Liberty Global Plc (NASDAQ:LBTYA) Q2 2019 Results Conference Call August 8, 2019 9:00 AM ET
Liberty Global Plc（纳斯达克股票代码：[LBTYA]）2019年第二季度业绩电话会议2019年8月8日美国东部时间上午9:00
Mike Fries - CEO
Charlie Bracken - EVP and CFO
Lutz Schüler - CEO of Virgin Media
- Mike Fries - 首席执行官
- Charlie Bracken - 执行副总裁兼首席财务官
- LutzSchüler - Virgin Media的首席执行官
Maurice Patrick - Barclays
Ben Swinburne - Morgan Stanley
Christian Fangmann - HSBC
James Ratzer - New Street Research
James Ratcliffe - Evercore
Matthew Harrigan - Benchmark
Jeff Wlodarczak - Pivotal Research
- 莫里斯帕特里克 - 巴克莱
- Ben Swinburne - 摩根士丹利
- Christian Fangmann - 汇丰银行
- James Ratzer - 新街研究
- James Ratcliffe - Evercore
- Matthew Harrigan - 基准
- Jeff Wlodarczak - Pivotal Research
Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global's Second Quarter 2019 Results 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 presentation materials can be found under the Investor Relations section of Liberty Global's Web site 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 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 from 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 condition on which any such statement is based.
I would now like to turn the call over to Mr. Mike Fries.
女士们，先生们，早上好，谢谢你们的支持。欢迎来到Liberty Global 2019年第二季度业绩投资者电话。此电话和相关的网络直播是Liberty Global的财产，未经Liberty Global明确书面同意，严禁以任何形式重新分发，转发或重播此电话或网播。
这些前瞻性陈述涉及某些风险，可能导致实际结果与这些陈述中明示或暗示的结果大不相同。这些风险包括Liberty Global提交给美国证券交易委员会的文件中详述的风险，包括最近提交的经修订的10-Q表格和10-K表格。 Liberty Global不承担更新任何这些前瞻性陈述的义务，以反映其预期或任何此类陈述所基于的条件的任何变化。
Thanks, operator. And welcome everyone to our Q2 results call. We always appreciate the opportunity to talk to you about our business, of course and our broader strategic plan. And today, we are speaking to the two man show. So Charlie and I will handle the prepared remarks. And then we'll engage the other key leaders at, maybe in Q&A. And I'll kick it off on Slide 3, which is entitled delivering 2019 priorities. We thought that since we're halfway through the year, it'd be a good idea to revisit the key goals we laid out for you nearly six months ago. These were the big needle movers in our minds. And by all accounts, we're making or have made substantial progress.
Number one, of course, was completing the announced M&A transactions with Vodafone and Sunrise. As expected, the deal with Vodafone closed eight days ago with net proceeds of €11.3 billion, and Swiss deal within the midst of a phase two regulatory review, and we think is on track to close in the fourth quarter. It might be worth reminding everyone that these deals are a result of purposeful rebalancing, which saw a capitalized on the strategic and financial value of our fixed broadband and video in what is a converging marketplace in Europe, and in each case generating double-digit OCF transaction multiples.
Now secondly, earlier this year, we also talked about resetting our operating model and cost structure, and that was in an attempt to reflect the reduced size of our European platform and to unleash the efficiencies, which resulted in flat OpEx for three straight years. And Charlie has a slide on this in his section. But we are right on track, if not a bit ahead of plan here on reducing our corporate costs and radically restructuring our technology services delivery platform, both of which will benefit OCF growth as we confirm our OCF guidance for the full year.
The third major priority was reducing our capital intensity as we look to optimize our recent investments in networks and products. Here we are well ahead of plan with P&E additions through June, down 25% year-over-year, reflecting a number of factors, including more efficient lighting bill cost in UK, the completion of fixed and mobile upgrades in Belgium, more focused product development and the decision to slow down CPE swaps in UK. And while we didn't provide guidance on operating free cash flow, I did mentioned on the call that we were looking at about 50% growth for the year, excluding Switzerland and through six months, operating free cash flow is up nearly 75%. And as Charlie will show, all of our op-cos are generating significant operating free cash flow margins and growth, and we are re-confirming our free cash flow guidance for the year.
And then lastly, we highlighted the importance of developing plans for allocating our excess capital. And I realized that we've been relatively quiet about that, mostly in anticipation of these transactions closing. As you would have seen yesterday, we announced our first step with €2.5 billion modified Dutch auction tender, and this represents about 24% of our cash before completion of the Swiss transaction and roughly 13% of our outstanding shares, but also bring total buybacks to €3 billion for 2019, when you include the $500 million purchase during the first six months.
Now the next slide, on capital allocation, tries to put this decision into context a bit. Starting with a cash walk that illustrates how we get from the total transaction value for the Vodafone and Sunrise deals, to our pro forma cash balance. And I'll leave it to you to review, if needed. But it shows pro forma cash of €14.4 billion or around €12 billion today before completion of the Swiss transaction. On the right hand side of the slide, we lay out our capital allocation strategy for that cash with five areas of focus and beginning, not surprisingly, with buybacks.
It should to be clear that we fundamentally believe in this strategy, having now bought back 21 billion of our shares over the 15 years. But we will continue to be prudent and opportunistic in how and when we repurchase stock. And as we have done in the past, we'll continue to balance that against investments that create long-term value. We've used Dutch option tenders effectively on several occasions in the past, some of you may remember. We like this approach. It gives us significant flexibility in how we size and price repurchases, and it's easy and efficient to execute. The plan is to launch formally on Monday next week, and to close in 20 business days thereafter. The current expected price range was set off of yesterday's close, and is expected to be $25.25 to $29 for up to $625 million of Class A shares and $24.75 to $28.50 for up to $1.87 billion worth of Class C shares. Now of course we may consider additional tender offers down the road, and we may return open market purchases or we may do neither, we'll make those decision based on the number of factors, both internal and external at that time.
And moving down the slide, it won't be a surprise to you that we continue to believe 4 to 5 times leverage is the right capital structure for us. Of course, our net leverage today is something like 3 times adjusting for the Vodafone proceeds. But on a gross basis, we expect to be at below 5 times in all of our credit groups by the end of the year. Going forward, we may consider using cash to maintain these target leverage levels. But again, we'll make those decisions at the time based upon financial performance, market conditions and things of that sort.
Now when it comes to deploying capital externally, we are first and foremost focused on our core operating markets. Remember, we still have considerable operating assets in Europe, totalling $31 million fixed and mobile subscribers, and nearly $5 billion of operating cash flow and an additional $15 million fixed and mobile subs and nearly $2 billion of operating cash flow coming out of our 50-50 JV in Holland. We are invested in these markets. We have confidence in their prospects. And we'll look to fortify or capitalize on our position, if and only if, attractive and compelling opportunities arise. This is in our wheelhouse, as I say, it shouldn't be a surprise to you.
Now, beyond our existing operations, we will be highly selective. I'll just say a few words here, because this topic seems to generate quite a bit of commentary. One, we are more interested in buying, building and operating scale businesses in geographies and sectors we understand then spreading capital around. Looking at the deals we've done over the last 15 years, they all had a few things in common. Typically, it represented long-term scale driven investments that leverage our deep technical and operational expertise and in most instances created synergies with existing business as we own. They also allowed us to optimize use of leverage, tax strategies and free cash flow. Who can't find anything that meet these criteria, we are likely to go back at the top of the page, it shouldn't be surprising, and look at our stock in our core markets. But again, we're going to be disciplined and patient here.
