Mike Fries – Chief Executive Officer Charlie Bracken – Executive Vice President and Chief Financial Officer Tom Mockridge – Chief Executive Officer, Virgin Media Eric Tveter – Chief Executive Officer, Liberty Global’s Central Europe.

James Ratcliffe – Evercore Ulrich Rathe – Jefferies Daniel Morris – Barclays Jeff Wlodarczak – Pivotal Research Group Jonathan Dann – RBC Ben Swinburne – Morgan Stanley James Ratzer – New Street Research Akhil Dattani – JPMorgan Carl Murdock-Smith – Berenberg.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global’s Second Quarter 2018 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 expressed written consent of Liberty Global is strictly prohibited. At this time, all participants are in listen-only mode.

Today’s formal presentations can be found under the Investor Relations section of Liberty Global’s Web site at www.libertyglobal.com. After today’s formal presentation, instructions will be given for a question-and-answer session. As a reminder, this investor call is being recorded on this date, August 9, 2018.

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 Private Securities Litigation Reform Act of 1995, including the company’s expectations with respect to its outlook and future growth prospects and other information and statements that are not historical facts.

These forward-looking statements involve certain risks that could cause actual results to differ materially from those expressed or implied by these statements. These risks include those detailed in Liberty Global’s filings with the Securities and Exchange Commission, including its most 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..

Okay, thank you, Operator. And welcome everyone to our second quarter investor call. As usual, Charlie Bracken and I will run through the slide deck summarizing our financial and operating performance, and hope you can get your hands on that.

And then during the Q&A that follows, I’ll be sure to get the rest of the senior management team engaged in answering whatever questions you may have. So I’ll begin on Slide 4, where we lay out main takeaways from what we believe was a strong quarter operationally and strategically.

One quick footnote right upfront, you’ll notice throughout the presentation that we’re showing results for both the Full Company, similar to what you’re used to seeing, and for what we now call continuing operations, which excludes the businesses that have or will be sold.

And in both cases we generate around 3% revenue growth in the quarter, and with operating cash flow growth at 3% for continuing operations, and nearly 4% for the Full Company. Both OCF growth figures were negatively impacted by some one-offs in the prior year, which Charlie will cover along with plenty of background on the financial results.

Not surprisingly, most people are focused on our announced transaction with Vodafone involving the sale of our operating businesses in Germany and some smaller Eastern European markets for $23 billion, around 11.5 times OCF, and from our perspective that deal is right on track. And of course the only condition to closing is regulatory approval.

As you would expect, several meetings with the competition authority in Brussels have taken place. And we expect a formal filing with the commission soon. And this deal will be decided by the EU, and at this stage we do not see any obstacles to that approval, and are confident that the transaction will close mid-2019.

In the meantime, you would’ve seen last week that we closed on the sale of our Austrian business, the T-Mobile, for $2.2 billion or roughly 11 times operating cash flow. This was also a fixed mobile merger, of course, which the commissions cleared in a Phase 1 approval, by the way, with just seven months from signing the completion.

As we announced last week, net proceeds after repayment of the debt that we attributed to Austria were $1.1 billion, and we’ll allocate about half of that to buying back our own stock, and that $500 million supplements our $2 billion share repurchase program, and can be used any time over the next 12 months.

Operationally, Virgin Media, our largest business, continues to deliver strong results. In fact this was our best Q2 ever, with over 4% revenue growth and 112,000 net adds. I’ll provide more detail in a few moments, but needless to say, our investment in digital, CPE upgrade and talent are paying off.

And speaking of talent, I’m sure you’ve also seen that we’ve made a number of key announcements on the leadership team, all of which are focused on ensuring we continue to execute well operationally.

I’m particularly excited that Lutz Schüler, who of course was CEO of our German business for the past eight years, will be joining the Virgin Media team as Chief Operating Officer next month. Lutz is an outstanding executive who delivered consistent growth and generated significant value for us in Germany.

He’ll bring a whole new level of marketing energy and operating focus to our largest business, and I couldn’t be happier that he’s staying in the family. After quite a search, I’m also excited to announce the appointment of Enrique Rodriguez to the CTO position.

Enrique is a seasoned media and telecom executive who’s already hit the ground running for us. He’s worked in hardware and software across geographies and sectors, which is exactly what we need right now as we try to evolve our video platform, driver broadband, and optimize our capital spend.

And then recently we announced that Severina Pascu will become CEO of our Swiss operation with Eric Tveter remaining Chairman and overseeing the rest of the Eastern European businesses.

Severina has been one of our strongest operating executives over the last 10 years, and is going to bring a fresh perspective to arguably our most competitive market right now. She’s done it before, and she and Eric are a great team.

Lastly, we are confirming our full-year guidance targets today for both the Full Company and our continuing operations, and Charlie will walk through those numbers in a moment. So we’re happy with the quarter overall. Our M&A deals are on track. We’ve upped the buyback.

The business delivered solid operating results, with Virgin Media leading the way, and we’re confirming guidance. With that, I’ll jump into some operating updates, starting on Slide 5, with subscriber growth, which was strong in the second quarter at 148,000 net adds for the group. That’s up from 66,000 in the first quarter this year.

