos and ServCos in these 2 markets? I think the answer is pretty straightforward, actually. On the NetCo front, once the physical infrastructure is isolated in these platforms, they can generate made stable and high-margin cash flow driven primarily by the fixed monthly wholesale payment they receive from retailers for utilization of that network. As the utilization rate climbs, the cash flows improve, driving long-term returns to financial and strategic investors. These platforms also allow us to attract new capital which helps accelerate our network upgrade and extension plans and they can facilitate in-market consolidation of both network and operating platforms. The remaining ServCo can also benefit from the separation which we end up with is an asset-light, typically a digital-first business model that prioritizes customer experience in order to differentiate from other retailers. There's more focus inevitably on innovation to drive new revenue streams as well as the opportunity for end-market consolidation of other B2B and B2C service providers. On the far right-hand side of the slide demonstrates the hidden value in our network assets. What we show here are 9 recent fiber transactions that have been concluded in Europe where the median EBITDA multiple in those deals was about 18x. Of course, there's a wide variance of valuations which reflect things like the CapEx profile, the amount of overbuild in the market, forecast and utilization rates and what the wholesale revenue opportunity is. But we pair that to integrated telco multiples of mid-single digit where most of us are trading, this is obviously a significant premium. Now these are not easy transformations. The execution risk can be high but we're focused and we have focused our resources on the 2 markets where this will most easily be achieved. And I think where the dynamics will generate the most significant value creation for shareholders. So stay tuned. Now before handing it over to Charlie, I'm just going to spend a moment on some development in our $3 billion Ventures platform. To begin with, in October last year, we cited the $500 million to $1 billion of noncore asset sales before mid-2024. Good news, we've achieved that goal with over $650 million of proceeds through Q2 and we're targeting another $100 million to $150 million before year-end. This is consistent with our strategy of rotating capital as I said, out of Ventures and other noncore holdings and into higher growth or higher return opportunities. Obviously, the sale of All3Media and the use of that $400 million to deleverage Sunrise pre-spin is an excellent example of that. We also remain focused on building larger positions in scale businesses like Atlas Edge in the digital infrastructure space where our portfolio now totals $1 billion. And Formula E, where we just announced our intention to increase our stake from 38% to 65% and what we believe a very attractive valuation. Now interestingly, I haven't talked a lot about Formula E. So on the right-hand side here, we provided a short update of this platform. After just 10 seasons, this is 1 of the fastest-growing motor sports in the world with over 400 million global fans, races that span 4 continents and revenue growth of nearly 20% As a reminder, we have an exclusive license with the FIA for electric racing that runs another 15 years. And we're riding the tailwinds, obviously, riding the tailwinds of vehicle electrification with the support of car brands like Porsche, Jaguar, Maclaren, Messarati and Nissan, who are also committed to that. Next season, the Gen3 EVO car be 30% faster than an F1 car at the zero to 60-mile per hour range with massive headroom on speed and performance moving forward. And the format of this racing is extremely exciting with nearly twice as many competitive overtakes per race as F1 and every champion pretty much so far being decided on the final weekend of the season. Also important to note, Formula E has been Net Zero since day zero which is another major selling point for sponsors and for fans. We definitely have work to do, particularly on the monetization of media rights globally. Another thing, this is work in progress after 10 seasons only. I think it took Formula 1 75 years to get to where it is. And we're going to continually refine the racing series, along with the FIA and with iconic racing partners like Andretti and Penske, I think the bottom line is with final future investment, the upside here, we believe, is significant and we are squarely focused on realizing that potential. Thanks, Mike. The next slide sets out the quarterly revenue in EBITDA for each of our 4 key markets: we saw similar trends to Q1 with broadly stable reported revenues across all our OpCos in the second quarter. Sunrise delivered stable revenue in Q2, supported by the July 2023 price rise and continued growth in mobile subscriptions and B2B. Now because there's no price rise this year, the second half of the year will be a price rise benefit, Telenet too posted stable revenue in Q2 despite slightly weaker mobile performance. And Virgin Media O2 reported broadly stable revenue but excluding the impact of the nexfibre construction, saw a revenue decline of around 4%. Now, the key driver of this decline continues to be lower year-on-year hardware sales which are only a very low margin and have a limited impact on the EBITDA of the company do impact top line growth. Now despite this, overall mobile service revenue and fixed subscription revenues did grow. And encouragingly, as Mike noted, in fixed, we saw improved ARPU trends supporting fixed revenue growth. At VodafoneZiggo, revenue was up 1.5% this quarter, supported by price indexation, continued growth in mobile and B2B fixed revenue. Q2 was another record quarter on mobile service revenue growth. Moving on to adjusted EBITDA performance this quarter; Sunrise posted stable adjusted EBITDA growth, including cost to capture driven by the revenue increase in the quarter and lower OpEx, particularly in labor costs and marketing spend. Telenet's EBITDA was down around 9% year-over-year, reflecting a tough comparison base against Q2 of last year. Now this included a EUR 10.5 million onetime benefit they got last year. In addition to this, the decline was due to higher staff-related expenses following the mandatory 1.5% wage indexation and growth in our overall FTA base. This quarter, we also had increased sales and marketing expenses, including the FMC launch in the south of the country compared to the same period last year when we scaled back our spending due to IT platform migration issues. Virgin Media O2's adjusted EBITDA decreased 1%, including nexfibre construction, as the quarter saw a reduced contribution from B2B fixed, Additionally, in Q2, VMO2 continued to invest in the future growth drivers, largely in IT and digital efficiency programs. And VodafoneZiggo delivered around 8% EBITDA growth driven priority by the reversal of energy cost headwinds and lower consultancy service costs. Now this is partly offset by wage increases due to the new collective labor agreement. Turning to the next slide, we give an update on the key metrics underpinning our capital allocation model. In the first half of 2024, we saw consolidated free cash flow and central spend on track. And as is the case in previous years, I anticipate cash distribution of the JVs will be realized in the second half of the year. In relation to our cash position, our consolidated cash balance was $3.5 billion at the end of Q2 2024. And the quarter saw cash inflow related to operations of $0.3 billion. We realized net cash from our Ventures of $300 million and share buybacks were around $170 million during the quarter, consistent with our guidance for up to 10% buyback in 2024. On Ventures, we closed Q2 fair market value of around $3 billion following the All3Media disposal. We made net investments of around $100 million in Ventures focusing on AtlasEdge and EdgeConneX, both the data center assets and part of our infra pillar, where we see strong growth potential and are focused on creating new unicorn assets. And finally, change to our some of the parts, we'd like to highlight the key value drivers of our stock on a per share basis. We believe the current share price of $18 to $19 per share still does not reflect the inherent value of the business and we're committed to closing this valuation graph and the Sunrise spin is the first step to do it. Encouragingly, the current average analyst valuation for Sunrise of CHF8.4 billion which is up from CHF8 billion in Q1, now implies a $12 per share contribution to the current Liberty Global stock price. And as we go through the Sunrise spin-off execution, our aim is also to unlock the remaining value sitting in cash Ventures and the other FMCs, with Sunrise in the run trade separately. So when taking the book value of cash, listed stakes and unlisted Ventures which sums to around $14 per share and combining with the Sunrise $12 per share, the implied value of a Liberty Global share is around $26 per share. This is even without attributing any value to the remaining FMCs. The implied value of current average analyst target price of $25 a share but if the Sunrise value is realized over time does imply very substantial upside on non-core from a preferred value of $7 a share to $13. Turning to our debt stack, we continue to have a strong position, maintaining long-term fixed debt profile of around 5 years. We also continue to hold our cash and liquidity at the parent company with the debt stack siloed at the key FMC assets. Now our debt silos do not face material maturities until 2028 and we remain proactive in extending the tenure. This is facilitated by our extensive swap portfolio with the swaps independent of the underlying bank debt. And importantly, this allows us to be opportunistic and strategic in the market and strengthens our attractive debt position. At Sunrise, we're proactively deleveraging ahead of the spin to ensure an initial leverage range of 3.5x to 4.5x. The CHF1.5 billion deleveraging which is approximately $1.7 billion will be funded by Liberty Global Corporate cash, summarize 2024 free cash flow and the all 3 media proceeds which we received in Q2. And lastly, I'd like to give you an update on our 2024 guidance. At VMO2, the company expects to deliver a low- to mid-single digit decline in revenue excluding nexfibre construction. Now this is a decline as a result of the lower margin hardware revenue which continues to be a headwind. However, the other revenue teams are expected to be stable and adjusted EBITDA, adjusted free cash flow and all other 2024 guidance is reiterated at VMO2 as the company continues to invest in its growth drivers. To underpin this, VMO2 has had a solid start to the year with a slightly better than 2% EBITDA decline. I also want to additionally reconfirm all other guidance at Telenet, Sunrise and VodafoneZiggo. And that concludes our prepared remarks for Q2 2024. And I would like to hand over to the operator for Q&A. [Operator Instructions] The first question is from the line of Carl Murdock-Smith with Berenberg. Carl Murdock-Smith I just wanted to ask about Virgin Media O2 and the fiber rollout. So fiber now passes 5 million premises. But of that, how many are actually ready for sale? And how many broadband customers do you have on the fiber infrastructure, particularly in upgraded cable areas? The reason I'm asking is there