And then finally, we have a pretty successful ventures platform with investments that we conservatively value at about $1 billion today. These are generally smaller typically minority interest or financial positions that we believe benefit our core operations or provide strategic value or insight, or can lead to outsized financial returns. You may see us add to or subtract from that portfolio, using relatively modest amounts of capital. I just want to be sure you understand that, and we will call out these investments should they ever happen as deals for the ventures portfolio.
Now, moving to some operational updates, beginning on Slide 5. We had a disappointing quarter on the subscriber front. There is no other way to describe it. But that's not the entire story, especially at Virgin where the team has been focused on so many new strategies, mostly intended to drive ARPU and profitable growth. The top left, you'll see quarterly net adds for our base of $23 million fixed broadband, voice and video RGUs, excluding Switzerland. We've been averaging around 60,000 net adds per quarter over this period, reflecting good growth in broadband and voice and net losses and video. In the quarter this year, we saw steady video losses, but slower growth in broadband and voice, driven primarily by competitive market dynamics in the UK.
We are going to dig into Virgin results on the next slide, and Lutz will comment during Q&A, but there are few factors at work here. The UK market has definitely slowed down a bit with sales volumes off from prior period. At the same time, competition has ratcheted up, especially at the lower end of both broadband and TV. In the midst of that, virgin is maintaining a disciplined and balanced approach to customer acquisition and capital expenditure, focus on higher value customers and not chasing after growth at the aggressive priced entry-level of the market.
New model on the bottom left of this slide, you can see that we continue to grow our €5.9 million mobile subs in Europe with a strong post-pay quarter, driven by new FMC bundles in the UK where we've actually doubled the mobile attach rate, and our new WIGO bundles in Belgium, which doubled post-pay adds compared to a year ago, so the mobile business doing well.
So the next two slides provide a more detailed update on Virgin Media. Just a couple of key points here on Slide 6. The first is that we returned to modest ARPU growth in the second quarter despite continued headwinds in pay-per view and sound usage revenues. In fact, rental ARPU a better indicator of our subscription business was up 1.2% in the quarter. We had reason to be encouraged about ARPU growth in the second half of the year with the announcement of a 4.9% average consumer price increase affected in September and October. We've nearly 75% of customers have been notified of the price rise. And so far, reaction has been consistent with expectations.
In fact, call volumes and discounts have been lower than they were last year at this stage. And make sure the price rise is underpinned by from substantial product innovation, like the launch of Intelligent Wi-Fi and the new Virgin TV Go app. And we continue to push our speed leadership, with 500 megabits available across our footprint and faster download and upload speeds offer 2 millions of customers without charge. Just as importantly, we remain committed to offering a best-in-class video experience; and we were the first to launch Netflix on our box in the UK, you know that; we've now added Amazon Prime; BTs 4k ultra high def channel; and a whole lot more content from Sky, following the multiyear agreement we signed last month. And absolutely, all the football available in the marketplace, Virgin is still the only super aggregator of content and sports in the UK.
事实上，在此阶段，通话量和折扣率已低于去年。并确保通过大量产品创新来支撑价格上涨，例如推出智能Wi-Fi和新的Virgin TV Go应用程序。我们继续推动我们的速度领先地位，我们的足迹可提供500兆位，更快的下载和上传速度可为200万客户免费提供服务。同样重要的是，我们仍然致力于提供一流的视频体验;我们是第一个在英国推出Netflix的人，你知道的;我们现在添加了Amazon Prime; BTs 4k超高清通道;根据我们上个月签署的多年协议，来自Sky的更多内容。绝对是，在市场上所有的足球，维珍仍然是英国唯一的内容和体育超级聚合器。
Now, I've already addressed the lower volume figures at Virgin shown on the right hand side here. And while the broadband market share of net ads was steady and churn was in line, gross ads were disappointing, again, a combination of a slower market and more promotional activity at the low end. And in video, the focus was on higher value Pay TV subscriptions versus a year ago when Virgin triple-play price was nearly at parity with the double-play product. Lutz and his team have their work put out for them there is no question about that, but there is good reason to be confident in their plans. And the new product bundle called Oomph has seen sales accelerate modestly month-on-month since launch in early June. And the majority of these sales are at the higher end ultimate package of 500 megabits, which includes premium TV, with sports and movies, unlimited data on a SIM card priced at £99 per month, and this will be good for ARPU obviously.
And as I mentioned the FMC strategy has doubled the mobile attachment rates, and resulted in more post-pay net ads. And Virgin remains the broadband speed leader in a market where all -- anyone can talk about these days from politicians to pundits is superfast broadband, which is a good segue to the next slide on Project Lightning, and I have three key points here. First, while it's an increasingly noisy marketplace when it comes to next generation networks and broadband rollouts, Virgin is miles ahead of everyone else. We already have 15 million homes, capable of 500 megabit speeds while the rest of the market relies on a copper network that delivers top speeds of around 70 megabits per second.
And we've already built out more new homes than all of the completion combined. And second, Lightning is absolutely working on an operational, consumer and financial level. We've built over 1.8 million premises as part of our UK network extension, including 232,000 in the first half of this year, and with build costs coming down. Importantly, nearly 400,000 customers and almost 1 million RGUs have been added so far in the Lightning network with our earliest cohorts achieving penetrations of 35% after just four years. And ARPUs of over £45 are right in line with the rest of the business after discounts. Together, this means that Lightning has delivered strong growth in revenue and operating cash flow, both up something like 50% year-over-year. And Charlie will break these numbers down even further in just a moment to show you how we're progressing.
And lastly, there is no operator better positioned than Virgin to determine how this next wave of fixed infrastructure investment unfolds in the UK. Listen, we absolutely applaud the government's ambitious broadband plans, which call for superfast broadband access for every UK home and business by 2025. On the flip side, we also agree with BT and others that this will be increasingly difficult and expensive for open reach and undercapitalized fiber altnett to achieve at least without substantial regulatory relief, which puts Virgin in an enviable position. We'll be at 1 gig across 15 million homes in about 24 months, that's four years ahead of Boris Johnson's schedule. And we will be, by far, be the most important partner or platform for the remaining 10 million homes. You should expect us to be exploring every alternative to creatively finance and participate in this expansion of broadband connectivity in the UK, while preserving capital and optimizing free cash flow, so stay tuned.
Now, finally I'll close with a couple of quick slides in our Swiss business, which as you all know, is the midst of a turnaround plan that's hitting on all cylinders. Just to remind you, there are four key drivers of the plan beginning with transforming our TV proposition with our EOS and Horizon4 video platform, by far the market's most sophisticated and cutting edge service, which includes 4K, a voice remote, a sleek user interface and cloud based storage. This roll out is right on track for 50% penetration by year end, with 190,000 boxes already deployed. And the product is working as well, that's the most important thing with MPS higher in churn and calls and truck rolls lower, that's what we want to see.
The second driver of the turnaround plan is to continue to push the convergence agenda. So we know from Belgium and Holland that a good fixed mobile converged proposition improves NPS and reduces churn, and that's happening in Switzerland too. And mobile base already in a 170,000 represents about 16% of broadband subs and that's good outcome. The third driver is all about broadband and future proofing the network. The UPC customers already average 250 megabits per second, average speeds delivered, by far the highest in the marketplace. But the plan is to rollout 1 gig capabilities here in the fourth quarter of this year to further cement that position. And then finally, we are investing real OpEx and real CapEx into our simply digital initiative. And this will be a multiyear process but we're already well advanced in the journey, which by the way, is very similar to how Sunrises has attacked these challenges and opportunity.