And as in prior period, subscriber growth varied by market, with Virgin Media by far our best performer, at 112,000 net adds, and Switzerland experiencing another tough quarter, and I’ll talk about that in a moment. Across all markets though broadband continues to be the engine of our business. You’ve heard that theme from us for a long time now.

We’ve added 400,000 net new broadband customers in the last 12 months, propelled by our triple and quad-play bundles of course, but anchored more than anything by our relative speed advantage over the telcos. Today, our average speed across 15 million broadband subs is 140 megabits per second, with 72% of the base at 100 meg or higher.

And we’re making great progress in our gigabit roadmap, with services already launched in Germany. Now in addition to broadband speed we’re seeing a meaningful benefit in sales, and churn, and MPS as we rollout our WiFi ecosystem for the home.

This has been a game changer for us, with over 50% of our broadband customers using our fast and powerful Connect Box, and our WiFi boosters and WiFi app rolling out as we speak. Now, on the bottom-left of the chart, you’ll see that video losses in the quarter were 30,000, and that was our best result in four quarters.

As we’ve discussed many times, and I think it’s worth pointing out again, the European pay TV market doesn’t face the same intensity of competitive pressure as the U.S. Our markets are broadly characterized by lower programming costs, lower retail prices for video, a large linear TV audience base, and inconsistent OTT penetration.

In fact, we gained 45,000 video subs. Virgin Media, as a result of new three-play bundles, footprint expansion, and the success of our V6 box. And just as we’re doing with broadband, we’re working towards one video ecosystem with a common 4K cloud-based box, go-apps, OTT content integration, and a sophisticated UI.

Now one last point in this slide about B2B, which continues to generate double-digit revenue growth for us, and that’s a fifth straight quarter, and SOHO was again the core driver, with 16% revenue growth. And we continue to see an opportunity to grow share in that market, particularly in the UK and Switzerland.

Now, as usual, we want to be sure to provide a more detailed look at Virgin Media which, as I’ve said delivered another strong quarter operationally and financially.

As you’ll see on Slide 6, total net adds in the quarter were 112,000, but materially from the prior few quarters and our best Q2 ever fueled by the UK, which actually added 120,000 net new RGUs.

There were lots of drivers at work here, as you would imagine, including new triple-play bundles at 100 and 200 meg, attractive 12-month offers, a new TV ad campaign, and our third successive quarter of reduced churn. We also saw pickup in growth in our existing non-Lightning footprint, which represented about 30% of our RGU net adds in the period.

And just as importantly, ARPU grew 1.6% for the second straight quarter, reflecting better execution of the last price rise, which we’ve talked about all year, as well as a more disciplined approach to acquisition and retention discounts, and better management of our base through programs like our V6 set-top and Hub 3 WiFi routers.

On the right-hand side, of Slide 6, you’ll see the latest update on Project Lightning in the UK and Ireland, which continues to deliver growth and attractive returns. We’ve now built 1.3 million premises and connected 280,000 customers, representing over 650,000 RGUs.

Q2 construction volume was relatively stable, at 118,000 new premises, and reflects a continued focus on cost-effective build opportunities.

I think it’s worth pointing out that new legislation in the UK will give broadband providers better access rights, allowing us to target more MDUs, which together with improved network planning and build commitments should help reduce our costs for premise going forward. On the bottom-right, you’ll see our typical penetration chart.

And just as with construction cost, penetration rates vary with the type of build, which is why we’ve highlighted the box on the right-hand side of that. As we’ve indicated all along, our 2015 cohorts included a higher volume of low-cost technical upgrades, and those are homes that are generally harder to penetrate.

So as a result, the reported numbers here for territories we’ve been marketing for three years look a bit lower. And in fact if you strip out the impact of those technical upgrades, our 36-month penetration would be over 40%.

So as we stand back and consider our key metrics for Project Lightning, namely ARPU, penetration, margin, and cost per premise, we continue to see attractive returns, and we like this general pace.

Now before I hand it over to Charlie, I’ll touch base with you briefly on our continuing operations, Belgium and Switzerland, as well as our Dutch JV with Vodafone. As we’ve highlighted before, each of these businesses is facing some form of competitive pressure in either fixed, or mobile services, or both.

And you can see that in the subscriber and revenue results, but we’ve got strong teams in each country who are managing through the current environment reasonably well. And each of these companies generates significant operating and free cash flow, which can be used to both grow the business and deliver capital returns.

So let me start with Belgium, in the left of Slide 7. This is our most advanced fixed mobile market with over 40% FMC penetration of one sort or another across the base. It’s also where we’ve rolled out our most advanced converged product, called WIGO, which now reaches over 350,000 subscribers or 16% of customers and generates great ARPU and MPS.

And as we’ve discussed before, we’re facing some significant regulatory pressure in Belgium, including wholesale access and new definitions of the broadband market, and the potential for our fourth mobile operator.

It’s a highly politicized environment, and we’re doing everything we can to ensure they don’t run afoul of EU standards, and that the commission holds them accountable whenever possible.

But despite the headwinds and relatively flat revenue and fixed RGU adds, Telenet generated 9% OCF growth in the quarter on the back of mobile synergies, in particular the migration of MVNO customers to our MNO platform.

In fact, the strong cash flow outlook for the business supports the recent decision to declare an exceptional dividend of €600 million which of course Liberty will benefit in proportionately. Moving to Switzerland, we are currently in the midst of a pretty tough competitive environment there, I think we discussed many times.