were a few reports a few months ago that you faced delays in being able to launch services to fiber customers in project Mustang areas, where there was previously cable network. Michael Fries Well, I mean, I'll let Lutz dig into the details. I'm not sure we're disclosing that much information, Carl. But the $5 million breaks out into both, nexfibre about $1.3 million, I believe and the balance on our VMO2 upgrade or fiber up as we call it, we're connecting customers on nexfibre. I'm not sure we disclosed our penetration rate, Lutz. And Charlie jump in here, if you think we have, I'm pretty sure we have it. And then we're taking our time on converting HFC customers to fiber, just getting ourselves ready to do that more than anything. And that's as much around how we package and market products and services than where we build or where we don't build. So in terms of homes ready for service. Lutz, I don't believe we're providing that detail. That's how the fiber homes break out. But clearly, we're gearing up to take advantage of these fiber homes or we wouldn't be building them in the first place. But jump in here, do you think there's more we're going to say, Charlie, or Lutz. Sorry. Lutz, I was just saying we haven't provided final [ph] numbers. Yes. I was -- the only thing I can add is that at the moment, we are well positioned with our HFC work with our 60 million homes. So therefore, we have taken a conscious decision not to start selling fiber -- but as Mike has said, we will do and you see in our churn numbers that, at the moment, customers are not leaving our network because of fiber. Next question is from the line of Maurice Patrick with Barclays. Maurice Patrick It's Maurice here from Barclays. Sorry for the U.K. question. But I see in the financial, you lost, I think it was 12,000 broadband customers but you had growth in nexfibre. I'm just conscious listening to the -- looking at the BT numbers yesterday, they saw $190,000 losses of customers in Openreach, they said they were seeing increased loss to competitors but also a soft pull by markets. So just curious as to given you presumably you lost about $30,000, $40,000 of our legacy footprint, are you seeing more impact from altnets? Is it a soft market? What's driving that shift? And should we see improvement in the coming quarters? Yes. Thank you for the question, Maurice. So in the net add development outside nexfibre, we are a bit better this year in a price rise quarter compared to last year. So therefore, yes, I agree altnets are increasing their activities, right? They're built less but they try to sell more and therefore, you see aggressive promotions. But in the scheme of things, we managed to keep our base stable in the price rise quarter. And we have now managed also to increase the ARPU and the fixed service revenue first time in 3 years. And this is a result of a completely different way of working, right? We understand every household we are serving. We have -- we run 25,000 campaigns in parallel. And we come up with individual product and price combination and therefore, we are able to maximize retained revenue. Something we have achieved for several years and it starts now to really pay off since Q3 last year. On the nexfibre area, we haven't disclosed any numbers but it is fair to say that we are a bit behind in our ambition. The reason for that is that fiber is a new product. So we had to also deliver the video product. It's a bit of different sale, it's a different sale process. It's a different provisioning process but we are getting better and better. And we stick to our ambition that end of this year, we have sold so many fiber customers into the nexfibre area that turns into a growth driver for '25. But I think it is simply a ramp time. We lost a couple of months there. But month over month, we faced record months in sales and provisioning. And we want to sell and we will much -- sell much more in second half. I hope that answers your question. Maurice Patrick Yes. Just maybe on the phasing, sorry for a quick follow-up. But if you look at the cadence of net-adds and ARPU, it should be maybe different this year given the way the price increases put through? Lutz Schüler I mean, it could be but the majority of our customers are in contract. So we know exactly how many will be out of contract. So we don't expect a massive different phasing there, a little bit, it could be. The next question from the line of Ulrich Rathe with Bernstein Societe Generale Group. Ulrich Rathe I wanted to ask a little bit about the Belgian memorandum of understanding. So the idea for the mutual wholesale access, could you just confirm that's at the active for the passive level? And also when you envisage sort of an agreement eventually, obviously, the terms aren't really announced and probably not finalized it. But do you essentially foresee this JV to -- JV, sorry, this carve up to offer terms to each other, to the partners on a reciprocal level that are different from the terms that are offered to other takers? A virtue of the underlying agreement? Or are the wholesale essentially going to be open to all take us at the same level? Michael Fries Yes, it's a really important question. And just to remind everybody that -- the contract is under -- is now being reviewed the regulators. So we're hopeful they'll see it -- the way we see it as a very constructive development for the market and for the operator. John, Do you want to address the specific issue around wholesale rate to the extent we're disclosing that at all? John Malone Yes. But first of all, for clarity, it is a passive -- reciprocal passive deal ultimately with Proximus, where Telenet will be building 60% and Proximus 40% in the collaboration zone which is about $2 million of the homes path in Flanders. The principle of it being open and nondiscriminatory is already a public principle articulated by the regulator. And we do have a regulatory process which will be underway here very shortly. But like I said, the principle of a nondiscriminatory regime will be in place in part of that agreement. The next question is from the line of Polo Tang with UBS. Polo Tang It's on Switzerland. Can you maybe talk through what you're seeing in terms of competitive mix in the Swiss market? And can you maybe comment on a few specific factors. So for example, what's happening with promotional activity, specifically in the Swiss market. Also, is there still a drag on financials and KPIs from the retirement of the UPC brand. And then also going into Q3, Q4, should we expect your Swiss financials to see slower growth as you start to lap your 4% price rises from July 2023. Michael Fries I mean I'll let Andre address the competitive dynamics. And I think I mentioned in my remarks, Polo, we believe the UPC migration will be done by year-end and we'll have an increasingly smaller and smaller impact on results. And I don't believe we've provided quarterly guidance but take a look at where we are year-to-date through the midyear and where we ought to get to the full year guidance. So I think you can do that on your own. Do you want to talk about the competitive dynamics andre? André Krause Sure. Yes. Thanks for the question, Polo. So I would describe the competitive dynamics as promotional intensity being high but at the same time, we are seeing a bit of a worrying off effect. Meaning liquidity in the marketplace is somewhat reducing. I guess, customers are increasingly getting tired of the ongoing price promotions being the only argument being raised. On the back of that, I think our inflow was benefiting from 2 additional features that we have launched. One was the Flex upgrade program on hardware which is a very strong driver of our inflow at this moment. So that's perceived as a differentiating factor. And second to that, we have also announced that we are increasing our HFC speeds for 70% of the population in Switzerland to 2.5 gig. That's another differentiating factor. Very relevant one, we believe, because, a, of course, there's only 40% of the country today covered with fiber and all additional HFC coverage is having a unique situation, not only delivering 1 gig but now 2.5 gig which we think is also strengthening our position with customers when fiber rollout will increasingly get to areas where we have been a unique selling proposition with HFC so far. So I think that's positive. Additionally, I think worthwhile mentioning where we have seen good dynamics on our own info. You've seen 33,000 and 5,000 on mobile and broadband, respectively, on broadband; now the third quarter consecutively where we have been in the positives. That is not only on the back of strong inflow but furthermore we have reduced churn which is on the back, again, of increased retention activities, increased and improved service capabilities and our ability to differentiate through the product additions that I mentioned. So I think overall, it remains an intense market but we see some wearing of promotional activity, I would say, to consumers. And on the back of that, we just recently also have seen that the amount of discounts being granted has been slightly reduced. So I think that's a positive indication going forward and we will continue to drive that trend. Michael Fries And as with other markets, having this dual-brand strategy is making a world, a difference because you can compete with Salt on one hand and Swisscom on the other hand, with products that match their offers and the customers they're targeting. Polo Tang But just on that dual-brand state question. You only have one. Just on the dual-brand strategy. You don't have one in terms of the U.K. because you have a premium Virgin Media O2 brand. So that's a different setup from other markets now. Michael Fries No, we have giffgaff. Giffgaff is our, well, flanker brand, if you will, in the U.K. and arguably one of the stronger elements of growth. giffgaff is a really digital-first incredibly popular mobile brand which at some point, could be a broader telco brand. But that's our brand in the U.K., giffgaff. Do you want to say any more about that, Lutz? Okay. The next question is from the line of David Wright with Bank of America. David Wright I guess, Mike, Lutz, just more of a question on U.K. potential consolidation. I'm just wondering whether this dynamic of the altnets maybe focusing the financial resources more on loading the network and provisioning rather than building. Does that create any potential sort of hurdles to consolidation, the fact that you might -- any of these businesses might have incumbent subscribers, maybe on discounted pricing, could that create any more regulatory challenges? And I guess there's an obvious kind of TalkTalk has, I think, even themselves have made it quite clear the there's an element of distress around that business at the moment. Do you think given the kind of going concern risk that the U.K. regulator could even consider customers from TalkTalk possibly even being acquired by the 2 biggest network operators yourselves and BT? Michael Fries Well, I'm not going to speak about TalkTalk. You can read about their situation. And it's premature to determine or even guess to what the regulator may or may not do and what they may or may not do. We're not assuming TalkTalk is doing anything but competing with us until they're not. So not much to add to that. On the altnets question, I mean you are seeing what you described which is a slowdown in build as