So those are the drivers. And on Slide 9, we show some results. We talk about being right on plan and right on track. But we think it's important for our shareholders and the Sunrise shareholders to see what that plan is and has been. So what's actually provided here are quarterly forecasts on several metrics, both historical and the remaining part of this year. So we'll let the numbers speak for themselves, and feel free to review this at your leisure. But I'm guessing they'll get attention in Switzerland, which is great. The punch line is that fixed RGU losses were better than planned in Q2. Mobile post-pay ads have been consistently higher than planned, underpinned by our unlimited offerings. We've exceeded absolute revenue forecasts, supported by continued ARPU growth, BCS price increases and positive tier mixed results. And finally, we are ahead of plan on operating cash flow, which as a reminder, includes our investment and simplification and digitization and looks a little lumpy in Q1 and Q4 due to the timing of our investment in sports content. So all-in-all, the Swiss plan is tracking to our internal forecasts. The same numbers we shared with Sunrise. And we couldn't be proud, or I couldn't be prouder, of the job Severina and her teams have done in Switzerland.
So lot of information, I'll turn over to Charlie now to go through the financial update. And then we'll get right to your questions, Charlie?
Thank you, Mike. I'm on the slide entitled revenue and OCF growth. This is a summary of our key financial results. And the Group, as a whole, recorded negative revenue growth in the quarter of 0.9% and an OCF decline of 4.3%. Now, there were a number of one-offs impacting the OCF figures and turning around $12 million of severance from one-off retention payments. Some of these impacted the UK and Ireland, which reported negative OCF growth of 2.5%, a positive of revenue growth of 0.4%. Belgium was also impacted with the loss of the media land contract, which resulted in negative revenue and OCF growth of 1.5% and 3.6% respectively. Without this impact, Belgium OCF growth would have been broadly stable.
Mike has discussed Switzerland and the Q2 performance remains in line with our financial expectations for the year despite reporting negative revenue growth of 3.9% and negative OCF growth of 8.7% in the quarter. CEE had good revenue growth of 2.9%, supported by new builds and B2B efforts in Poland with a slight decline in OCF due to programming cost increases. Central and other reported TSA revenues of $60 million for the quarter, and the net OCF cost of $90 million, which I will now address in more detail in the following slide, which we call de-scaling central.
We think of central spend in two separate buckets. The first is more classical corporate spend during the group functions for finance, legal, HR and development. We spent $260 million on these functions in 2018, and are on track to reduce this by 20% by 2020 as we support a smaller group post the disposals. The second category is our centralized spend in technology and innovation. And broadly, this is the spend that we've taken out of country operations and centralized in order to realize scale efficiencies. In 2018, this was around $800 million and we expect that to reduce to around $700 million this year and around $600 million in 2020. A large amount of this spend is recharged for the companies we have sold, including VodafoneZiggo and a formal Austrian business. And we estimate that in 2019, if the disposals to Vodafone and Sunrise have occurred on January 1st, this would have resulted in a net allocation to Virgin and our CEE businesses of around $250 million. Our other revenues from the TSAs are projected to fall over the next four to five years. We intend to keep a net allocation to Virgin and CEE broadly flat during that period as we're able to flex down the costs of these centralized activities.
Moving to the next slide, titled P&E additions. For Q2, we reported P&E additions, including Switzerland, at around $600 million or 24% of revenue, representing 25% year-on-year reduction. Including Switzerland, we still reduced our CapEx spend by 21% year-over-year and continue to target a reduction of approximately 20% for the full year. The decrease was largely driven by the UK as the prior year roll out of the V6 set top box has now been largely concluded, and there has been reduced cost for Lightning programs. In Belgium, we've completed the fixed to mobile network upgrades, as well as some significant IT project spends. So the only operation to report in the increase was Switzerland, which relates the growth investments into the UPC TV rollout for 1 gig upgrade and the digitization program.
On Slide 14, we set out the OCF and CapEx for our key divisions, and how this translates into OFCF, operating free cash flow for the first half. And then we split Virgin into Lightning and our cable core businesses is they're very different OFCF characteristics. And we've also allocated the central T&I cost to our retained assets, using the same mythology as we use for the TSA agreements. Now asset revenue growth in the core table businesses is slow. We are seeing significant OFCF generation. And in the first half of this year, it's up nearly 40% to $993 million. Now, if add back the investments in Lightning, the figure for the first half of the year would have been $1.15 billion. Lightning continues to be a major investment for us, and we spent $235 million of CapEx year-to-date, resulting in an OFCF cash outflow of $157 million. Although, OCF growth is very strong with half one estimated OCF of over 50% at $78 million.
Now as you can see from this slide, Belgium is converting $0.29 in every dollar into OFCF. And if you include the recharges, the UK ex-lightening, and Holland has slightly lower margins and convert $0.23 and $0.25 respectively. Now the lower margin in the UK is largely because they rent to mobile network with the MVNO rather than own one. Whilst, in Holland, we expect the margin to rise as they continue to realize the synergies from the merger with Vodafone, which have largely been achieved in the comparable merger in both -- in Telenet. Now remember because of the tax attributes in both the UK and Holland unlike Belgium there is no cash tax payment in our other market, making them very efficient free cash flow generating assets. However, despite the investments in the turnaround planned, Switzerland remains a very cash generative asset with an OFCF margin of 24% into recharges despite the increased CapEx spend.
Turning to next slide, we summarize the results in free cash flow conversion. We've broken down the free cash flow to show it before and after working capital and operational finance. In Q2, the free cash flow before these items was $511 million for the quarter. In contrast to Q1, there were no cash interest payments and you'll see a similar picture in the second half with significant interest payments in Q3 and not in Q4. Tax paid in the quarter was the payment of our 2018 accruals from Poland and the United States, which are our only current tax payers other than Telenet.
In terms of VodafoneZiggo, the company has reconfirmed it's guidance for shareholder distributions of €400 million to €600 million for the full year. However, year-to-date, the JV has only disbursed $25 million and we expect the balance during the second half of the year. You should note that our share of the €400 million to €600 million include shareholder loan repayments to us of around €100 million, which we do not include within our adjusted free cash flow definition.
Our working capital and operational finance line was positive in Q2 at $35 million, resulting in adjusted free cash flow for the quarter of $546 million. For the full year, we expect this category to be slightly positive and a source of cash flow. We remain on track for our full year free cash flow guidance of $550 million to $600 million and that includes our estimated $400 million to $500 million negative free cash flow from project Lightning.
从这张幻灯片中可以看出，比利时正在将每美元0.29美元兑换成OFCF。如果你包括充值，英国除外，荷兰的利润率略低，分别兑换0.23美元和0.25美元。现在英国较低的利润率很大程度上是因为他们通过MVNO租用移动网络而不是拥有MVNO。虽然在荷兰，我们预计利润率将继续上升，因为他们继续实现与沃达丰合并的协同效应，这在两者的可比合并中已基本实现 - 在Telenet中。现在请记住，由于英国和荷兰的税收属性不同于比利时，我们的其他市场没有现金税，这使得它们成为非常有效的自由现金流产生资产。然而，尽管投资计划有所转变，尽管资本支出增加，瑞士仍然是一个非常现金生成资产，其OFCF利润率为24％。
On the next slide, entitled balance sheet, we set out our current leverage tests. Pro forma for the Vodafone transaction, Q2 growth leverage is 5.2 times. But net of the deal proceeds, it's 3 times. We remain committed to the 4 to 5 times leverage ratio for the Group, and we'll continue our policy of long-tenant debt maturities and fully hedging FX and interest rate exposures. As of Q2, our average life is around seven years, and our weighted-average cost of debt is around 4.1%. As a result of the disposal of certain CEE countries as part of the Vodafone transaction, we've repaid $1.6 billion UPC term loan, resulting in a leverage ratio at UPC of 4.6 times. Upon the sale of UPC Switzerland, we will transfer the remaining UPC bonds to Sunrise, and repay the rest of the facility, marking the end of a 20 year history of borrowing under the UPC Group. We proposed to re-lever the Eastern European assets of Poland and Slovakia to around 4 times, following the completion of the Swiss disposal, representing additional debt of approximately $900 million.