During the quarter, we lost 54,000 RGUs, about two-thirds of which were video. A big part of the focus for us right now is on improving the TV product and with the upcoming launch of our next-gen EOS platform as well as our best-in-class user interface and cloud-based DVR.

As I said earlier, I am excited that Severina will be taking over the CEO role here. She has had a great track record with us. In fact as COO, she oversaw for recent price rise as well as our current Happy Home campaign which highlights our best in class WiFi experience and sport channel.

And both of which help drive a modest improvement in ARPU and that’s obviously good news. It’s also important to remember at UPC Switzerland continues to be a highly cash generative business with extremely attractive OFCF margins. And that provides us with some strategic optionality as the market looks to consolidate and rationalize in our view.

And lastly, you’ll see a quick update on VodafoneZiggo. Our 50/50 joint venture in the Netherlands. Just like Belgium, the name of the game here is convergence.

And the JV is having quite a bit of success with nearly 30% of broadband subs taking a mobile product and nearly two-thirds of Vodafone branded postpaid customers or mobile customers taking broadband subscription from us. Few other highlights or bright spots here, we are adding fixed broadband and enhanced video subs again.

We have been able to take reasonable price increases on the fixed customer base. And we should see some regulatory headwinds on the mobile business abate in the second half of the year.

As with Belgium and Switzerland, the JV generates significant cash flow and continues to expect total cash distributions at the upper end of the €600 million to €800 million range. Half of which accrues to us obviously. So wrapping up my remarks, I will just make three quick points here.

Number one, the M&A deals we have done make total sense for us and are highly accretive.

The Dutch JV, the sale of Austria to Deutsche Telekom and the larger sale transaction recently announced with Vodafone, they all demonstrate the premium value of our cable businesses in a consolidating European landscape, and have $0.11 to $0.12 operating cash flow.

By the way, they allow us to reposition and create value for shareholders, which is and always has been our goal here. Secondly, our largest operation Virgin Media continues generate consistent revenue and OCF growth. And we will see an improvement in operating free cash flow as we optimize the CapEx profile moving forward.

And then lastly, I am excited about the recent management changes in our corporations. We are putting the right people in the right positions to support firstly, of course, execution but also our strategic growth initiatives. So Charlie, over to you..

Thanks Mike and hello everyone. I will start with an overview of our Q2 2018 financial results on Slide 9. Here we present the consolidation results of our continuing operations and for the Full Company.

And to reiterate, Full Company results include our discontinued operations in Germany, Hungary, Romania, and the Czech Republic, and more on those transactions later. We delivered rebased revenue growth of 2.7% or $3 billion for our continuing operations and growth of 3.1% to $4 billion for the Full Company.

By reducing indirect cost year-over-year, we were able to regenerate rebased OCF growth of 3.3% to $1.3 billion for our continuing operations and 3.7% to $1.9 billion for the Full Company.

These results were largely shaped by the record Q2 rebased revenue growth of Virgin Media and the strong OCF growth of Telenet, both of which I will address in a moment. While continuing operations Q2 P&E additions were $0.9 billion which represented 28.4% of revenue and the Full Company we spent 1.1 billion or 27.4% of revenue.

And moving to the bottom left of the slide, we present adjusted free cash flow now on three different basis. Now first purely on a reported basis, our continuing operations had negative adjusted free cash flow of $131 million in Q2.

Second, we supplement that reported figure with a per forma view of adjusted free cash flow from continuing operations which assumes that the aforementioned disposals are being completed on January 1, 2018.

As specifically this incorporates an estimate of the net revenue from transition service agreements and adjusts for the estimated impact of the partial repayment of the UPC debt. But this amount is not allocated to discontinued operations in our reported financials.

On a per forma basis, we estimate that our adjusted free cash flow was $50 million higher for the reported Q2 figure coming in negative $81 million. Both of these results largely reflect the net negative impact of our vendor financing activities which was concentrated in our continuing operations this quarter.

And then finally, our Full Company adjusted free cash flow, the basis for our 2018 guidance was $250 million. This is higher than the adjusted free cash flow from our continuing operations. And that’s mainly due to the positive contribution from Germany.

I would also highlight the free cash flow results of our continuing operations are largely the result of inter year phasing impacts. And for the full-year 2018, we expect to generate meaningful free cash flow from continuing operations as part of our Full Company guidance of $1.6 billion.

From a leverage perspective, our consolidated adjusted gross debt to OCF for the Full Company stood at 5x while our net debt ratio stood at 4.9x both on the basis of last quarter annualized OCF. And we present our debt ratios on a Full Company basis.

That’s consistent with the methodology we used to calculate our respective leverage ratios for debt covenant compliant purposes. Net leverage was down year-on-year from 5.1x at the end of Q2 2017, which was mainly related to OCF growth over the last 12 months.

At June 30th, our average tenure exceeded seven years with over 70% of our debt not due until 2024 or beyond. And our blended fully swapped borrowing cost is now down to 4%.

And then finally on this slide, we believe that the current share price does not reflect the underlying value of our business and that at these levels buybacks are a very attractive use of our capital. Now, supporting this conviction, we repurchased nearly $800 million of our stock in Q2 as compared to $500 million in the previous quarter.