financing and capital slowly dries up and I think that will continue. There will be winners and losers in that game. Some continue to raise capital. Others will consolidate and others will stop build. And so inevitably, one way to improve their prospects is to start selling more directly and perhaps more competitively, it's still very early days. It's too soon to tell whether this will have an impact on the broader market, whether it will have an impact on their futures and -- or our ability to consolidate or not in this market. But I think the trend is the same and I'll let Lutz if he wants to -- or Andrea, if you want to speak to it. The trend is the same. There are companies like -- nexfibre which is fully financed at GBP 4.5 billion that we own a piece of, that is going to be building, full stop and is going to generate -- get to 5 million to 7 million homes in home. No question about it. There's VMO2 which is going already at 16 million [ph] and 3.5 million, 4 million of which are fiber and is going to get to full fiber, full stop. So there's going to be platforms like ours with 21 million to 24 million homes and that's a certainty and BT is a certainty. And the rest, we'll see how it shakes out. I think it's -- the writing is on the wall, so to speak but that doesn't mean between here and there, it's a straight line. There will be puts and takes. We look at M&A prospects along 3 or 4 levels. First of all, what's the overbuild with us, if we can upgrade at GBP 100, what's it worth it to us to acquire an existing fiber home that somebody spent GBP 500 to build. Secondly, the quality of that network, obviously, what it would cost us to get to our sort of level of sophistication. And thirdly, is there a customer base. And maybe your main question is, does the existence of a customer base on an alternate change that dynamic materially. And I would say no. If there are customer and we would look to see how those could be integrated or required or migrated. That in and of its doesn't change the principal analysis. It's more about where they built, how much they've spent to build and how it fits with our broader strategy. I'll maybe pass Andrea, do you have anything to add to that as the Chairman of nexfibre. Andrea Salvato No, I think you've summed it. Yes, Mike. I think you summed it up well, Mike. I would simply say that there's also a certain amount of value expectations, I think that need to get reset in the market, before we can start to see material consolidation. So I think that's one of the other issues that people are struggling with at the moment. David Wright Just put the -- you just put the infrastructure multiple out there, haven't you guys in one of your early slides, I think you've given the market its price point. Michael Fries Well, I would say those are pure NetCos with scale and cash flow. So it's a little different. That kind of is a little different market. Yes and existing customers; but a fair point. Yes, there you go. The next question is from the line of Joshua Mills with BNP Paribas. Joshua Mills It comes back a bit to the cable versus fiber debate. And my question is, how do you -- can you talk a bit about how you're testing DOCSIS 4.0. And then going back to Andre's comment earlier of the improvement in speed in the Swiss cable network, can you maybe give any stats about the kind of commercial benefits you're seeing where you do upgrade can to faster speeds and maybe just give us a sense of how much the network longer term will go to that? And maybe if I could tack on 1 small question. One of the points of the Proximus sale today is they're now going to be wholesaling from you on cable in 700,000 homes. I think in the past when you've talked about your cable versus fiber strategy. One of the points about the U.K. was a benefit of upgrade to fiber gives us that opportunity to wholesale. Now you're doing that just on the cable network, so you don't need to make that investment. Do you think this could be a template for other markets in the future as well? And how should we think about that? Michael Fries Yes. That's a good question. And Josh and I'm not sure we have enough time to answer it but I'll take a quick crack on it and maybe Enrique can chime in here, too. First of all, we have been wholesaling cable or a hybrid fiber coax in Belgium [ph], I don't know, 5 years or something like that. We were regulated in Belgium and obligated to open up the cable network and Flanders. And we did and Orange Belgium is a very happy customer on our cable network and has hundreds of thousands of customers and will be and has already committed exclusively to our fiber build as we do that through wire. So there are situations where either it's HFC or fiber, wholesalers are happy as long as they're getting the speeds they want the service, the quality, it works fine. We haven't done it anywhere else. We haven't been obligated to do it anywhere else. It doesn't mean we couldn't do it elsewhere. But I think when you step back and ask the question, why wouldn't we do it, in say, the U.K., principally, it's because the cost to upgrade the fiber and the cost to upgrade to DOCSIS 4 in the U.K. is about the same within spitting distance, so to speak and when you have the choice of upgrading to DOCSIS 4 or fiber in a market like the U.K. where you own your own DOCS, it's pretty clear that fiber makes more sense for the long term when you -- might need to look at DOCSIS 5, DOCSIS 6. But more importantly, when the entire wholesale market is working off of a fiber platform, beginning, of course, with Openreach and even altnets then to be competitive to be in that marketplace, you're going to need to go fiber. So there's a market check. What's needed at the commercial level, what's the rest of the sector doing in that market around access or kind of technology. So that's driving the decision in that market. In Belgium, we are happy as HFC wholesalers and we'll continue to do that for some time. But slowly and over time, we'll migrate that network to fiber as we've discussed and clarify today with that MOU. And then Switzerland, we're taking an even different approach which is let's use the best technology for the particular customer in a particular region. And so in that market, we have a complete option, a menu. We can access our 2.5-gig HFC platform. We can access the Swiss -- Swisscom's fiber platform. We can build fiber. We really have the best of all options there. Clearly, we'll migrate as many customers as we can to our own infrastructure because that benefits margins but we really have the flexibility to be competitive from a retail point of view with whatever technology makes the most sense. So there's not one size that fits all in this equation but it typically revolves around the cost to upgrade, the market realities of the competitive environment, the wholesale environment, the revenue opportunity in wholesale and whether or not regulators are requiring us to do one thing or another as they did in Belgium, for example. So I think we're taking the right approach. If you dig into each and every one of them, you'd see that they are the correct way to attack the economics, the technology, the customer opportunity, the competitive environment. And it's great to have that ability to be flexible. So I hope that's addressing your question. But if there's anything further, maybe follow-up and let's make sure we've done it. Joshua Mills Yes, that's very clear. And I'm guessing the -- any detail on how faster broadband speeds on the cable out in Switzerland, as the old cable network might wait for the C&V now [ph]. The next question is from the line of Luigi Minerva with HSBC. Luigi Minerva It's about the Netherlands and your pricing strategy. If I think about your broadband price increase last year, I think you just did exactly what KPN did back in July 2023. Now this year, KPN is going for 3.8% growth. And VodafoneZiggo is going for 2.5%. And I was wondering what is the rationale behind this and how you see competitive dynamics in that market? Michael Fries Yes, we've got Ritchy on, who's our interim CEO. I think it's as much as anything to do with the fact that we're trying to remain competitive in a declining inflation market which doesn't call for the same sort of increases. But Ritchy, do you want to provide more color on our price increase level? Ritchy Drost Yes, for sure. Thanks, Mike. The 2 things. First and foremost, we do a price increase both on the back-book and front-book. It's not similar to the others in the Dutch market. But also keep in mind that the inflation in the Netherlands is falling. Last year, we had about 10% inflation. And we did an 8.5% fixed price increase. This year, the inflation is 3.8% and we're doing 2.5%. The price increase in itself is, I would say, not a reflection of the competitive position in the market but it's all about price value perception. We do see that customers who decide to leave us, use cost of subscription as a main reason for them to churn. And hence our decision to go slightly below the inflation level to make sure that the price sort of value perception stays in balance with market expectations. Michael Fries Last year, as you recall, KPN took a price increase on their back-book and lowered their front-book. So some of this is signaling to perhaps. We've always taken price increases on both front book and back book. So hopefully, there's a more rational market here. The next question is from the line of James Ratzer with New Street Research. James Ratzer So if it is possible, just go back to talk about TalkTalk in a little bit more detail. I know you might be limited in what you can say. But are there any scenarios, you can see in which you might interest in acquiring some of the asset or the rate at which customer base is declining at the moment just makes it kind of too risky to get involved like the asset you think you see now that when it comes to closing. [Indiscernible] you had on that particularly would be really interesting. Michael Fries James, I want to make sure I heard the first part of it. I got the jist of the question around M&A but which entity are you referring to? James Ratzer TalkTalk, in particular in the U.K. because that -- [indiscernible] so just to get your thoughts on that, though it is too risky an assets to be looking at right now, given the rate customers are coming down? Michael Fries Yes. No, I got you -- I just didn't hear that first part, you're coming in and out a little bit. I don't think we have anything to say about TalkTalk today. I mean we watch as others do, with great interest of what's happening across the sector in the U.K. but obviously, with TalkTalk, they're competitor. And we certainly are watching what they're doing and what they're considering doing and with their B2B, with their network, with their consumer business, it's really outside of our control. And if there were opportunities, you should assume we would be looking at them but there's nothing I can say about that today. The next question is from the line of Matthew Harrigan with the Benchmark Company. Matthew Harrigan I think I'm last American [indiscernible] these days. Conceptual question really at the some various other industry organizations, I think you had some consultancies, like McKenzie really commented on how you've had trillions of dollars of equity value created, Silicon Valley and other places of telecom networks and you've really obviously