So moving to the conclusion slide, the sale of UPC Switzerland remains on track, and the business fundamentals continue to improve. In the UK, the annual price rise has been announced and our Sky content negotiation has been completed in line with our budgeted assumptions. We continue to see strong OFCF and free cash flow generation in our core cable assets, and we're reconfirming our 2019 guidance target.
And with that, over to you operator for questions.
The question-and-answer session will be conducted electronically [Operator Instructions]. We will go first to Maurice Patrick with Barclays.
Good morning, guys. I'm here with [indiscernible] from Barclays. Just a couple of questions please on the UK, and it's really my intention on your comments about pushing on investments to some of the comments on Boris Johnson and now generation access. There's being some press reports about you looking at investing beyond project Lightning. And I'd love to hear your thoughts around just about long-term investment once Lightning is done. And the article also touched upon entertaining the idea of offering wholesale access through your network. I wondered if your thoughts on the wholesale access in the UK changed. Thank you so much.
早上好家伙。 我来自巴克莱的[音频不清晰]。 在英国，请问几个问题，我的意图是关于推动对Boris Johnson的一些评论以及现在的一代访问的投资。 有一些媒体报道关于你在Lightning项目之外的投资。 一旦Lightning完成，我很乐意听到你对长期投资的看法。 文章还涉及到通过您的网络提供批发访问的想法。 我想知道你对英国批发渠道的看法是否有所改变。 非常感谢。
There's a lot of questions there. On wholesale access, our position has been pretty consistent across here, which we don't think is particularly good idea and it discourages investment in infrastructure by cable, which is the only competitive platform our there to the phone operators. On the other hand, we have had to utilize it in Belgium where it was acquired. And in some instances, we have in the past looked at a voluntary, or I would say, private negotiation. So we're opportunistic and I think we're creative in how we approach it. But we certainly are positioned as always been, from a regulatory point of view, it should now be mandated. And in some instances, we have in the past, looked at whether we would partner with companies who might be interested in utilizing that, but that is a private transaction, not one determined or priced by the government, big difference is there, that's what I'd say.
In terms of building beyond Lightning, we think the Lightning footprint that we originally estimated of 4 million homes and then we built about half of those almost is still attractive to us, and we're evaluating certainly market-by-market and city-by-city how to do that in the most effective and efficient manner. On the other hand, as I mentioned in my remarks, there is a quite a bit of activity occurring across the marketplace. And there is at least another 10 million homes that somebody is going to build. I don't see us doing that on balance sheet as a Lightning like project where we're funding it out of our operating free cash flow. But Virgin is, by far, the best partner if somebody is looking to build those homes, because we bring obviously a great brand, ability to penetrate quickly and potentially outside capital to do something off balance sheet.
So let's just say that we are in the mix as we should be in any discussions about building the next wave of networks outside of where we already have built superfast broadband, we feel like our 15 million homes of 1 gig ready going to 10 gig is it for that footprint. But beyond that footprint, we're going to be opportunistic to see if we can put capital to work off balance sheet without consolidating losses and activities potentially with partners just to get Virgin possibly in the Virgin brand to a national scale, wouldn't that be great, if Virgin was a national brand not a regional brand in half the marketplace.
We know our footprint, we generate 50% market share. We beat BT. We bit Sky on footprint, in video and broadband, we know that. If we could extend our footprint potentially using other people's networks or participating in off balance sheet type network construction, that could be pretty interesting. So it's all very preliminary, and its work you would expect us to do. But abiding by the points I made in my remarks, which we're looking at that opportunity at our capital efficient, optimized free cash flow and largely off balance sheet. That's a longer answer than you probably wanted, but hopefully that's clear.
就Lightning以外的建筑而言，我们认为我们最初估计有400万套房屋的Lightning足迹，然后我们建造了大约一半的房屋，对我们来说仍然具有吸引力，而且我们肯定会逐一评估市场和城市 - 城市如何以最有效和最有效的方式做到这一点。另一方面，正如我在发言中所提到的，市场上发生了相当多的活动。还有至少另外1000万个人要建造的房屋。我不认为我们在资产负债表上这样做是像Lightning一样的项目，我们从我们的经营自由现金流中为其提供资金。但是，如果有人想要建造这些房屋，到目前为止，维珍是最好的合作伙伴，因为我们带来了一个很好的品牌，能够迅速渗透并有可能在资本外部进行资产负债表之外的事情。
We'll move now to Ben Swinburne with Morgan Stanley.
I know you've made some comments earlier, Mike, about sort of the rationale behind the tender. But I just wanted to come back and ask my sense and maybe I just misinterpreted. But I sense over the last couple of calls is you guys were sort of suggesting the cash flow isn't going to burn a whole in your pocket, and you're going to take your time, et cetera, et cetera. And obviously, you still have a lot of capacity. So I'm not -- I get the numbers. But I just was wondering if anything changed between May and now to lead you to launch the tender for $2.5 billion. And if there is any sort of change in how you're thinking about allocating that capital that we should be aware of. And then secondly, on the subscriber trends in the UK, you mentioned competitive environment. I'm just wondering as you look out through the back half of this year. Do you see that getting any better, any initiatives you guys have on either turn management, it's probably for Lutz, or new bundles to help try to drive that. Are you -- or maybe you're just focused more on EBITDA and ARPU, and you're not going to change subs. So I'd just love an update there?
我知道你早些时候已经发表了一些评论，迈克，关于招标背后的理由。但我只是想回来问我的感觉，也许我只是误解了。但是我觉得在最后几次电话会议中，你们有点暗示现金流不会在你的口袋里燃烧整个，而你会花时间，等等。显然，你仍然有很多容量。所以我不是 - 我得到了数字。但我只是想知道五月到现在之间是否有任何改变，导致你以25亿美元的价格推出招标。如果你在考虑如何分配我们应该注意的资本方面有任何改变。其次，关于英国的用户趋势，你提到了竞争环境。我只是想知道你在今年下半年的情况。你是否看到任何更好的，你们在转向管理方面的任何举措，可能是Lutz，或新的捆绑帮助试图推动它。你是 - 或者你可能只关注EBITDA和ARPU，而且你不会改变潜艇。所以我只是喜欢那里的更新？
Lutz, why don't you work on answer to the UK question? On the tender, I don't think our position has changed materially. I mean if we'd announced this morning $2.5 billion buyback program, it would have taken us, based as you know, on rules and restrictions, pretty long time to get that money, put that money to work. So, it's our view these Dutch option tenders are efficient. You can launch them and be done in 20 business days. We're not suggesting this is the only one. We'll see what happens to the market, or our alternative uses of capital.
What I meant to say on patience was really about and discipline, was really related to transactions outside our core markets and let's say in new markets or new opportunities. There seems to be a fair amount of concern, at least I hear it and our IR guys hear it, that we're going to turn around and buy something nonsensical. In a sector or a market where we have no expertise or no capabilities, and that's not what we're going to do. And the patient and the discipline comment was really related to opportunities outside of our core markets or our core capital structure. And I'm not -- I'm certain we have those capabilities to do interesting things. We're just going to be very, very selective about those.
In the meantime, we will look at where the stock trades and we will look at what other opportunities we have to be, to solidify and grow the businesses that we already own and operate, which we think are substantial and great free capital generators and have the ability to be re-valued in this environment. So no question that our stock today has zero value for Virgin Media, maybe negative value for Virgin Media, which is incredible to me.
So we know there's huge opportunity to create value and demonstrate value in the UK based on our cash flow characteristics and our market position, our strategic opportunities. And you don't have to be heroic in your assumptions about what that value might be on any metric to know this stock is undervalued. So we're going to look at that, I would say, quarter-to-quarter. Every six months, we're going to be thoughtful about what the best allocation of capital is. But the patience and the discipline comment was really more geared towards doing things outside of our core business today. Lutz, you want to address the UK point?