And this takes our year-to-date repurchases to $1.3 billion leaving $700 million for the remainder of this program. Additionally, and as Mike stated earlier, we’ve committed an additional $500 million from the sale of UPC Austria from buybacks over the next 12 months.

Turning to Slide 10, we present rebased revenue and OCF for our continuing operations. Our largest operation, Virgin Media delivered rebased revenue and OCF growth of 4.1% and 2.4% respectively. Top line growth was supported by another strong quarter of mobile handset sales.

And although these sales represent a lower margin revenue stream, we’re also seeing an increasingly meaningful contribution from project lining and revenue growth was further supported by the year-over-year impact from our Q4 2017 price rise. OCF growth was however impacted unfavorably by certain items.

The most material of which was the $24 million net year-over-year negative impact of network charge settlements. If we were to exclude this impact, Virgin Media would have been able to demonstrate a fourth successive quarter of OCF acceleration.

In Belgium, Telenet’s revenue declined by 1% on a rebased basis in Q2 driven by lower cable and mobile revenues, and in addition to customer losses, future revenue was again impacted by mobile regulatory headwinds as well as the decision to delay our annual price rise in Belgium.

However, these headwinds should begin to dissipate in Q3 of 2018 as the price rise takes effect and the regulatory impacts start lapping. Base synergies are also starting to come through and with the main driver of Telenet’s rebased OCF growth of 9% in Q2. Moving to Switzerland, our revenue declined 1.9% in the challenging market.

With the effect of competitive pressures offsetting the increases in revenue from MySports distribution fees, mobile services and B2B revenue, the 11% rebased OCF contraction for Switzerland in Q2 was impacted by customer losses over the past 12 months and the cost of the MySports platform.

These costs will begin to lap in Q3 of 2018 when we pass the one-year anniversary of the launch of MySports. Our CEE segment posted flat revenues in Q2 as modest growth in Poland was offset by a decline in our DTH business.

The 2.5% OCF decline for the second quarter at CEE was principally due to the accrual of additional costs for the reassessment of an operational contingency. And in this segment, net expenses were reduced by approximately 22% on a rebased basis.

This was largely attributable to a change in our remuneration structure whereby our senior employees can elect to receive equity in lieu of cash bonuses. On Slide 11, we provide more color on P&E additions for our continuing operations.

Now we’ve grouped this spend and there are five main categories of new build and upgrade CPE Product & Enablers, capacity and baseline. And as most of you would know, our capital intensity has ramped since commencement of our New Build program back in 2019. And that’s in addition to significant investments in the network and customer experience.

However, a number of these large scale initiatives, which is the mobile transformation project and the B6 upgrade within Virgin Media and the modernization of the Belgium mobile network has since completed. And so we would therefore characterize 2017 as the peak year of capital intensity.

And this is showing the chart, which shows a CapEx to sales ratio of 28.4% for Q2 29, ‘18 as compared to 34.4% for the comparative period in 2017. This is also partly due to the lower volume of lightning premises and the change in build mix which Mike described earlier.

With regards to phasing, as is evidenced by the trend in Half Two, the second half of the year tends to be slightly more capital intensive than the first half. And we would expect 2018 to be no different. So as a result we’re reiterating our 2018 P&E additions guidance of around $4 billion for continuing operations.

But this still reflects a reduction in capital intensity as compared to 2017. We’re not in a position yet to provide specific guidance for 2019, but we are targeting further reductions next year. However, we continue to believe that new build is amongst our build uses of capital. And we will continue to build to the extent that the returns make sense.

The total for the other four categories excluding the new build and upgrade stands at approximately 24% for the year-to-date. And over time we expect to drive this number lower. And this will be achieved in part by ensuring that central CapEx is appropriately sized in relation to our continuing operations.

So moving to the conclusion slide to wrap things up, in summary, we’ve delivered solid results lead by Virgin Media while we’ve reported record Q2 RGU additions with accelerated growth in both existing and new build footprints. The synergies from Telenet’s base integration are kicking and we expect to deliver even stronger OCF growth in Half Two.

Despite the challenging nature of the Swiss market, we continue to invest in our customers’ experience while considering our strategic options.

Having successfully completed the sale of our Austrian business, we are committing an additional $500 million into our buyback program over the next 12 months while we also remain committed to our original $2 billion target for 2018. And finally, we’re also able to confirm both sets of full-year guidance as shown on this page.

And with that, Operator, we’d like to turn it over to questions..

Thank you. [Operator Instructions]. And we’ll go first to Vijay Jayant with Evercore..

James Ratcliffe for Vijay. Good morning, it’s James Ratcliffe for Vijay. Two on UK if I could; first of all, can you talk about the ongoing dispute with UKTV and how you’re approaching that and particularly any color around what the OpEx savings associated with not carrying the content is and any sub loss impact of not having this has.

And secondly, voice in general in UK was very strong in the quarter.

Can you talk about what drove that and update us over what the economics around the voice services are at this point, thanks?.

Hi, James, we got Tom and Robert on too. And I’ll ask them to chime in here. But I’m pretty sure we’re not going to say much about the UKTV dispute since that’s an ongoing negotiation. Clearly, there would be savings. Clearly, we think the content was overpriced and we’re sort of in the midst of those conversations as we speak.