borne the cost without necessarily having that much impact. Is there anything that's different about the service code that would enable you to participate better in fintech, entertainment, health care, et cetera? Is that like a -- at least complementary rationale for doing this relatively complicated structure? Michael Fries Well, possibly, Matt. I mean, I think both entities, Netco and the ServCo are probably better positioned to compete long term and take their fair share of that ecosystem. I mean, you correctly point out that net neutrality as a whole, created haves and have nots, right? And the haves are anybody in the big tech space, selling apps and access largely for free. And we in the infrastructure, connectivity space have obviously experienced more competition, higher CapEx and higher usage and capacity requirements. So with some ability to pass that a lot of consumers but not as much as we'd like. So going forward, there's a handful of things the industry in network-as-a-service. I'm sure you're following that, new products and services in the home and how we might take advantage of that. AI which is going to give us a much stronger, some more sophisticated way to manage customers and our networks. But the Netco cervical model itself certainly should create a more agile ServCo management team and product and brand, looking at accessing the NetCo as well as perhaps other networks to try to drive services into the home and into business. And the NetCo itself will become really a connectivity provider first but also depending on who the user is, more sophisticated transport hub. So I don't think it, by definition, makes it easier to ensure that the next 10 years don't look like the last 10 years but I think it certainly bends that way. And I think in some instances, depending on how well we execute and kind of structure we put in place and the capital we have, think it could actually that but we've got things to do the board even in our integrated businesses to make sure that the next 10 years look different than the last 10 years. And I think the toolbox, as I said, the outset is pretty good to make that happen. There are no further us time. So I would hand the call back to Mike Fries. Michael Fries Great. Thanks, everybody, for joining. I hope you have incredible summer wherever you are, whenever you're doing and do please put in your calendar September 9 in Zurich or September 9, wherever you'll be, be connected, of course, to our Capital Markets Day. For Sunrise, we really look forward to getting that process moving in earnest in the fall. So thanks and we'll speak to you soon again. Ladies and gentlemen, this concludes Liberty Global's second quarter 2024 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 the presentation materials.

Proximus PLC (BGAOF) Q2 2024 Earnings Call Transcript

David Vagman - ING Joshua Mills - BNP Paribas Exane Dhruva Shah - UBS Titus Krahn - Bank of America Nuno Vaz - Bernstein Justin Funnell - Nextgen Research Siyi He - Citi Hello. And welcome to the Proximus Q2 Results 2024. My name is Laura, and I will be your coordinator for today's event. Please note this conference is being recorded and for the duration of the call your lines will be on listen-only. However, you will have the opportunity to ask questions at the end of the presentation. [Operator Instructions] I will now hand you over to your host, Nancy Goossens, Investor Relations Lead to begin today's conference. Thank you. Nancy Goossens Thank you. Welcome ladies and gentlemen to this Proximus webcast. We have today some ground to cover. So, in addition to the second quarter results, we will also spend some time on the strategic announcements of last night. We will of course still foresee some time for your questions. Before we get started, let me just introduce the participants on our side. Here with me today, I have the CEO, Guillaume Boutin; the CFO, Mark Reid; the Consumer Lead, Jim Casteele; and the Corporate Affairs Lead, Ben Appel. Let's now start the presentation. Guillaume, the floor is yours. Guillaume Boutin Thank you, Nancy. And with the year now halfway, it's a good time to reflect a moment on some of our major achievements. Overall, I'm very pleased with our commercial achievements so far, showing a continued strong customer growth for our main product groups. Our Residential unit, for example, added another 46,000 mobile cards over the past quarter in a very competitive market. For Fiber, we activated an additional 40,000 customers and we continued deploying at high speed to reach a Fiber industry footprint of 38%. Our International segment grew its direct margin by 7% in Q2, benefiting from its unique position in the global digital communications market and ready for its growth trajectory. All in all, this has led to our group EBITDA growing by 5.3% for the second quarter, a strong result that fueled our announced guidance upgrade. The past month also has been very eventful. Not only did we close the Route Mobile acquisition, we also centralized our B2B IT activities into a dynamic new subsidiary, Proximus NXT IT, to better serve professional customers in the Benelux. And then, of course, the most recent news, the signing of the Fiber MoU for collaboration in Flanders and Proximus obtaining full ownership of Fiberklaar. Overall, our strategic progress is intended to safeguard a sound organic free cash regeneration. We'll do a deeper dive on this in a moment. I already said it. Overall, we can be very pleased on our performance, with all main results illustrated on this slide. I won't comment on each, as we will have a closer look at it. But before that, let's first go to our strategic achievement. Our International segment is already delivering significant profitable growth. Remember, early May, we closed a major transaction, acquiring a majority stake in Route Mobile. We have elaborated on it extensively during our International webinar, now almost two months ago. In short, we have created a unique position whereby we deliver services across the full value chain of digital communications, from connect, to engage, to protect and this on a global basis. We are proud of our International brands being recognized for their expertise, underlining the leading position for Proximus in taking those -- great shares of those global markets. A speaking example is a recently signed strategic partnership with Microsoft. As part of this five-year agreement, Microsoft will use the best-in-class CPaaS and AI products of our International platforms, and as such further solidify our leadership in the digital communications space. Turning to our Domestic market, for which our Fiber strategy remains a key driver of a strong commercial performance. In June, we were deploying Fiber in 164 cities and municipalities, bringing the fastest internet in Belgium, as was recognized by Ookla. Moreover, we continue to innovate and bring now for Ultra Fiber customers the latest Wi-Fi technology to further boost the in-house experience. An increasing number of customers can benefit from our gigabit speed offers, with an additional 443,000 homes passed with Fiber over the past three months. In June, we are close to the 2 million home pass bar, the milestone we have in the meantime crossed. Just to illustrate our accelerated pace, half of this coverage we achieved over the past two years, while the first million took six years to be reached. Customer traction for Fiber clearly continues. Our base of activated Fiber lines continued to grow solidly, now counting a total of 448 -- 481,000. Business success of Fiber ambitions, of course, does not stop here, which brings me to the next part of this presentation. You've been waiting for some news on this front for some time now, so I'm excited to share that. After several months of constructive discussions, we achieved some major strategic steps in the deployment of Fiber for Flanders. Yesterday evening, we announced the signing of two separate agreements. One, we signed an MoU on Fiber Collaboration with Wyre and Telenet, and two, we acquired 100% of Fiberklaar, the Flemish Fiber GV, in which we own approximately 50%. With this, we not only achieved a strategic milestone for the country and the industry, it also creates for Proximus a framework for long-term cash flow generation and competitiveness to increase network utilization, yielding additional Wholesale income. These agreements are expected to result in free cash recovering current dividend levels in 2025-2027, supported by our divestment program, which we scale to €500 million. From 2022-2028 onwards, we expect to return to growing annual organic free cash flow. Let's first take a closer look at the MoU on Fiber Collaboration. The intended collaboration with Wyre and Telenet stretches over approximately 2.7 million homes across the Flanders region. For the 2 million homes in the medium-dense area, Wyre and Fiberklaar would build componentary Fiber networks. 40% of these 2 million would be allocated to Fiberklaar, meaning about 800,000 homes passed, with part of that already completed today. The other 60% would be allocated to Wyre. And, of course, both companies would have reciprocal Wholesale access. For the 7,000 homes in the more rural areas of the Flanders region, Proximus would start offering services using the HFC network of Wyre. This would allow us to offer gigabit speeds throughout Flanders. Outside of this MoU are the dense areas, representing about 900,000 homes, with most of them already covered by Proximus Fiber today. The MoU is a step forward towards an optimized Fiber rollout in Flanders, providing a path to maximize the utilization while ensuring broader Fiber coverage at an accelerated pace. All this would be achieved with a significantly reduced overall investment. Separately, we announced that we are increasing our ownership in Fiberklaar, going from about 50% to fully ownership now, and this for a total consideration of €246 million. Becoming the sole shareholder of Fiberklaar will allow us to work more closely together and further increase the efficiency and quality of the Fiber rollout in Flanders. At the same time, we capture the value generated by synergies. Integration in the group will especially allow for optimized funding costs, and in addition, will create operational synergies. We expect both to total up to an NPV of €100 million. While collaboration will for sure bring benefits for Flanders and the industry, it also would secure strong incremental cash-generating fundamentals for Proximus from 2020 -- 2028 onwards. While it's clearly too early to share any details, there are some key components inherently driving value. Top of the list, we have a massive CapEx avoidance, thanks to an optimized footprint for Fiberklaar. Moreover, as just mentioned, pouring full ownership in Fiberklaar would gain both operational and financial synergies, particularly regarding debt management. The high utilization of the Fiberklaar network would bring additional Wholesale revenue from Wyre, partially balancing out the costs going the other way. The higher and faster Fiber coverage will also allow for faster decommissioning of a copper network, which is, as you know, costly to maintain. The intended collaboration would provide us access to the HFC and Fiber networks of Wyre, which will sustain and enhance our retail commercial Fiber momentum. The chart of this slide illustrates our expected free cash flow trajectory. We