我对耐心的意思是关于和纪律，与我们核心市场之外的交易真正相关，让我们说新市场或新机遇。似乎有相当多的担忧，至少我听到了，我们的IR家伙听到了，我们将转而购买一些荒谬的东西。在我们没有专业知识或没有能力的行业或市场中，这不是我们要做的事情。患者和纪律评论确实与我们核心市场之外的机会或核心资本结构有关。我不是 - 我确信我们有能力做有趣的事情。我们对这些非常非常有选择性。
So before I give a bit an outlook, just maybe one member to compare a bit the market size. Broadband market Q2 2018, 171,000 net ads on Openreach and our network. I neglect the altnets. This year, 14,0000, right? So the market is materially down. Our churn like-for-like has been stayed at 15%. So this is about gross adds in that market. And I think if you compare our number, we got almost close to 50% of the entire market or 80% on to our coverage. What we are not doing is chasing for the low end of the market. And I mean that Vodafone, there's now broadband from Sky £17, £20, we are not fishing in that segment. So therefore, you won't see us changing our strategy in that direction.
What will help us in the future I think is four things. So we have launched fixed mobile convergence mid of June with our campaign. That has already helped. You see that in the mobile subscriber, although, it's only less than one month of mark-to-market launch in Q2, and that is you see steady growth. That leads to a lower churn and higher ARPU. So this is really a momentum we will be using going forward more and more. Number two, as Mike had said earlier on, we have all soccer available with very strong sports package. So Q3 is about that. In general, Q3 and Q4 are the strongest quarters in terms of sales. So therefore we are prepared for that and we are leveraging more and more digital in that. So our digital share of channels is increasing.
So therefore, already in July, we've seen materially higher sales numbers. However, having said that, don't forget that we have put our price rise forward by two months compared to last year. So therefore, you will -- we will eat up some of these additional sales we are already generating by some churn. However, that was planned. And as Mike said earlier on, 75% of letters and emails have been sent out, and the reaction is better than last year. But last year, we had also the UK TV struggle going on. So therefore, it is as expected.
因此，在7月份，我们已经看到销售数量大幅上升。然而，话虽如此，但不要忘记，与去年相比，我们将价格上涨了两个月。因此，您将 - 我们将吃掉一些我们已经通过一些流失产生的额外销售额。但是，这是计划好的。正如迈克先前所说，75％的信件和电子邮件都已发出，反应比去年好。但去年，我们还在进行英国电视斗争。因此，它符合预期。
And we'll move now to Christian Fangmann with HSBC.
Good morning. I was just following up on the buy backs. I think the plan is a bit below of what the street was expecting. I mean for H2 definitely a big number. But beyond that, I was curious are you updating us on the quarterly basis or relatively in between quarters if you think you may do more tenders? Because you just mentioned that may not be the last one you do, so interest in your view on that one. And then maybe on the UK, I mean you find a new deal with Sky, a content deal. And I think for the full year, you have content costs going up £60 million to £80 million, I think was the guidance for the year. Can you maybe give some color if you're more towards the higher end, the mid end, or the lower end? So would be interested in that one.
早上好。 我只是跟进了回购。 我认为该计划略低于街道的预期。 我的意思是H2绝对是一个很大的数字。 但除此之外，如果你认为你可以做更多招标，我很好奇你是按季度更新我们还是在季度之间相对更新？ 因为你刚才提到的可能不是你做的最后一个，所以对你对这个问题的看法很感兴趣。 然后也许在英国，我的意思是你找到一个新的协议Sky，一个内容交易。 而且我认为在全年，你的内容成本将增加6000万到8000万英镑，我认为这是今年的指导。 如果你更倾向于高端，中端或低端，你可以给出一些颜色吗？ 所以会对那个感兴趣。
Yes, I think the Sky deal -- Lutz, you correct me. I think the Sky deal is where we thought it would be. So -- but you can provide some color on that later if I missed it. But I'm pretty sure it'd be right on where we thought we be in terms of what we might have forecast to you on the guidance. In terms of the buybacks, I think what I said in my remarks I'll repeat, which is we could be more of these. We could launch tender -- buyback programs as we've done in the past, or we could do neither. It doesn't -- it's not a good idea for me to signal to you, well, we're going to do these every quarter and people won't be interested in selling shares, and won't be tendering, and we're interested in owning more shares.
So my goal here for shareholders who are going to be long-term shareholders is to acquire shares at the most efficient price that we acquire them. At this point, this is all we've got going on. And so, I don't anticipate quarterly updates on our "tender offer activities". But if we are to launch additional tenders down that road, you're likely not to know about that until we do it. I mean that's kind of how it works. So I don't believe this is something that we're going to discuss on a quarterly basis.
I think we're going to look at how this particular transaction performs and our ability to efficiently acquire more of a company we believe in, and then we'll make decisions. Hey, we will be looking at it of course and making decisions around how best to utilize capital on a quarterly basis. But I don't know that will be signalling to you in our earnings call every quarter exactly what we may or may not do, just as we didn't signalled to you up until this particular tender what we were going to do, because we're still evaluating those options real time. Lutz, on the Sky deal, you want to just confirm what I said, I'm pretty sure that's…
是的，我认为Sky交易 - Lutz，你纠正我。我认为天空协议是我们认为的。所以 - 如果我错过了，你可以在以后提供一些颜色。但我很确定我们认为我们在指导方面可能对您的预测方面是正确的。在回购方面，我认为我在发言中所说的我会重复一遍，这就是我们可能更多的这些。我们可以像过去那样推出招标回购计划，或者我们也不能做。它没有 - 我向你发出信号并不是一个好主意，好吧，我们每个季度都会这样做，人们不会有兴趣出售股票，也不会招标，我们'对拥有更多股票感兴趣。
A - LutzSchüler
Christian, of course, we cannot really disclose any details. I think what I can say is the general idea was, between Sky and us, to create win, win potential when we close the deals for future growth of revenue jointly. And I can say we have managed to do so. So we can now jointly monetize UHD together. We got much more box sets, so we're able to monetize that, sell that to our customers. We are able now to really integrate Sky Movie into our Liberty Go apps as we increase usage here. And we got a lot of additional benefits. So therefore, it's those. Is it in the range we have expected? As Mike said, it is. But I think more importantly, we found a way to make up for the cost in increased business, both on pricing increases but also simply selling higher value packages through the customers, and this is exactly what we are doing.
当然，克里斯蒂安，我们无法真正透露任何细节。 我想我可以说的是，Sky和我们之间的总体想法是，当我们共同完成未来收入增长的交易时，创造胜利，赢得潜力。 我可以说我们已经设法这样做了。 因此，我们现在可以共同将UHD货币化。 我们有更多的套装，所以我们能够将其货币化，然后卖给我们的客户。 我们现在能够真正将Sky Movie集成到我们的Liberty Go应用程序中，因为我们在此处增加使用量。 我们还获得了很多额外的好处。 因此，就是那些。 它是否在我们预期的范围内？ 正如迈克说的那样。 但我认为更重要的是，我们找到了一种方法来弥补增加业务的成本，既可以提高定价，又可以通过客户销售更高价值的包装，这正是我们正在做的事情。
And maybe one follow-up, if I may, also on Virgin. I think there was some news yesterday from Virgin and that Virgin is addressing Ofcom's ongoing review of the broadband pricing and related efforts to protect customers running out of their minimum contract period. So looks like Virgin may address 100,000 customers that are vulnerable, I would call it's kind of disabled, petitioners, unemployed people. So can you maybe quantify the effect or the costs embedded to that approach that Virgin is taking for 2020 maybe, or just the rough feel?