And I will tell you without being specific that the impact on subscribers has been minimal. In terms of voice, Robert or Tom, you want to deal with that? Margins are basically 100% [ph] in that product, yes..

Yes, I will chip in there. I think what we are seeing is a couple of things there. And particularly, we have made a concerted effort as I think is seen through the numbers to go back into the triple play and where we can quad play. So we have gone for the more complete customers and a part of that of course is the telephony bundle.

So we are growing that segment of the business quite consciously. But we’re being very much assisted by the fact that Virgin Media has now a significant voiceover cable or 21st Century Voice as we call it in the marketplace, digital home telephony product, which is making a significant difference, particularly, in the lightning areas.

When we didn’t have that available we often found we couldn’t sell at all in Lightning because customers still want that landline. And so we’re growing that segment of the business. And whilst we are seeing home telephony usage declining at the margin, it’s a moderate decline. And of course we’re picking up the landline revenue.

So there’s still a very significant revenue stream for us in home telephony..

Great, thank you..

We’ll move now to Ulrich Rathe with Jefferies..

Thank you. Two questions, one is you mentioned the strategic optionality in Switzerland; I’m wondering what are the building blocks to Switzerland back to growth organically beyond MySports? Second question, coming back to the intake in the UK, there was high telephony intake; there was also high video intake.

But actually the broadband intake was flat quarter-on-quarter and year-on-year. So I was wondering is the broadband intake sort of now settled down at this level or is there anything going on that would suggest 2Q is an unusual quarter on broadband within this very, very strong overall MDU intake? Thank you..

Tom, you guys can plan for the broadband question on this. In Switzerland, listen, we’re not going to say much about rationalization here. I’ve made some remarks in the past. Needless to say, we have a pretty strong turnaround plan for Switzerland. It doesn’t happen overnight, it takes multiple years.

But we’ve been in these positions before, you remember Romania or Holland. And I think the new leadership team, in particular Severina are going to make a bid difference in that regard. Yes, MySports has an impact, will continue to have an impact, but that’s not the main driver.

The main driver is getting the video business stable and growing again, and that’s a function of many things, not the lest of which is getting the EOS box rolled out, making sure the platform is stable, reliable, and that people are getting what they’re requesting, which is state-of-the-art video platform and video service.

That’s probably the number one thing. We have a great broadband product; it’s the fastest in the market reaching the largest number of people. Mobile is making a dent, and the B2B business is solid.

So it’s really, from our perspective, about getting video most importantly back on track, and that is as much as anything a function of product – quality of the product in that competitive market. On the rationalization front, I think we’ve controlled that process.

The market does require some consolidation, and then any observer would give you the same observation. And in the end we’re sort of the fulcrum asset there, so we’ll see what opportunities arise and what we can get done. But fundamentally we’re focused on organically turning the business around.

Tom, you want to talk about the broadband in the UK?.

Yes, thanks, Mike. Look, on UK broadband the issue there, I think, is there’s the flip side of our pursuit of ARPU and high quality triples, as we’re focused on that. It doesn’t mean that we haven’t gone down to the bottom of the market to the extent that other operators might have.

If you look at the UK you can see the broadband additions by each of the other two major, Sky and BT, are certainly below our number. And there’s been a fair bit of activity right at the low end with some of the other operators coming in. In our experience in the past, this has tended to be transitional, but this is business we did – we want to chase.

Very easy to sell a good product cheaply at a low ARPU, so we have been focused on the more quality end of the market, driving our overall ARPU up and getting our revenue and lower churn out of that.

We do see ourselves as being assisted going forward by these new rules that have been implemented in the UK around the ability to market broadband speed. So we now have a top speed of 350, and due to the great network we have and the high-quality router, we can go out there and say that we can actually offer 362 meg across that network.

All the other operators on the BT network are still stuck at 80, and BT itself can only say that it has limited availability for 100 meg. So the new rule prevents you marketing a speed unless you can offer it to at least half of your network, which of course puts us in a much, much more advantageous position against those competitors.

So fundamentally I think on broadband we just very deliberately target the full ARPU customers, and we’ve always got that option to dive down and pick up some cheaper ones. But we’re better off doing it when the market is not being fed at the lower end..

Thanks very much for both comment, thank you..

We’ll hear next from Barclays’ Daniel Morris..

Good morning. Thanks for taking the question. Just another question on the UK around the Lightning run rate we saw in 1H, clearly demonstrates some disciple around the cost.

And I just wondered if you can talk a little bit more about what’s changed in your thinking around the UK Lightning build and how much things might change again as the regulation shifts, as you alluded to in the opening remarks? And related to that, is there any reason the 2H trends on Lightning would be very different to 1H? Thank you..

Yes, I think as I said in my remarks, we kind of like this pace that we’re building at now. And it’s driven, most importantly, by just optimizing the capital cost and ensuring that the returns stay where we want them to be. We could build faster. I think Tom and the team could easily ramp up.

But I think from where we sit today this is a steady pace, and one that ensures we’re driving the lowest cost per premise and attacking and penetrating the most attractive areas of the market. And that’s going to continue. So we’re not giving guidance on Lightning, you know that. But as I said in my remarks, we like this pace.

And we don’t see anything that would probably push us to increase the pace and really no headwinds that would slow that pace down materially. I think the trend going forward is going to be lower cost per premise as we look at MDUs, as the legislation we referenced gives us an opportunity to penetrate those markets more aggressively.