make the distinction between two main timeframes, investment period running until 2027 and the timeframe beyond. Starting with this year, 2024, on the left-hand side, the work illustrates how we go from the estimated adjusted free cash flow, which was the ballpark of our company compiled consensus, to the full year free cash flow estimate, including the effect of the acquisitions. During the under present ownership of Fiberklaar will consolidate the CapEx on our balance sheet. This leads to an estimated total group CapEx for 2024 of around €1.36 billion. The CapEx increase replaces the expected equity injections in Fiberklaar, therefore limiting the free cash flow impact. Expected average annual free cash flow over the period 2025-2027 is already growing significantly, reaching a level that covers the current dividend supported by our divestment program. The CapEx relief offered by collaboration will kick in and we expect to return to growing annual organic free cash flow. Besides our expectation to continue to grow Domestic EBITDA, we also will see support from our International segment, while our CapEx levels will be coming back to normalized levels. This transaction, therefore, allows us to provide significantly longer-term visibility and derisking as we will enjoy gigabit network coverage with no additional CapEx required by then. The funding of the Fiberklaar transaction will have a limited and temporary impact on the net debt-to-EBITDA ratio. For 2024, we expect this to be around 3.1 times and should stabilize around 3 times as of next year. A strong deleverage is expected to start from 2029 onwards. In terms of process, you can expect the Fiberklaar transaction to be closed shortly. As for the intended Fiber Collaboration, reaching a final agreement is subject to regulatory and antitrust approvals. The formal investigation by the Belgian Competition Authority has just started with the involvement of the BIPT and the outcome could be expected somewhere towards the end of this year. Moving to the next and final part of this presentation with a quick overview of the second quarter results. Starting with our Domestic segment. As I already pointed it out at the start, our second quarter Domestic operations demonstrated once more solid growth supported by our attractive product offerings and effective multi-brand strategy. Our strong commercial results combined with our pricing strategy led to another strong revenue growth for our Residential unit up by 5.3% in total with revenue from Services increasing year-over-year by plus 6.3%. The revenue from Residential Services was still supported by two price indexations, as well as by the ongoing customer growth, especially in the conversion base. For Business units, revenue was growing by 4.8% with revenue from Business Services continuing the growth trajectory up by plus 2.2% for the second quarter. The growth in Business Services revenue was driven by a sustained positive revenue trajectory for Fixed Data and IT Services. Our Wholesale revenue followed a similar trend as before with a revenue decline fully related to low margin interconnect revenue while our Fixed and Mobile Wholesale Services were up just over 9%. This brings me to the total Domestic revenue for which we achieved a sustained strong growth up by 4.6% for the second quarter driven by an equal 4.6% increase in Services revenues. Turning now to the Domestic operating expenses which were up 3.8% from last year and continuing the improving trend following the further moderation of the inflationary cost effects. Bringing it all together, our Domestic EBITDA showed a strong growth year-over-year by 5.1% driven by the increase in direct margin. Turning now a moment to the International part of our results, our International segment closed the second quarter with a solid growth in its direct margin. Before getting to detailed results, let me first frame some of the key drivers that are supportive of this. One, with Route Mobile, we now have a unique exposure to the fast-growing APAC region for our CPaaS services which more than compensate for the currently more difficult U.S. and EU markets. Two, we have omni-channel solutions that allow us to recapture some of the disappearing SMS traffic with omni-channel typically coming at higher margins. Three, the loss of SMS volumes is to a great extent related to A2P, so application-to-person traffic for which the impact on margin is limited. Four, besides CPaaS, Digital Identity and Mobility Services are also growing revenue and direct margin. And as a last point, although P2P Voice & Messaging is typically a declining market, we achieve to limit the direct margin impact of this. Turning now to the numbers, two or three global brands, BICS, Telesign, and Route Mobile, we achieve to grow our International direct margin by 7.0% on pro-forma basis driven by Communications & Data services. Driven by the DM growth, the International EBITDA increased year-over-year by 6.5% again on a pro-forma basis. Zooming in for a moment on Communications & Data services, which is a product group including CPaaS, DI and Mobility Services. Here, we posted a 9.5% growth in direct margin on a pro-forma basis. Besides omni-channel recapturing part of the SMS transition, especially in the APAC region, the margin also benefited from new customers and large contracts going live. Digital Identity experienced robust growth with a net retention rate at 116%. And Mobility Services did good as well, driven by higher travel volumes. In contrast, over the same period, the revenue was down by 6.2% on a pro-forma basis, demonstrating that it is concerned, especially low margin CPaaS messages. For our second International product group, P2P Voice & Messaging, direct margin was down slightly, all due to lower voice volumes in an inherently declining market. This brings me to group results. Our traditional slide brings it all together, with the group EBITDA up by 5.3% on a pro-forma basis, with both the Domestic and International segment contributing. The CapEx over the first half of 2024 totaled €585 million, which is a decline for last year, in line with the pace of the Proximus-owned Fiber build. Our free cash flow over the first half of 2024 stood at minus €114 million on an adjusted basis, with the variance from last year mainly being timing effects in working capital needs, partially compensated by a higher underlying EBITDA and lower cash flow CapEx. In conclusion, we have closed the first half of 2024 on a high note, with strong growth realized for Domestic revenue and EBITDA, as well as for the group EBITDA. We therefore can, with confidence, raise our 2024 guidance for this matrix, as shown on the slide. Following the full ownership in Fiberklaar and the resulting consolidation on a balance sheet, we are reviewing our expectation for the group CapEx to around €1.36 billion for 2024. The funding of the transaction will have a limited and temporary impact on the net debt to EBITDA ratio for 2024, expected to be around 3.1 times. Our three-year dividend policy we set for 2023-2025 remains unchanged. With this, I have covered my presentation, but we can turn now to your questions. Thank you. [Operator Instructions] We will now take our first question from David Vagman of ING. Your line is open. Please go ahead. David Vagman Yes. Hi. Good afternoon and thanks for taking my question. The first is on the free cash flow outlook beyond 2027. I'm a bit surprised by the ballpark figure to be slightly above €300 billion, despite the significant step-up in CapEx and then your deal, a very nice deal, Fiberklaar deal with Telenet, so Telenet getting on your network. So, is this free cash flow of €300 billion and maybe a bit more, is it supposed to move up significantly after 2030 or could you explain basically why? Is this on you being cautious because of DG arriving in Belgium? Is it because you deduct minorities in International or is it simply reflecting high Wholesale costs and maybe not that high Wholesale revenues or still high CapEx, so, basically? The second question, when I look again at the free cash flow and the €300 million plus, is it correct to say that more than half would be coming from the International activities when I'm basically computing, let's say, using your guidance from the International Day, Investor Day, so the free cash flow conversion, the EBITDA, margin and so forth? And maybe last question on the CapEx post-2027. Yeah, should we see a significant step-down? Is it correct to assume that there would be a major step-down in CapEx, let's say maybe even less than €1 billion after 2027? Thank you. Mark Reid Hey, David. Let me take those. So, first of all, on the free cash flow 2028 and beyond, I think, again on the presentation we clearly state it's an average and I think we also have a point in there that we expect it to be growing post that period because of the economics of the Fiber Collaboration. So I think that's where we are. I think hopefully it's appreciated that we've given you that visibility. Clearly, we're in a position right now where we're super happy with the agreement we've come with the regulators and Liberty. And so again, it's hopefully giving you the directional element of where our free cash flow will be. And again, I think maybe point you to that we fully believe that will be fully organic by that point. I think in terms of the International, I think again, you can use that. I think there's no difference in terms of what we're thinking on the International business, as Guillaume pointed out, and the results are very positive on direct margin EBITDA perspective of Q2 and we continue to see a great trajectory to hitting our guidance for 2024 and beyond on International. And then on CapEx, and again, I don't think we'll -- we're not disclosing exactly the years. But again, I think, you can think of around -- something around €900 million in terms of the period between now and 2028 in terms of the introduction of Fiberklaar. So I think that's probably. David Vagman Okay. Thanks. Very useful. Maybe a quick follow up on the Wholesale cost you were mentioning. Concerning -- so you have this HFC deal with Wyre in rural areas in Flanders. Is it correct to assume or to extrapolate that there will be a similar solution in Wallonia? And is it included in your 2028-2030 free cash flow outlook? Guillaume Boutin I think we are not going to comment on the discussions on going on Wallonia. I think there are two different situations. Proximus in Flanders are -- is super different from the seasonal Proximus in Wallonia. So it might be that there is some also different outcomes on those discussions. So, I'm not sure you can really extrapolate what's happened in the north for what could happen in the south. Thank you. And we'll now take our next question from Joshua Mills of BNP Paribas Exane. Your line is open. Please go ahead. Joshua Mills Hi, guys. Thanks for taking my questions. I had a few, please. And I was going to focus on the Fiberklaar transaction because I think that's the one which is probably getting the most pushback today. So, the first question related to this is, what was the rationale for reconsolidating this business now just two years after you set up an off-balance sheet joint venture? And then related to that, how do you justify the €160 million premium being paid to EQT based on the buyout price versus what they're putting with equity? And finally, if we look