Liberty Global Ltd. (LBTYA) Earnings Call Transcript & Summary

Right. I think we are live. So I'm Robert Grindle from Deutsche Bank, and I'm delighted to welcome Charlie Bracken, Liberty Global Group CFO, to this is our 25th annual TMT conference, this time in virtual London. Charlie, super to have you join us even in 2D rather than 3D form. We've got about 40 minutes or so...

Great to be here. Thank you for having me.

Thank you. We have about 40 minutes or so. So I'll kick off with some questions in fireside format. But I'll also ask questions from the floor via the chat function. So investors, please post your entries on that system.

So Charlie, Liberty has changed dramatically even over the last 4 years that I've been covering. Feels like longer sometimes. It's been complicated at the moment, but I think the new communication around 3 pillars and value creation is easier for us all to get our heads around. Please, could you summarize the 3-pillar approach? And then perhaps, we can talk about each in turn.

No, of course. And again, welcome, everybody. And thank you for taking the time to listen to us. I provide the classic manner when somebody is trying to call when you have a call. As you say, we've made a big change in the last 5 years. There was a while there when we were driving towards what I would call the fully integrated Comcast of Europe. I think as you know, we pivoted more to a value creation strategy based around the sum of the parts, and there are 3 key themes there: One is to take our principal and consolidated assets, end markets, which are consolidated between fixed and mobile and really drive value creation there on the FMC basis. And that's really building on the organic growth themes of fixed-mobile convergence, the growth in the SOHO markets, the ability to drive costs out through digitization, which you've heard from all the telcos. But in our case, also to monetize the synergies that lie ahead of us in those fixed-mobile combinations. I think the second bit is to use those platform businesses to try and drive value creation in adjacencies. And we call that the ventures portfolio. And we'll talk a lot more about it, I'm sure. But it's things like taking the core competencies or the core skills or the core anchor tenancy that we have developed over the last 20 years and using it to create new businesses and value creation opportunities. And we think we're off to a pretty good start there. We'll have to talk about some of those things. But over time, I think you'll see some very exciting, high-growth businesses emerging from that approach. And then underlying this all is our balance sheet management, what we call the levered equity strategy. We do believe in levered equity. We do believe in levered returns. And so we remain committed to a 4 to 5x leverage target and really redistributing our free cash flow back to our shareholders through buybacks rather than dividends. Now as we move to listed national champions, you might see a listed national champion, like a Telenet, pay dividends. But at the Liberty Global level, we'll be buying back stock. And in Q2, as you know, we announced a near-term plan for Liberty to buy back 10% of our share count for at least the next 3 years, which underlines our commitment to driving free cash flow per share.

Great. Thanks for that. So European FMC is the biggest pillar, of course. And post the U.K. and Swiss deals, you are set to exploit convergence in those markets as you are already doing in the Netherlands and Belgium. Your share of synergy NPVs for those transactions are in the excess of 50% of market cap. How are the 2 deals bedding down since your last update before the summer?

Look, I mean, I'm actually very pleased with how they're going. And look, I think we should obviously make the point that this is not -- we're not breaking new ground here. Not just Liberty, although we have done it in Holland and Belgium, I believe, very successfully. But you've seen same things with Vodafone. You've seen similar transactions with Altice. So the synergy story around FMC combinations is not something which is an unproven story. It's a very well-trod path. And obviously, we have a lot of experience and benchmarks on how to do it and how to phase it. And at least in the 2 big ones that we've done so far, Holland and Belgium, we've actually exceeded our synergy targets in both times. In the case of Switzerland and the U.K., there are very significant synergies ahead of us. I'm happy to go through kind of the details, which I'm sure people are familiar with. We're off to a very, very good start. You will see in both markets that we've got cost to capture, which is sometimes you have to put upfront costs to realize the synergy down the line. A good example would be an IT system. When you combine 2 IT systems, massive synergies, but you have to invest in the off problem. The one in Belgium is called project Darwin, for example; the one in Holland is called project [ bright ]. But it's the same principle. So what we're going to try and do as we talk to our investors is to highlight how much of the increase in cost, if you like, is related to the cost to capture and try and give you the underlying growth rates that are coming through.

In Switzerland, you indeed raised the synergies targets recently. What was the nature of the new synergies you found and the UPC MVNO? I think it's starting to migrate somehow. When will we see costs falling at across that?

Yes. I think -- I'd say to [ answer with these synergy ] deals is that when we do these transactions, management are always very keen, local managers are always very keen to give themselves a number they can beat, which is fine. So I wouldn't say that there's any new revelation that we sudden realized, oh, didn't realize that you could consolidate a bunch of offices. Oh, we didn't realize that you could combine call center operations. I think also there, the degree of -- as you get into it, [ Andre ], for example in Switzerland, you obviously get into the detail and you understand that there are more opportunities. So I wouldn't say there was some great revelation. I mean the playbook is the same. It's just with more detail and more understanding. I mean obviously, the big one there is the MVNO. Because if we have an existing MVNO, we can move it onto our own network. As we saw in Belgium, and to some extent in Holland, that is a very, very big and massive synergy. But there are lots of blocking and tackling synergies. I mean for example, offices, you don't need -- in Holland, they went down to, I think it was 3 principal offices from 16. Another example would be procurement is a good example. By definition, combining perhaps a slightly smaller footprint company like Sunrise into the Liberty Global platform gives you synergies, which takes time for these contracts to roll up. So I think, so far, so good. And broadly speaking, in these FMC deals, it takes about 3 years to get about 75%, 80% of the synergies. Because near-term ones, you can get just by necessarily rationalizing finance or whatever. But some of this is systems-related and process-related, and that takes a little time. So that's why you'll see that -- and you've seen this before, by the way. You'll see the synergies phase in over that period.