And as we just get smarter about our own build commitments and strategies. So I think it’s steady as she goes, and I don’t see a material change one way or the other. It’s a great use of capital for us. It’s driving significant returns, it’s driving growth, it’s driving EBITDA. So we don’t see that changing..

Thank you..

We’ll move now to Jeff Wlodarczak with Pivotal Research Group..

Good morning. I wanted to follow-up on Switzerland. It’s obviously gotten a lot more competitive. How much of the 2Q RGU result was related, as far as you guys can tell, directly to Salt’s aggressively priced rollout of that triple-quad-play offer? And then just to confirm, your overlap with Salt these days is about 30%.

And then what’s the outlook for Salt being able to materially expand that footprint by wholesaling more FTTH from municipalities. And then I’ve got one follow-up..

Yes, I would say, and I don’t know if Eric is on he can chime in here or Severina. We would say that the impact of the Salt triple-play rollout or quad-play rollout was minimal. I think they would say the same thing if they had their earnings call, they have – that is roughly the footprint they reach.

It’s an aggressive product, clearly much cheaper than everybody else in the market. But it doesn’t appear to have had much of an impact. Other operators in the market are saying roughly the same thing; we’re not seeing it have that material impact. I’ve talked to Sever twice in the last few weeks, you know, probably say the same thing if asked.

And Eric, are you on? You want to take the second question?.

Yes, I am. Again, as Mike said, we’ve seen limited impact of their launch at the moment. And I believe as we rollout our EOS platform, which Mike mentioned, that will allow us to reverse the trends on the good year side. Also, we’re planning improvements to MySports in the new season which starts in early September.

And then earlier this year, through the base management efforts, we have a stabilized ARPU. And as Charlie said, ARPU modestly grew in the quarter. So I’m optimistic that we’ll be able to battle in the coming months with the new launch of the TV product..

And then, Mike, just wanted to get your latest thoughts on what you plan to do with the $12 billion or $13 billion or so you’re expected to receive from the VoD transaction?.

Yes, thanks Jeff. I mean we’re not adding a whole lot of color to what we’ve said in the past, which is it’s quite a ways off. And so we’re trying to be sure we’re not prematurely showing a direction one way or the other. I can say a couple of things though.

I think if you look at what we’ve done in the past, that’s probably a pretty good indicator of what we’ll do in the future. If you go back over the last five, 10, or even 15 years, I think you’ll find that we’ve been pretty consistent. We’re either putting our capital into buyback; we’re putting our capital into acquisitions. In fact it’s about 50/50.

If you had – and we have called those numbers up, about 50/50, and we do that just based on returns, what kind of returns are we generating on our stock, what kind of returns are we generating with acquisitions.

On the M&A side, looking if we could do more deals, like Germany, where we can take €2 billion and turn it into €13 billion, we’ll do deals like that. And I think if we can find transactions or opportunities where our track record, our market knowledge, our operating and technical expertise can be put to work, we’ll do things like that.

But on the other hand, if we don’t see those opportunities with the stock where it’s trading and the valuation we see it’s likely we’ll be focused on buying back stock or finding a way to reduce equity. And that shouldn’t be surprising. I understand there’s some preoccupation with this, I totally get it.

If were in our shoes I think you’d probably say what I just said, which is we’re going to try to keep our options open. It’s quite a ways off. We don’t know where interest rates will be, where market multiples will be, where we’ll be, where operations will be. So we’re going to – but I think we’re not going to change our stripes here, guys.

And that’s the main point. And I think, as I said just at the outset here, what we’ll do going forward probably has a lot – looks a lot like what we’ve done in the past..

Great. Thanks, Mike..

We’ll move now to Jonathan Dann with RBC..

Hi there. Two questions if I could.

The first, could you just, Charlie, how much is the vendor financing drag that’s been incurred in the first-half that you’d expect to swing positively in the second-half? And then secondly, just on Project Lightning, are most of the homes added in the UK or is there any sort of material change in the rates in Ireland?.

Charlie?.

Yes, on the vendor financing, as you probably know, for us it’s very cyclical. In the first-half of the year we’re typically unwinding the vendor financing at the back end of – at the backend of last year, and then we pulled it back up in the second-half.

I think net-net you should see a net increase in our vendor financing in the low hundreds of millions year-on-year. So I think you’ll see a reasonably significant swing in the second-half. And that’s pretty much on track based on what we’re looking at today..

Yes, and the new build in Ireland is relatively small, but Tom or Robert can respond to that..

I’ll just add we have tailed off a little bit in Ireland essentially because we had local authority governments asking us for fees that we didn’t wish to pay, so we have moderated the rate of build there. But of course it’s relatively small compared to the UK, but we have begun to tail off a bit there.

So if you mention Ireland we would point out our strong business performance in Ireland around both the cable business and the TV3 business, both of which are going very well..

Excellent. Thank you..

We’ll hear now from Morgan Stanley’s Ben Swinburne..

Hey, good morning guys. For Mike or Tom and the UK team, just looking at the B2B is mobile businesses there; under the hood on mobile I think the service revenues are kind of flattish, B2B low single digits.