forward, you still have a number of other joint ventures related to Fiber in other parts of the country. Is this the kind of template which you would be adopting when you look to reconsolidate those or is there a reason why in this circumstance there is such a high premium being paid? And the second question, just more of an operational one. And on the Wholesale co-investment with Telenet, have you already identified the 60% to 40% split of areas? And does the mechanism simply mean that where you build, they pay you, and where they build, you pay them on equal terms? And then, finally, just coming back to the CEO contract extension, it looks like there's now a much bigger focus in terms of fixed compensation on the International business, which is clearly quite small in the scope of Proximus today. I just wondered if you could comment on how that may affect your strategy and also if you can give us any color on how remuneration targets are played out in the 2023 annual report might have been changed as well? Thank you. Mark Reid Joshua, let me start. I'll try and put the rationale and the value on the EQT. So, I think, we've talked about this before. I think ownership is super important to us and I think the ownership economics of a fully utilized network, I'm sure you can understand that. I think the other element is, again, we're now very, very sure in terms of the alignment of incentives between ourselves, Liberty and the regulator, and I think that really gives us confidence in terms of the next period in terms of getting to the long form. I think that also helps by the fact that it's the three of us. I think if you look from a valuation perspective, again, I think, if you take comparables across Europe, there's very few networks that will be able to have this kind of utilization rate, a surety on overbuilt risk that this network will have once we get to the long form. And so, therefore, again, we feel economic value is worth it at this point. And then we add on top of that the synergies that we announced today on the acquisition of the additional share. Again, those will accrue clearly to us. So I think that's how we think about it. But, I mean, Guillaume, I don't know if you want to add anything to that on that first part. Guillaume Boutin On the first part, I think, what I would love to say is more your second question is that, again, stated just previously, but starting point of the decision of Proximus in the north and in the south and Brussels are completely different. So what happens in the north on the way we took back control of the duty we had in the north cannot be extrapolated for the rest of the country, neither on the German speaking community or in the Walloon region. That's extremely clear and important to note. Mark Reid And then, Josh, again, on the terms of the MoU, again, I think, we've been very explicit in terms of the details we've shared with you in terms of the allocation of footprint and how we're going to use each other's technology. We're not going to divest. We're not going to divulge any further details on the terms at this point. Clearly, we're still in a long form time negotiation. But, so that's a little bit where we are on that. So, hopefully, we -- I think we've provided a lot of detail today in terms of you to be able to work out how this is going to work, so. Guillaume? Guillaume Boutin Now, on my new contract, obviously, no effect or no impact on the strategy of the group with the new remuneration framework. Thank you. We'll now move on to our next question from Dhruva Shah of UBS. Your line is open. Please go ahead. Dhruva Shah Hi. Thank you. Thanks for taking the questions. Two questions, please. First is, could you provide an update on the competitive dynamics in the Domestic business across Belgium? And I'm just interested to hear in particular if you're seeing any impact from Telenet entering Wallonia at a lower price point than Proximus and also if you're seeing anything from Digi? And then second question, you've seen very strong Domestic growth in Q1, Q2 off the back of price rises and good commercial momentum. But just looking at the guidance and what it implies mechanically, this suggests a declining EBITDA for the second half of the year. So could you just break down for us how much of this decline or forecast decline is due to the lapping of price rises versus the potential impact for Digi's entry or if there's anything else to consider? Thank you very much. Jim Casteele So, hello, this is Jim Casteele for Consumer. So on the launch of internet and television from base in Belgium, because it's not, of course, not only in Wallonia, but it's a nationwide launch. And so far, as you can see in the results, we don't really feel that impact. Also linked to the fact, of course, that we already have been executing on a multi-brand strategy for several years now, where next to our Proximus brand, we also have Scarlet and Mobile Vikings as alternatives, where Scarlet is well positioned versus base in terms of positioning of the market. And at the same time, over the last years, we've also been working on increasing the premiumness of the Proximus brand, linked, of course, to the deployment of 5G, the spectrum that we bought, the Fiber experience that we bring to our customers, investments in Wi-Fi technology, in our digital platforms, et cetera. And so we're convinced that by bringing Proximus to a more premium positioning, and then at the same time, our multi-brand strategy makes us well positioned to cope with the changes that we see today in the market. Mark Reid On the guidance, so I think, we're super happy with the first half of the year. I think in terms of the main components of guidance for the second half, I think, you struck the main two or three. I think price is the vast majority. We start to lap the price, as you noted. We have put some Digi assumptions in there. Again, we're not seeing a huge amount of activity there, so that may be on the conservative side. We had a contract in the enterprise side that we're also lapping, and terminals revenue also, we're lapping some hard comparables from last year. But I think the way I would think about it really is it's primarily the price rise, annualization, a bit of assumptions in terms of the market, the conditions that may exist in the second half. But again, as I'm sure Jim will say, as we've been trading through July, trading continues to be strong. So we're very comfortable with our guidance for the year. Thank you. And we'll now take our next question from Titus Krahn of Bank of America. Your line is open. Please go ahead. Titus Krahn Good afternoon, everyone. Thanks a lot for taking my questions. A couple from me, please. I would say three of them. The first one, quick one, just on the 2025 to 2027 free cash flow guidance, where you mentioned that your increased €500 million divestment program will benefit the reported free cash flow. Is there any way to kind of give us an indication how much of these €500 will be divested throughout 2025 to 2027, or maybe ask differently, how much kind of cash proceeds have you received so far? And then the second question would be on your new CapEx guidance, including Fiberklaar and the actual Fiber rollout throughout the period until 2027. The Fiberklaar rollout, is that going to be kind of quite equally weighted throughout the years? I'm just asking because your initial plan was for your own rollout to drop significantly and gradually over the next couple of years. But your new CapEx envelope is basically stable for the next four years. How can I reconcile that? Will you also accelerate your initially planned rollout or is there some other delta within the CapEx guidance? And then a very, very brief question just on the transaction, on the Fiberklaar transaction. If the regulator does not approve your cooperation with Telenet, can you back out? Would you back out? Is that an option? Thank you. Mark Reid Yes. Let me take a discussion on the 2025 free cash flow guidance on the divestment. So, where are we on divestment? So, we've increased the number to €500 million. In terms of the timing, clearly these are M&A type processes and so clearly the timing is difficult. But one element I can give you that maybe helps you in terms of time is, we are -- I would say in the advanced negotiations of around 40%, we're in the process of another 45%. And so, of that €500 million, there's 85% of it in sight, right? I think that's where we are. The remaining part is we clearly identified and we're running, starting to understand where the timing of that process will be. So, it's difficult to call exactly, but I think the pieces that are in our control are well in -- under process. In terms of how far -- how much we've raised so far, we had €30 million. I think that's well disclosed in our accounts where we had €30 million cash in for the sale of our headquarters building in December 2023. In terms of CapEx guidance, so I think, I mentioned earlier on the call, we're going to take on just around €900 million of the Fiberklaar CapEx. Again, I'm not going to disclose fully the timing of that, but there are going to be elements that we're discussing with the regulator about the timing and the phasing of the build, which will dictate exactly when that phasing is and it's not fully agreed at this point. But I think, again, you can probably, given our 2024 guidance and the number we gave you for 2025-2027, you can probably work fairly close to it. And then, Guillaume, do you want to take the last one? What the question was? Guillaume Boutin On the regulatory discussion and with the comfort we, what kind of comfort we have that we get through that discussion with the regulator? I think we are confident. I think we have been interacting with the authorities to make sure the principles of the MoU are aligned with the expectations. And I think that if you look at the communication issued by the regulator this morning, it has been confirmed that, based on that MoU, the BIPT and the BMA are launching the new investigation. So I think we are quite confident that we -- that MoU will get to a closing moment, that where we are, if it's not happening, we are back to competition on the infrastructure. But I think this is not a healthy situation for neither the country, neither Wyre, neither Proximus, neither the regulator. So I think the -- there is all incentivization for all parties to get to an agreement on that deal based on the detailed MoU that we shared with the regulator last night. Titus Krahn Okay. Thank you. And in the worst case, you would still roll out on balance sheet then? Guillaume Boutin Yeah. Then we continue the rollout. But there is, probably, no situation where you're going to have overbuilt in the country. That's for sure. And I fully realize and agreed in between all stakeholders. So I think there is... ...very high confidence on ourselves to get to a conclusion of the deal. Just to go back on the free cash flow guidance beyond 2028. I think, first, we never guided on the International activities beyond 2026. That's a bit where we are. So extrapolation of what is going to be those International activities beyond 2026 is a bit difficult to say and it could be a fast-growing segment of the first. And that's the first element. Second, when we look at the free cash flow generation beyond that period, we say in the presentation and it's clearly stated that it's an annual average organic free