也许有一个跟进，如果可能的话，也可以是维珍。 我认为昨天有一些来自维珍的消息，维珍正在解决Ofcom正在进行的宽带定价审查以及相关的努力，以保护客户的最短合同期。 所以看起来维珍可能会解决10万易受攻击的客户，我会称之为残疾人，上访者，失业者。 那么你可以量化维珍在2020年采取的那种方法所带来的影响或成本，或者只是粗略的感觉？
I think it's very small accretion. So it's a small attempt. And at the end, if you do that and you're customer centric, you come to much lower churn with these customers. So therefore I think the impact on 2020 is neglectable.
我认为这是非常小的吸积。 所以这是一个小小的尝试。 最后，如果你这样做而且你是以客户为中心的，那么与这些客户相比，你的流失率要低得多。 因此，我认为对2020年的影响是可以忽略的。
We will move now to James Ratzer with New Street Research.
我们现在将与New Street Research一起搬到James Ratzer。
I have two questions please. The first one just going back to the topic of use of proceeds please, I hear what you said so far. But I was just wondering if you could talk us through how you see some of the relative merits of some deals that are being discussed? I mean mobile in the UK is one area. But I think in the past you've been nervous about mobile performance. I mean are you now feeling more comfortable with that. There's also been some speculation you might look in Latin America. I mean given your comments about geographical focus. Are you able to rule out categorically doing any deal in Latin America with the capital you have? And then thoughts around on deals in the Benelux area as well, interested in your preference, order and thinking around those options? And then follow up I have is just going back to the price rise in the UK. I mean how do you weigh that up against what your market share tolerance is? I mean, I'm looking at BT who has been taking price for a while, and it seems like they now have to reverse engines a bit and say they're no longer willing to seed share, because their pricing approach led to customer losses. How do you think about that potential trade off going forward? Thank you.
James, on the use of proceeds, I'm not going to get into that here on this call. I can just repeat what I said, which is looking at things in our core markets first as we should and then possible consider things outside our core markets if they make sense and fit, a pretty tight group of criteria for us. So I hear what you are asking and I'm sure it would be a great info. But it's not prudent of me to get into the relative merits of any one transaction or anyone opportunity. As things unfold and become real, we will certainly comment on them. Do you want to talk about the price increase?
詹姆斯，关于收益的使用，我不打算在这个电话中进入。 我可以重复一下我所说的内容，即我们应该首先关注核心市场中的事情，然后如果它们有意义和合适，可以考虑我们核心市场之外的事情，这对我们来说是一个非常紧密的标准。 所以我听到你在问什么，我相信这将是一个很好的信息。 但是，对于我来说，任何一项交易或任何机会的相对优点都是不明智的。 随着事物的展开和变得真实，我们肯定会对它们发表评论。 你想谈谈价格上涨吗？
Yes. We are growing still the market share, right. I mean although it was not the strongest quarter, in general -- this quarter we are flat. But in general, we are growing market share. According to our information, our churn is substantially lower than from the competitor you mentioned. And so far customer reaction is in line. I mean don't forget we are targeting the value segment of the market. And we spend a lot of money for increased speed, now intelligent WiFi, better content, higher upload speed, better boxes and also lot of money in better service. So I think we are not in a position to say do we really shrink as a business or not.
And I think when you look at the UK market, you see higher competition on sales growth at market, but you see still a pretty rationale approach in the customer base. Sky has taken price rise. Netflix has take price rise. TalkTalk has taken price rise. Even BT has taken price rise on BT sports packages. So I think we have not to a reason to change our approach here.
是。我们仍在增加市场份额，对吧。我的意思是虽然它不是最强的季度，但总的来说 - 本季度我们持平。但总的来说，我们正在增加市场份额。根据我们的信息，我们的流失率大大低于您提到的竞争对手。到目前为止，客户的反应是一致的。我的意思是不要忘记我们的目标是市场的价值部分。我们花了很多钱来提高速度，现在智能WiFi，更好的内容，更高的上传速度，更好的盒子以及更好的服务。所以我认为我们无法说明我们是否真的萎缩了。
我认为，当你看到英国市场时，你会看到市场上销售增长的竞争更加激烈，但你仍然看到客户群中的理性方法仍然存在。天空价格上涨。 Netflix价格上涨。 TalkTalk已经涨价了。甚至英国电信也在BT体育套餐上涨价。所以我认为我们没有理由在这里改变我们的方法。
I mean Sky took a 5% price rise in April, as you guys -- which by the way, we did not pass through to our customers. So our price rise will, to some extent, compensate us for not having to ask you the Sky price rise to our customers. So I think that's noteworthy. Does that help, James?
我的意思是Sky在四月份的价格上涨了5％，就像你们一样 - 顺便说一下，我们没有通过我们的客户。 因此，我们的价格上涨将在一定程度上补偿我们不必向您询问Sky价格上涨给我们的客户。 所以我认为这是值得注意的。 詹姆斯，这有帮助吗？
Thank you for that. Yes, that's great. Thank you. Just going back to the point, I mean what outside your core markets might look more attractive than doing a deal within your existing pull markets today?
谢谢你。 是的，那很好。 谢谢。 回到这一点，我的意思是，你的核心市场之外的东西看起来比现有拉动市场中的交易看起来更具吸引力吗？
A - 迈克弗里斯
I mean, again, I'm not going to get into that with you. I think that wouldn't be smart for us to start. Are they divulging or if we have things pre-empting those opportunities. It's just not a good idea. I would be -- it would be a generic conversation, and I don't think it would be particularly useful for you. I did describe that we like businesses and have always benefited I think from owning and operating businesses that have scale, capability that are in our wheelhouse around technology, and subscription, and businesses that we understand well. We know who we are and we know who we're not. So you can look backwards perhaps than look forward.
And at one point, we were operating at 40 different countries around the world. So there is very few places we haven't done business. Doesn't mean we're interested in doing business in those places today. I'm just saying that every -- we have a pretty long history of, I think, investing in the types of opportunities that we think fit our profile. But to be specific about a territory, or market, or an opportunity would be prudent at this point.
我的意思是，再说一遍，我不会和你讨论这件事。我认为这对我们来说并不聪明。他们是否在泄露，或者我们是否有先发制人的事情。这不是一个好主意。我会 - 这将是一个通用的对话，我不认为这对你特别有用。我的确描述了我们喜欢的企业并且总是受益我认为拥有和经营的企业具有规模，能力在我们的技术，订阅和我们理解的业务。我们知道自己是谁，也知道自己不是谁。所以你可以向后看，也许不要期待。
有一次，我们在全球40个不同的国家开展业务。所以很少有地方没有做生意。这并不意味着我们今天有兴趣在这些地方做生意。我只是说每一个 - 我认为，我们有很长的历史，投资于我们认为适合我们形象的机会类型。但在这一点上，要明确某个领域，市场或机会是明智的。
And Evercore's Vijay Jayant has our next question.
Hi, It's James Ratcliffe. Just on the -- now that the Vodafone check is clear, and you've got the cash on the balance sheet. I'm wondering if you can talk about the trade-offs between having a lot of liquidity available for opportunities? And I think Liberty generally done well by having liquidity when other didn't historically versus the negative arbitrage associated with accounts because if which back of the envelop be 100 million bucks of quarter or so. And do you have flexibility to essentially reduced that negative arbitrate, while still keeping a lot liquidity readily available should opportunities arise. Thanks.