What’s your expectation for the ability to accelerate those growth rates as you look in to kind of the next 12-18 months, because obviously those are decent sized businesses, particularly the B2B piece and at Virgin.

And then just maybe one follow-up on the ITV deal, Mike, is this a step towards sort of a re-trans regime either in the UK or Europe, or do you view this as fundamentally different and part of a more offensive partnership with ITV to sort of differentiate Virgin’s offerings in the UK?.

Well, I’ll let Tom work on the B2B mobile question; I’ll just quickly address the ITV question. We really think the deal we’ve done with them is a positive one. Fundamentally it gives us more rights, access to more content. It’s a very cooperative relationship we’ve developed with them and then we’ve had with them.

We’re not either of us – neither of us are speaking about the terms of the transaction financially, but we will repeat what we said publicly, which is we’ve reserved our position on the issue of re-trans, and I believe they’ve done the same.

So all we can say, and I guess if I had to answer you more directly, I do not think it’s trending towards that. And I think we’re pleased with the outcome, and we feel like we’ve reserved our position. But it is an important relationship.

And ITV of course has a very strong position in the content market in the UK and we want to have access to their content, SD and HD, 4K, you know, the ability to get all linear rights, and all of that was achieved on what we believe were traffic jams for both parties. So, hope that helps; that’s helpful.

Tom, do you want to talk about B2B in mobile?.

Yes, thanks Mark. B2B has been a consistently strong earner for the Virgin Media business. It’s been very well-supported by Liberty Group both in product Samsung and in capital and knowledge. Peter Kelly who leads that business has expanded its discipline on the Soho areas, and we see continuing growth in B2B and a continued focus on it.

I think they have a track record there of being able to acquire small businesses that are key to WiFi, which I think we are paying back on that well within the two years by the time it was integrated into the business.

So we see that as a continued growth area in a broader market, where businesses are of course looking at their own expenses, and so there is different competition in that area. But basically we have the advantage of not being BT, and operators are looking for alternative supplies.

On the mobile business, yes, look, we have had some service revenue pressure, and I think probably less than the bigger operators. I think we are transitioning that business entirely to a contract business and working out prepay.

We have moved the business increasingly on to our IT stack, and so we’re getting a better service and better operations on that.

And the handsets, yes, have been a significant element of our revenue, but also significant element of margin, the fact that we sell people a handset with a good service is all part of effective mobile business and solid profit contributor, and also big part of their ongoing increase in FMC, which again has picked up in this quarter.

So we do see combination that are continuing to be a good contributor to Virgin Media overall, both in the UK and in Ireland..

Got it. Thank you, guys..

We will move now to James Ratzer with New Street Research..

Yes, thank you very much indeed. I have got two questions please. First one, just reflecting on the past three months or so, I mean it looks like the stock market has taken quite a negative view to the German transaction you did last quarter, you’ve responded in a positive way up in the buyback rate by around 60% or so.

I mean given that kind of disagreements, I have seen the way you have reacted to investors, I mean does that affect your thoughts on your future M&A strategy in general, I mean given that kind of different opinion would you consider following Elon Musk’s footsteps and consider taking the company private at this level? And then second question just on the pace of build and lightning, you mentioned you are comfortable with that.

Does the 4 million target long-term still remain in tact, I mean, if so, should we be thinking that that’s still another kind of six years of build ahead of you on that project? Thank you..

Well, I’m not going to take bate on the first question. I will try. Yes, I appreciate that. I think our approach to M&A and our approach to buyback has been pretty consistent over the last 10 to 15 years. I don’t see us operating or managing or allocating capital in a materially different way going forward. We are who we are.

But I think we will look creatively and honestly at the best rate of return and the ability to create value for shareholders.

And that – and as I said a couple of times now, if we see our business trading at these sorts of levels and we believed in the growth of our underlying continuing operations, particularly Virgin Media, which I think we do seriously believe in, as well as having great strategic optionality in the other markets that we operate in, we will go and look hopefully pretty hard at how to own our own business.

I’ll say that way. On the other hand, we are operators first, and we have had a very you know, I think terrific track record of buying and building businesses, and when appropriate or when attractive, monetizing or consolidating or finding ways to create value from those businesses. So that’s what we do. And we have I think great experience in Europe.

We have pretty, as I said, strong track record in making smart acquisitions at appropriate and attractive prices. And that’s something we will continue to do. On the pace of build, Tom, you can chime in here. Those 4 million homes still are out there, so to speak.

And so long as we are having success and the success we are already having and churning of returns we know exist. And I think we are realizing it would be foolish for us not to look at new build as a great source of book growth and high return capital investment. So we are not going to give you a long-term guidance on that.

We have built 1.3 million homes. We have built more homes in the UK market than anybody else. So, I would be cautious as you look at these business plans from other operators in the market who have talked a pretty good game but haven’t done much.

So we are way ahead of the rest of the market in terms of understanding both where and how to build these homes and how to make a return on them. So we want to take advantage of that knowledge, that experience.

And I think if we are plough ahead, we are not going to give you a longer-term guidance on whether it’s 3 million or 4 million expect to say so long as we are getting great returns, it’s a smart use of our capital..

Great, thank you..

We’ll move now to Akhil Dattani with JPMorgan..