cash flow and we also clearly state in the presentation that that free cash flow will be growing from 2028 and onwards in the later years. That's something that you also need to take into account when you look at that period post-2028. Thank you. And we'll now take our next question from Nuno Vaz of Bernstein. Your line is open. Please go ahead. Nuno Vaz Hi. Good afternoon. Thank you for the opportunity as well to ask questions. Three from my side, but I think all pretty straightforward also, mostly focused on this Fiber announcement. The first one is in terms of the areas that will be passed by Fiberklaar. It's my understanding that Telenet will still have the cable network active in those areas. Is there some sort of incentive to make them switch or because you can see from my perspective that they might want to save some money and some Wholesale costs? Is there any sort of incentive for each of the parties to switch to Fiber? The second question on the 700,000 homes where you now have access to Wholesale to cable, I assume this is not really a technology you've used before. Does this have any sort of costs of preparation in terms of customer premise equipment, in terms of this new technology? Just to understand, because my understanding is you've not used this technology before. Then just the third one is a quick clarification, because in the past we used to see a lot of targets, about 95% Fiber coverage in Belgium. I'm assuming that target has now been pretty much dropped, but there'll still be quite a few rural areas in Belgium. If you could just comment on if there's any developments on that. Thank you. Guillaume Boutin On the first one, I think as you can imagine, we cannot disclose the details of the MoU that has been discussed between the parties, but you can imagine that there are incentives to build, so incentivization to migrate customers. So, rapidly, the decision will be that when you have one network, one Fiber network, you're going to have all the customers on that network. That's the way you should look at it. In terms of preparation to go on Coax, I think it's not a technology we don't know. It's a technology we don't use. And of course, Wyre is already ready to accept our customers, because they have Orange as a customer. On their side, I think, they are quite ready to welcome Proximus. And for us, it would be a limited amount of investment to be made, but super limited in the context of Proximus to be able to service Coax for customers, but also a fantastic opportunity to win market shares, because in the areas where we're going to have access to that new network, our market shares are limited in terms of size. And that opportunity to win shares will be also present in those areas compared to the situation of today, which is an upside that we think we can capture as well. Then on the Fiber coverage in Belgium, I think, it will depend on the way our government, the Belgian Government, will look at the subsidization of the rollout, as we always stated. Of course, having one network helps the economics of the Fiber build, but to go up to 95%, you're going to have to create a framework where you need to be helped, supported by subsidization to get to this kind of level. I think what we achieved with that agreement is that we will offer the possibility for Proximus customers to access the Gigabit network in Flanders as of tomorrow. That's a bit the good news for our customers. In terms of whether we're going to be using for 95% of the country Fiber of Coax, it's still to be decided. And of course, otherwise, we're going to be rationally -- we are going to be extremely rational in the way we're going to take those decisions to use either Coax or to develop Fiber networks, which will also depend on the support we're going to receive from government. But we all know that to go beyond 81% of coverage, you need probably some support to bridge the gap between 81% and 95%. We'll now take our next question from Justin Funnell of Nextgen Research. Please go ahead. Justin Funnell Yeah. Hi. Thank you. I hope you can hear me okay. Could you give us any insight into how you expect the respective Fiber networks that you're building in the semi-dense to be regulated? Do you think it's going to be minus or do you think it's going to be a cost model that the regulator basically requests or forces you to adopt? And then on your leverage, you obviously have a 3 times target. Is that a hard ceiling or is this safe for you to run above 3 times per period given that your credit rating is BBB+? Thanks very much. Mark Reid Let me take the leverage one first. So, I mean, Justin, you're right. We gave guidance. The 3 times was we wanted to operate below 3 times. I think we announced today because of getting access to a path towards this collaboration deal, we're going to temporarily go above that with the inclusion of Fiberklaar. Again, I think we were clear that we see this as a temporary elevation above that level and that we expect it to come down around that for a couple of years. And then we see a deleveraging period once we return to the free cash flow levels that we talked about earlier in this call. So, that's where we are. There's no hard target. Again, I think we've always been in constructive discussions with our rating agencies and we'll explain to them fully this deal. But, again, we feel it's a very temporary element above three in 2024 and we expect our conversations to discuss that in the next coming weeks. Guillaume Boutin On the regulation, on the semi-dense areas, I think, what will come with that deal and it's a good thing. It's a long-term visibility on the way the regulators will look at the different networks. So, in those discussions we had with our regulations -- regulators, sorry, what we -- what was super important for us is that long-term visibility and we get that in that agreement. So, we'll get that visibility on the way they want to manage the Fiber network in terms of regulation for the next hopefully 10 years. The way we look at that, so it will be regulated, but with a long-term visibility which helps navigate and maximize the value creation for everyone. So, I think this is our expectations. And there is no reason why those expectations should not be heard and met by the regulators. Justin Funnell Thanks. Can I just follow up? I mean, in terms of reading between the lines, you say you expect it to be regulated. That suggests a cost plus model or am I reading too much into what you just said? Guillaume Boutin I think the regulators said also that they don't want to change the way they look at the cost to access, the price to access the network and they don't want to change the methodology. So, I think, we are seeing that framework and I think this is a fair way to assess the economics of actually seeing a network for our customers. So, I think we are seeing that mindset. The good thing, again, is that we can have visibility for a long period of time on the fees and the conditions to access the different networks of the different operators. Thank you. [Operator Instructions] Thank you. We will now take our next question from David Vagman, once again, from ING. Your line is open. Please go ahead. David Vagman Yes. Thanks for giving me, again, the opportunity to ask questions and sorry to come back on the free cash flow 2028 and 2030. I heard well your comment that this is an annual average and it's growing. So, do we have to understand that there is actually basically the possibility that in, let's say, you have a big discrepancy between these three years and then is it because you still have quite a bit of CapEx or any particular reason impacting significantly, let's say, 2028, and then that you would have quite a significant CapEx, sorry, not CapEx, free cash flow exceeding this period. So, let's say 2030. I'm trying to figure out basically what is a bit normalized free cash flow level for the group. So, that's my first question. Then, secondly, if I do the math quickly for Fiberklaar, so, and thanks for the indication that there is still like €900 million of CapEx to, let's say, to invest. If I look at Fiberklaar, I have the impression that they've already invested something like, let's say, €450 million, something like that. It would give a CapEx per premise per household at €1,700. It seems quite a bit above the initial CapEx guidance of Fiberklaar of €2 billion for 1.5 million households. Any particular reason why we're landing at a higher cost of CapEx per home passed? Thank you. Mark Reid Yeah. David, on the 2028 to 2030, I mean, look, again, I don't think we're going to talk too much more. We can disclose too much more on that. I don't think there's nothing else mature. We don't have another CapEx significant investment after that period. So, there's nothing there. The Fiberklaar CapEx build will be almost fully done by 2028. So, that's how we should be returning to more normalized CapEx levels, and that's why, again, over that 2028 and beyond period, we've said it's an average and it's growing, right, and it's organic. So, I think that's the way you should think about it. On the Fiberklaar mass, I think there's a couple of things. I think it highly depends on the footprint. That footprint, the medium-dense, is a difference in, where it is in that medium-dense. And I think the other element you need to kind of work into is, we have Fiber in the street, which we disclose, which is not just Fiber's home passed built and ready for service and so that also has to play into your numbers. So, I think that's probably the way to think about it. David Vagman Okay. Thanks. And when you say, Mark, that the CapEx will be done by 2028, you mean done in 2027 and then little CapEx in 2028? ... but I think, hopefully, you can get directionally where we are on that 2028 to 2030 number. And as I said, look, we're going to come back once the long form is done and we'll be, hopefully you understand that there's only certain amounts that we can disclose at this point and we're still need to finish the long form. But we're super happy with the fact that we've got to this step. This is a the three parties and creating value for the regulator, society, Liberty and ourselves. And so, hopefully, you guys can get that and understand that on the... David Vagman Okay. Okay. No. Sure. Thanks. Thanks, Mark. I think you also understand why I basically want to understand whether there is potentially a big upside in free cash flow down the road also from this period. Thanks. Thank you. And we'll now take our next question from Siyi He of Citi. Your line is open. Please go ahead. Siyi He Hello. Good afternoon. I hope you can hear me okay. I just have one question and just another clarification. The question I have is on your assets disposal. I think you announced a plan at the beginning of 2023 and now for almost one year and a half. And then, I think, the proceeds that you achieved is €30 million. Just wondering if you can just share with us what's the lesson learned that you have on your assets disposal? And should we still think that the initial €400 million achieved by end of 2025 is still a valid timeline? And the second question is how will you file the cash cut-outs that you added from Fiberklaar? Are they annual cash -- annual cut-outs? What I'm trying to understand is that for next year, so when you expect this €160 million consolidated and it will potentially have a double size from this year? Thank you. Mark