嗨，这是James Ratcliffe。 就在 - 现在沃达丰检查已经清楚了，你在资产负债表上得到了现金。 我想知道你是否可以谈谈在为机会提供大量流动性之间的权衡？ 而且我认为Liberty通常在流动性方面做得很好，而其他历史上没有与账户相关的负面套利，因为如果信封的哪个后面是1亿左右的大约1亿美元。 您是否具有基本上减少负仲裁的灵活性，同时在机会出现时仍保持大量流动性。 谢谢。
You mean the negative arbitrage on our debt basically?
Yes, I mean just having cash versus having…
Yes, I got it. So I think it's -- there's couple of answers to that. One I think having the liquidity, as you point out, is a huge advantage. One thing John and I have seen and many of you have seen is market volatility comes and goes, and there are many -- there is -- it's always good to be in a cash position when you don't know what the future brings, and that's more opportunistic than anything. And so there isn't -- while there is a cost of carry, there's certainly an opportunity cost of not having liquidity. So as you say rightly, we balanced it off and we balanced it off dynamically.
And actually generating cash, Charlie and the team, are charged with -- one of the reasons we put all the money into dollars is we believe we can generate a better return on that capital than we could in euros, or any other currency. And so Charlie and the treasury team are going to do their best to generate a maximum amount of return that can be prudently achieved on that capital. And so that will certainly help a little bit. And then as necessary and on occasion as we talked about around leverage, we'll trim here or there. So, it's needed. So I think it's going to be a combination of things as you rightly say, little tension between liquidity and opportunity and cost of carry. But if we can get the treasury guys to work their magic, hopefully, we can shrink that a little bit. Charlie, you want to add anything?
是的，我知道了。所以我认为 - 有几个答案。正如你所指出的那样，我认为拥有流动性是一个巨大的优势。约翰和我见过你们很多人已经看到的一件事是市场波动来来往往，还有很多 - 有 - 当你不知道未来会带来什么时，处于现金状态总是好的，这比任何事都更机会主义。所以没有 - 虽然存在成本，但肯定存在没有流动性的机会成本。正如你正确地说的那样，我们平衡它并且我们动态地平衡它。
实际上，现金，查理和团队负责 - 我们将所有资金投入美元的原因之一是我们相信我们可以比欧元或任何其他货币产生更好的资本回报。因此，查理和财政部队将尽最大努力创造一个可以在该资本上谨慎实现的最大回报。所以这肯定会有所帮助。然后在必要时，偶尔我们谈论杠杆作用时，我们会在这里或那里进行修剪。所以，这是必要的。因此，我认为，正如你所说的那样，这将是一个组合的事物，流动性和机会之间几乎没有紧张关系。但是，如果我们可以让财政部的人们发挥他们的魔力，希望我们可以缩小一点。查理，你想加点什么吗？
Yes. The one thing is the $100 million a quarter, I think it's -- the cost of debt is 4%, and so in the U.S. dollar you're getting something north of 2%, so it's roughly a 2% negative carry and pro forma the buyback we got about $12 billion, so it's more like $240 million is the bid offer in terms of the cost of the option. And as Mike said, we will continue to evaluate the best way to run that negative carry, but it's more -- it's not the $100 million a quarter, I think.
是。 一件事是每季度1亿美元，我认为是 - 债务成本是4％，所以在美元中你得到2％以上的东西，所以它大约是2％的负面利差和备考 我们获得了约120亿美元的回购，因此就期权成本而言，更多的是2.4亿美元的出价。 正如迈克所说，我们将继续评估运行负面利差的最佳方式，但更多 - 我认为，不是每季度1亿美元。
We will move now to Matthew Harrigan with Benchmark.
I guess, it feels fairly vindicated on VodafoneZiggo given the turnaround there, the fastest growth business in Q2. How do you feel about the big mobile convergence benefit? I mean do they come in line with what you expected, were they even higher? Is there anything, any runway still on getting that? And then clearly, if you get a little more expensive on the VodafoneZiggo valuation, your stock is even more ridiculously inexpensive. And I know you're not going to comment too specifically on any transaction on unwinding the JV, but logically created a somewhat lower multiple if those synergies have pretty been realized at this point. I think it's an asset that maybe the street, maybe including myself is neglecting a little bit. Thanks.
我想，考虑到那里的转机，这是第二季度增长最快的业务，对VodafoneZiggo感觉相当平反。 您对移动融合的巨大收益有何看法？ 我的意思是他们是否符合你的预期，他们甚至更高？ 有没有什么，还有什么跑道还在那？ 然后很明显，如果您在VodafoneZiggo估值上获得更高的价格，那么您的股票将更加便宜。 而且我知道你不会对任何解除合资企业的交易过于具体评论，但如果在这一点上已经实现了这些协同效应，那么逻辑上创造了一个稍低的倍数。 我认为这可能是街道的资产，也许包括我自己在内略有疏忽。 谢谢。
First of all, the synergies haven't all been realized. I believe we're only about halfway through this synergies. They may or may not have addressed that, so that may or may not be public. But my understanding is that we are only about half way through the synergies originally projecting $210 million. And I think as we've indicated likely to exceed that just because we always do in these types of businesses. And I do agree with you. It's been terrific to see the business return to revenue growth and good OCF growth, and raise their expectations around that. And it is a function of both the natural synergies that occurred in fixed mobile mergers, there's a reason why we repaid 12 times for Germany, it's because the synergies are massive and they're real and they work for mobile and fixed platforms. And we've proven this out now and how many transactions, I can't even keep count in Europe so far.
And so I think all positive indicators there, and we're pretty excited about how they're performing as a team. What it's worth is you can come up -- come to that value map in a bunch of different ways, whether it's a levered free cash flow yield or an operating free cash flow multiple, or even an EBITDA multiple. I would suggest -- we would think there is very little value for us to talk with that business today. But we continue to be supportive of it. We think the team has done a great job. We think it's been a terrific partnership with Vodafone, and we're very pleased with the business as it sits today.
所以我认为那里有所有积极的指标，我们对他们作为一个团队的表现感到非常兴奋。值得一提的是你可以上来 - 以一系列不同的方式来到价值图，无论是杠杆式自由现金流收益率还是经营自由现金流量倍数，甚至是EBITDA倍数。我建议 - 我们认为我们今天与该公司谈话的价值非常小。但我们仍然支持它。我们认为团队做得很好。我们认为这是与沃达丰的良好合作关系，我们对今天的业务感到非常满意。
Anybody want to add to that? Charlie, you are on the board and anything you want to add to that?
Michael, you said it very well. In fact, I think in some respects it could be the most successful in town, which is obviously one comparable you could look at. I mean, the free cash flow conversion as we grow in other synergies should drive towards the similar type of margins that Telenet get. So I think, Mike, it's a very attractive asset and we're delighted with how it's performing.
迈克尔，你说的很好。 事实上，我认为在某些方面它可能是城里最成功的，这显然是你可以看到的可比性。 我的意思是，随着我们在其他协同效应中的增长，自由现金流转换应该推动Telenet获得的类似利润。 所以我认为，迈克，这是一个非常有吸引力的资产，我们很高兴它的表现如何。
We'll go next to Pivotal Research Group's Jeff Wlodarczak.
我们将选择Pivotal Research Group的Jeff Wlodarczak。
Q - Jeff Wlodarczak
Hey guys, one on the UK and one on the Belgium. UK, you've had a number of one-offs hitting EBITDA, mainly the higher network taxes, but as far as I know, are not going higher out to 2020. And you obviously got a large program price increase this year. Do you feel comfortable that the core UK business is going to be able to sustainably grow EBITDA once you get past these overhangs? And then on Telenet. Mike, I wanted to get your thoughts on this wholesale situation. It just seems like the regulator just wants the wholesale price to go down, and just continuing to try to push it down, trying to force you guys to do a single play. How do you push back against that?