Hi, thanks for taking the question. The first is just I guess to pull together some of the comments you have made on UK and I guess in reference to the future telecom infrastructure, it came out a bit earlier. I guess, Mike, you just mentioned I guess your skepticism around some of the build ambitions from some of the new entrants into the market.

I guess just keen to understand your broad thoughts around that. I mean the UK government seems to have pretty optimistic views around what might happen.

How are you thinking more broadly about the competitive threats and how will if it might change the landscape? And I guess linked to that you said that you would expect other initiatives the governments take in the UK to help reduce your build cost.

Obviously understand it is premature to maybe talk about numbers now, but is this something you might formalize more a bit later? And if so, when might you do that? And then I guess the second one is just a big picture question.

Your first-half OCF growth is 2.8% versus the full-year target of 4, so truly you are expecting trends to improve in 2022? Just wonder if you might be able to give us any color around kind of key markets and key sensitivities. Thanks..

Sure. Maybe working backwards we have a strong OCF growth rate in Virgin in the first quarter. The second quarter, of course, was impacted by the one-off settlement in the prior year. If you took that settlement out, we were closer to 6% EBITDA growth or OCF growth in the second quarter.

So we are trending where we need to trend in the UK I think that was your question because you started referencing UK Where we think we need to trend, there is a lot of tailwind in the second half of the year both in the UK and some of our other markets which I think we identified. So that is what supports our view of guidance.

And UK is a big part of that of course. In terms of fiber-to-home builds I mean you have all the same press release as we have.

And that’s pretty much all there is go on in terms of where people are hoping to build and the number of homes we are hoping to build I think adds up to 4 million to 5 million or something like that, that they are shooting for by 2022 - 2020, there probably be some overlap in those homes. And some of them won’t get built at all.

Not to say that the market isn’t trending towards faster mobile BUS broadband competitor. That is undeniably the case. We plan two, three, four years out. We expect to have a bit more fiber, more robust competitors and faster speeds. And that’s why we are constantly investing ahead of the curve.

And while we put so much money into our capacity and while we have already up speeds in the UK across our 50 million homes to 350 MEG plus/minus. And we are as everybody else’s in double digits for the most part. So I think from that point of view, we intend to continue to lead the way in terms of broadband speeds.

It doesn’t mean now there is more build, we won’t be aggressive. We will try to be aggressive. But I don’t think it’s going to add up to a significant amount very quickly here. And that means we have an advantage for some period of time. And we are going to take advantage of that that speed differential.

I don’t know if, Charlie, you will jump in whether we actually disclose our build cost to date or cumulatively we have been in that 675-680 kind of number.

And the reference to build cost coming to down, I think was more of a if you look at our quarterly PP&E cost per premise that’s likely to be improved over time as we get better access to MDUs, which are cheaper to build.

I think that was the purpose of that call and as we get just smarter about construction in this market as we learn quite a bit over the last three years.

I don’t know if Charlie you want to add anything to that last point?.

No, no, I think that’s absolutely right. And we’re still around that 650, I would say, slightly higher, but in our minds around the 650. And there’re also reasons to believe depending on build mix and as we obviously get better at building that should trend down, and we certainly saw that in other build projects actually in Chile back in the day.

We saw over time the trend cross – the bill cross trend down over time..

Yes, we will be at one gig. We have the ability to take the entire Virgin platform to a gig. And when we choose to do it, which would be some time probably in the next one to three years and it will be in response to both competition and the right capital allocation decisions..

That’s great. Thank you..

Thank you. We’ll take our final question from Carl Murdock-Smith with Berenberg..

Hi, thanks very much. Following up on Project Lightning again, I’m afraid. You’ve talked a lot about the third party builders there, but to what extent might you be open to possibly share in build costs and partnering with third party network builders to improve economics of rollouts as you push into more rural locations.

Is that something you’d consider, kind of improving build costs to sacrifice and market exclusivity? Thanks..

Well, I think the answer is possibly. And clearly Tom and the team have uncovered or been approached by any number of competitors who are looking at their own CapEx needs and capital needs as they intend to build and try to build out. So I think the answer is, possibly. We haven’t announced anything, and we haven’t concluded anything.

But it would be smart of us to try to create the most optimal outcome we can in this particular area. And as I said, we’re the only ones who are building at this pace.

We think the cost that others have disclosed are likely to be higher than they think and certainly if there are opportunities to reduce cost and reduce overbill and overlap, we would look at that. Right now, we have nothing to disclose on that, but we would certainly look at it..

Thanks a lot..

Okay, great. So I appreciate everybody joined in. I think as we had indicated, we thought it was a strong quarter in particular, you know, Virgin Media right on track and performing great. And we have a strong second half of the year, we think, in front of us. All the M&A deals are on track.

The Vodafone transaction, we think, is going to be a great outcome for us and looks to be received well by the regulatory authorities. And the businesses as part of that deal are performing really well on top of that.

We’ve got work to do in the continuing ops, we talked about it, we have strategic optionality in some, but more importantly, great turnaround plans in all of them. And I think the team has never been stronger. So appreciate you joining us, have a great summer, we look forward to talking to you on the third quarter call. Thanks very much..

Ladies and gentlemen, this concludes Liberty Global’s Second Quarter 2018 Investor Call. As a reminder, a replay of the call will be available in the investor relations section of Liberty Global’s Web site. There, you can also find a copy of today’s presentation materials..