Reid I'm sorry. The line was really bad. Let me try and if I don't get the question. In terms of disposals, as I said earlier, I think to a question, we are in process for 85% of the now uplifted €500 million, right? and so, that means almost half of it is actually in what I would call a negotiation phase, the other 40% is in a process, and the remainder, the small part of it, is in planning and is not going to take three years to execute. So I think in terms of and I'm sure you understand, running these processes can take time and the ability to forecast when they will close is difficult. So I think that's what I would say on that first part. On the Fiberklaar, again, the Fiberklaar cash CapEx, I think the question was around the €160 million a year and was that appropriate level for the next few years. I think the answer to that is yes. Thank you. And we'll now take our next follow-up question from Joshua Mills of BNP Paribas Exane. Please go ahead. Joshua Mills Hi, guys. Thanks. A couple of quick clarifications. On Slide 18, I just want to triple check. So there is a difference, if I'm correct, between the three cash flow definitions on the middle chart, which do include asset proceeds, and then the one on the right-hand side, which exclude any M&A and asset proceeds. If you could just confirm that the right-hand chart doesn't include anything of M&A, that would be helpful. Secondly, I know you gave some disclosure on how many of the Fiber lines are built through JVs in the presentation on Slide 10. Could you maybe just give us an update on how many homes have been built by Fiberklaar already within the, I think, 280-odd million, which the 12% of the 2 million would suggest? That would also help us do some maths on the CapEx. And then finally, I'd like to come back on my initial question about the reason for reconsolidating the joint venture at this point. I'm more interested about whether you'll do this again. And if so, what would the justification be? How do you cut -- how do you weigh up the benefits of deconsolidating these Fiber builds, as you clearly set out a strategy to do three years ago versus buying them in now? Is it simply a change of control clause and something to do with the relationship between you and Fiberklaar, which meant when you did this deal with Telenet you have to do this or has something fundamentally changed in your thinking about the benefits of fully owning these networks rather than doing the joint ventures? I just really want to understand whether this is something that will come back with Wallonia and some of the other rural areas? Thanks. Mark Reid Yeah. So, Joshua, let me talk about the slide and the earnings. So I think on the slide on the left, we clearly provide a walk from our adjusted free cash flow in 2024, which, again, includes divestment, right? And we've had this discussion several times, so that includes divestment. And then, we walk that from the inclusion of Fiberklaar and the eventual acquisition of, right, Route Mobile, which gives us our reported free cash flow. On the right hand side, again, two nuances there. The free cash flow 2025 to 2027, as we said in the notes, it includes the divestment. It clearly says that scale up divestment programs from €400 million to €500 million to support the free cash flow level. And then, again, it's -- why we're so confident in being able to kind of meet the dividend coverage is that, we've got, as I said, 85% visibility of the divestments to support that free cash flow. And that free cash flow clearly, because we're taking Fiberklaar on the balance sheet during that period, is why you're seeing, it being negatively affected and then offset by the dividend. On the 2028 to 2030, we have no divestments in there. It's purely organic. And again, I think, I mentioned that earlier in the period, from that period onwards, we purely have organic free cash flow growth from the business. So hopefully that's clarified that point. Other questions? On the homes passed on Fiberklaar joint ventures, again, we haven't disclosed that number. Again, I think, you can see the total joint ventures, and again, Fiberklaar is probably the lion's share, is probably the way to think about it. So hopefully that points you in the right direction. And then on the reconsolidation of others, Guillaume, do you want to take that question? Guillaume Boutin I think, I try to give you a bit of where we are. I think, again, what happened in the north cannot be extrapolated on the south. And why we wanted to gain ownership of Fiberklaar in the north, because you have that split in between the two players, the split in between Wyre on one side and Proximus on the other side. And we wanted to make sure that we control our fair share of the network, because we believe that the value creation of controlling that network going forward is going to be massive for us and that's why we decided to control 100% of Fiberklaar. In the south, again, the situation is really different. We are in a situation where we have a share of network ownership that is already quite significant and it might not be that we want to come to the same conclusion in terms of we need to own 100% of Fiber JV in the South, because we already are in a very sound situation in terms of network ownership. As you know, network ownership for incumbent is important. Mark said it as well. And so we want to make sure that we own a large majority of the Fiber networks of the country, including the part of the country where we can compete on infrastructure. So including Zone A, Zone B and Zone C, we want to own a strong majority of that network for our customers and that's the plan we are holding out. In the north, we decided to get 100% ownership because we wanted to secure the right ownership for Proximus on the long-term in terms of Fiber plugs. In the south, if you take the ownership we already have today, we are in a very good situation. I'm not sure that we want to increase that or to improve that situation. I think at least it's not something that I foresee in the near-term. Thank you. And we'll now take our next follow-up question from Justin Funnell of Nextgen Research. Please go ahead. Justin Funnell Yeah. Thank you again. I suppose it's the same question that others have asked, but in a slightly different way. Just can you explain why you're buying Fiberklaar now, why you're buying the 50% now? Why not wait for the regulatory review to be completed? It feels like there was some sort of technical reason why you had to buy it in, but maybe that's wrong. And secondly, on the asset disposals, the €500 million, I guess, some of these assets you're going to be leasing once you've sold them. It might be perhaps the data centers. Is there a lease cost that we should be thinking about versus the €500 million of cash in? Thank you. Mark Reid Justin, let me take the first one. I mean, there are different flavors of that, obviously. So maybe let me take the headquarters building. I think we've talked about this before. We -- the plan for the headquarters building is to dispose of 100,000 square meters and shrink to 42,000 square meters, something like that. So clearly we get -- that type of transaction, we get a cash in. But we also, because of the operational synergies, we actually end up in a total cost of ownership with the lease that's actually, thereby, in terms of the actual operation of that entire building prior to that. So, there's elements where there are clearly operating costs or lease costs that come back in. There are also elements where that's not the case, where there'll be clear straight disposals and no lease back. So I think there's -- in that €500 million, there is a mix of that type of activity. And again, in the free cash flow projection we've given you, that is all worked in. So I think there's no additional lease costs that you should think of on top of this, of these free cash flow projections, given the €500 million divestment. On Fiberklaar, why now, Guillaume, do you want to do that? Why don't you take it? Guillaume Boutin I think you take it. So, I say ownership on networks is important for us. I think for us, because of that deal, which is likely to happen, very likely to happen, because we've got a good conversation with the regulator, because we've got a good conversation with Liberty, because we think that it makes sense for all parties to get there. I think this is something that we trust is going to be raised in the coming month, because at the end of the day, there is not a lot of other options for all players to get to that collaboration situation. And then with -- if we step back, if we look at the complexity to get to this kind of outcome, I think it made a lot of sense to have three partners around the table, Liberty, Proximus and the regulator with 100% aligned incentives. I think the chance of a better outcome for us was and is higher in that situation. And the step where we are today, where we have a publicly announced MoU, where you have support for that deal coming from all angles of the country, from politicians, from regulations, also from Wyre and Telenet, but there was also -- we're also extremely pleased by the announcement of yesterday. I think we are creating something unique, but we want to get long term benefit from that situation. So for that, we want to be exposed as the network owners to the benefit of that deal. That's why we wanted to secure the fact that we get the right ownership of the Fiber networks in the north of the country. Again, the situation is different in the south, and I will repeat it, there is no starting points are different. So outcomes might be also different and there is something that you should really consider living that core. So that's a bit what I wanted to see. And we think we have a good deal, we are well positioned to meet the value creation that we have set -- target that we have set to ourselves. The fact that we own Fiberklaar today is also a good thing for learning the discussions and you can see obvious reasons for that. And again, the deal is something good for everyone. For customers, and that's something that we don't talk a lot about today, but the deal is also the way for us to secure access to gigabit networks for all of our customers. And today, if you look at the situation with today, that was the case. So, now we have secured that for our customers in Flanders. Again, it is good for the country and politicians, I think, of all part of the spectrum -- of the political spectrum are behind that deal. It also creates a condition to discuss whether the collaboration could be even broader and we need also a bit in other parts of the country. That is a question that could be asked also by politicians at some point, because we have opened the way for a Fiber collaboration. Why limit that collaboration to only part of the country? A question that needs to be also discussed in the coming months. And as I said, it's also win for our partners. So, I think this is something we -- which is value that maximizes our chances to extract a lot of value from our Fiber investments. There are no further questions. So I'll hand back to your host to conclude today's conference. Thank you for joining today's call. Nancy Goossens Thanks. I just wanted to say thank you to all for your questions. Should there be any follow ups, as usual, you can reach out to the investors. Thank you. Thank you for joining today's call. You may now disconnect.