嘿伙计们，一个在英国，一个在比利时。 英国，你已经有多次一次性投入EBITDA，主要是网络税较高，但据我所知，到2020年不会更高。而且你今年的计划价格明显上涨。 一旦您超越这些过剩，英国核心业务是否能够持续增长EBITDA，您是否感到放心？ 然后在Telenet上。 迈克，我想对这种批发情况有所了解。 似乎监管机构只是希望批发价格下降，并继续试图推低它，试图迫使你们做一个单一的游戏。 你怎么反对呢？
Well, I'll let Lutz cook up his views on the UK question. I think Belgium wholesale question remains a throne in our side. And as I said many times and John Porter had said many times, it's a highly political marketplace. And we do the best we can to address those politics. And to point out the absurdity in some cases of what they're proposing, we fight them in court, we appeal to the EU. We do all the things we're supposed to do. We're irascible and a pain in their butt. But at the end of the day we know that they way in which they're trying to regulate this market is wrong, fundamentally wrong.
Now, the flip side of that is we're doing pretty well either way. If you look at Orange Belgium, their subscriber base on our platform is not that material, I think it's roughly 130,000, 140,000 subs. I mean none of revenue "at risk" and a wholesale change of pricing is not that material either. So I don't want to overstate the impact of what may or may not occur on the regulatory side. On the other hand, I do want to -- I don't want to understate, and I want to be sure, it's clear that we don't agree with the way in which we're approaching this market. And in Holland where we have similar conversations, it's much more reasonable on rational. We also don't agree with what they -- how they're approaching it. But on the other hand, it looks to be, they coming at it certainly healthier point of view. So we fight the good fight.
I mean I think good news is it's not a material impact, at least based on the current wholesale revenues. We can't be certain how it will unfold. All I can tell you is we keep fighting a good fight. And we're as focused on this as anything. And it does really feel to us to the extent you're concerned about contagion or anything else. It does really feel focused in the Benelux, partially because of the success cable has had in those markets for decades, not just recently. Telenet's market share is quite substantial relative to Proximus and others. And VodafoneZiggo is a market leader. So I think it's partly a reaction to that and partly reaction to politics, part of which we control and obviously the rest of it we just -- we can't. So I hope that's helpful. Was there another question?
现在，另一方面，我们在任何一种方式都做得很好。如果你看看Orange Belgium，他们在我们平台上的用户群不是那么重要，我认为它大约是130,000,140,000个潜艇。我的意思是“风险”的收入都没有，而且定价的批发变化也不是那么重要。因此，我不想夸大监管方面可能会或可能不会发生的影响。另一方面，我确实想 - 我不想低估，我想确定，很明显我们不同意我们接近这个市场的方式。在荷兰，我们有类似的对话，在理性方面更合理。我们也不同意他们 - 他们如何接近它。但另一方面，看起来，它们肯定会更加健康。所以我们打好了这场斗争。
我的意思是，我认为好消息是它不会产生重大影响，至少基于目前的批发收入。我们无法确定它将如何展开。我能告诉你的是我们一直在打一场好斗。我们就像关注任何事情一样专注于此。在你担心传染病或其他任何事情的情况下，它确实对我们有感觉。它确实让人感觉专注于比荷卢经济联盟，部分原因是因为有线电视在这些市场上已有数十年的成功，而不仅仅是最近。与Proximus和其他公司相比，Telenet的市场份额相当可观。 VodafoneZiggo是市场领导者。因此，我认为这部分是对此的反应，部分是对政治的反应，其中一部分是我们控制的，显然其余部分我们只是 - 我们做不到。所以我希望这很有帮助。还有其他问题吗？
So, I mean we have -- we did a consumer strategy, which is 80% of the business in Virgin Media last autumn, and we came up with four growth drivers. One is fixed mobile convergence. This is launched now. Early signs are positive but that takes a while. We have 20% fixed mover converge customers when you look at VodafoneZiggo or Telenet, they have more than double of that, so huge opportunity for lower churn and higher ARPU, and for us here early stage but positive times.
Second one is space management, I mean, we have higher speeds. We have now Intelligent WiFi. We have higher customer satisfaction. We are going to launch Horizon4, our new video platform, which has been launched in Belgium and Switzerland so far. So the idea is simply to leverage that and to get to lower churn. Then we run a digital transformation program. The impact is huge. It's a big change for the company. But others have done it successfully, why wouldn't we do it, and then more segmented to sales. The more -- the market is mature, the more -- the go to market has been segmented. So MDUs, the SOHO machine leverage closer the consumer machine.
So therefore we believe that when all these growth drivers are in place, of course, we will come to growth again, and are in position to give any guidance. Also, headwinds from network taxes and also content costs are getting down a bit in future, so both should help to get back to growth.
所以，我的意思是 - 我们做了一个消费者策略，这是去年秋天维珍媒体业务的80％，我们提出了四个增长动力。一个是固定的移动融合。这是现在推出的。早期迹象是积极的，但需要一段时间。当你看到VodafoneZiggo或Telenet时，我们有20％的固定移动融合客户，他们有两倍以上，因此有较低的客户流失率和较高的ARPU，而且对于我们这里的早期阶段，但积极的时间。
第二个是空间管理，我的意思是，我们有更高的速度。我们现在有智能WiFi。我们有更高的客户满意度。我们将推出Horizon4，这是我们的新视频平台，目前已在比利时和瑞士推出。所以这个想法只是为了利用它并降低流失率。然后我们运行数字转换计划。影响巨大。这对公司来说是一个很大的变化。但是其他人已经成功地做到了，为什么我们不这样做，然后更多地分割成销售。市场越成熟越多 - 市场化进程就越细分。所以MDU，SOHO机器更接近消费者机器。
But we do have headwinds, I mean just to your point, Jeff. Next year, there are -- we do still have increases in both year-over-year in network taxes and programming. So we will provide more visibility on that as we get obviously into our guidance for the following year. But there still is some -- there are headwinds there. Having said that, I think Lutz is actually -- is absolutely right. We are doing all the things that we think we need to do in that market to grow the base, and to grow profitably and to drive cash flow, in particular free cash flow.
I think that brings us to the top of the hour, so I'll disclose it out. First of all, I appreciate everyone joining. Second, I'll just repeat that we feel like we are doing what we told you we would do at the beginning of the year. Number one, we'd get the deals closed. A lot of people didn't think we would. We always thought we would. And we got them closed on original terms, and that's important to us. We're driving costs down in the corporate and T&I space in our company, that's critical as we de-scale. We need to de-scale what we do and how we do it. And a lot of good work happening there, which I think will benefit, both operating cash flow and operating free cash flow.
We're driving CapEx down, actually not 20% but 25% through the first half of the year. And that hasn't been difficult and it hasn't had an impact, material impact at all on our ability to create growth. And we're delivering on the promise to put capital to work. And we didn't waste any time. It's only been a few days since we closed that deal, and we are in out about, more excited about getting the tender launched formally on Monday. Stay tuned for that paper work and those details. Thanks for joining us. And we'll speak to you soon. Thanks everybody.
但我们确实存在不利因素，我的意思是你的意思，杰夫。明年，我们仍然在网络税和节目方面同比增长。因此，随着我们明显进入下一年的指导，我们将提供更多的可见性。但仍有一些 - 那里存在不利因素。话虽如此，我认为Lutz实际上是 - 绝对正确。我们正在做我们认为在该市场中需要做的所有事情，以增加基础，增长利润并推动现金流，特别是自由现金流。
Ladies and gentlemen, this concludes Liberty Global's second quarter 2019 results and 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.
女士们，先生们，这就是Liberty Global 2019年第二季度业绩和投资者电话会议的结论。 请注意，Liberty Global网站的“投资者关系”部分将提供重播电话会议。 在那里，您还可以找到今天演示材料的副本。
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