Yes, indeed. The synergy is pretty massive in the U.K., GBP 6.2 billion. Because it's a merger in the U.K., is that sort of -- did that change the way these premises were together rather than a purchase? Or is it kind of the same, the same stuff?

It's the same. And so when we do that -- we did a merger in VodafoneZiggo -- and Vodafone, I mean, fantastic partners. And must say I was down in Madrid on Tuesday. I mean Telefonica are fantastic. I really was impressed by them, and we're very aligned. And again, to be honest with you, it's not like we were reinventing the wheel. They've done plenty of FMC synergies. We've done plenty. So I think that we're all pretty aligned on the road map. So we have experiences now in both controlling the synergies, like we did in Belgium and then we will do in Switzerland, but also partnering. So I'm not worried about that at all. And as you say, the synergies are very good in the U.K. Again, I suspect GBP 540 million may be a little bit undercooked. There could be more there, but let's see how we play out. There's a much bigger MVNO synergy, as I'm sure you're aware, because Virgin Mobile was a pretty substantial business in its own right. But I think both businesses -- and whether you count this as a synergy or not, both businesses were very early on the digitization story. And I think if Lutz were on the call, he would say that his organic plan had pretty significant cost savings coming through as we rolled out the digitization plan you've seen, for example, in Holland and Belgium. And I think O2 had the same thing. So put the 2 together, whether that's an incremental synergy -- it's now how we looked at it, but there's obviously more cost savings to come there over time.

Okay. That's good to hear. And revenue synergies as well, I imagine.

Yes. The big thing about the U.K. -- and again, I don't want to make out that there's no -- it's not we're breaking new ground here. The U.K. is relatively underpenetrated on FMC. I mean Virgin Cable, if you like, was only 20%, 21% fixed-mobile convergence. I mean the Benelux is mid- to high 30s, in some definitions in the 40s. Similarly, if you look at SOHO, which is the highest-return business for -- at least for a telco or for a cable company, Comcast, you've seen that with our businesses in Germany, et cetera. if you look at just as a penetration of addressable market, I think in the Benelux, we're at the 35%, 40% penetration. Virgin was a 10% or 11%. And once you get that mobile cross-sell, you can really get some momentum there. So they've got, well, synergy or just runway for growth. There's very significant growth possibilities organically in Virgin that perhaps we don't see in some of the other European markets.

Okay. That's -- yes, U.K. is the least converged market in Europe. And now that's clear. So that's got to be an opportunity for you guys. And now a major issue for investors that I talk to is the positioning of the [indiscernible], which happily, in the U.K. and Belgium has been quite late for the incumbents to get with that program. And even in the Netherlands and Switzerland, the incumbents, they haven't been superfast. But Virgin Media has announced upgrade to full fiber by 2028, and that's sort of an advantage to you. What are the key drivers that make the move to FTTP more or less likely in your other markets?

Yes. I'm a little bit nervous about saying that fiber is good, cable bad. I mean that just seems to me a little bit simplistic. And I mean, Mike I thought did a really good job in our results call. Investors can't over time. He actually explained this I thought very well. Look, we're all in the game of producing the best quality, fastest, most resilient, most cost-effective network. And there are a number of flavors you can use to achieve that. As it turns out, for the last 10, 15 years, cable I think it's pretty well accepted and had a very material advantage over VDSL, ADSL and copper-based technologies. As there is a massive investment program rolled out over multiple years by the European telcos and indeed, these private equity guys, they're going to go to fiber, which is much more comparable to the coax technology. But remember, coax is a fiber-based technology. It's fiber and the question mark is would you define it as fiber. It's fiber down to the curve. It's the last drop. Most of the cable networks are, I would say, 99.5% fiber if you want to look at it in pure volume terms. So I wouldn't be making the distinction that fiber good, cable bad. We are in the game of the Euro DOCSIS rollouts, which we think will get us to some pretty good speeds. And CableLabs, which we in Comcast and Charter are all key members of, there's still runway on the coax technology. So I wouldn't -- I just can't emphasize enough. It's not fiber good, cable bad. Having said that, clearly, it is -- there are certain markets that we have where we have done, like the U.K., where it's cost-effective to put fiber in as opposed to coax, and we can do it very quickly. So in certain markets, you'll see us go more aggressively in that, and that's what Virgin's been looking at. And in other markets, you'll see us pushing the DOCSIS route. And in some markets, like in Belgium, you might see us renting other people's assets, whether they're fiber or otherwise. We currently have a bunch of partner networks in Switzerland, which we use the DOCSIS. So I think it's going to be a mix. And I think the point I'd make to investors is, look, first of all, we are well capitalized. We have a broad-based portfolio, so we don't have to go all in on one market at one time. We're in a position where we can make those incremental investments on a modular basis. We don't have to do a big bang, build it and they will come, which you perhaps see with some of these other private equity guys. It is anchored, all this investment, by very strong retail tenants, not least us. And so we should, in theory, be in the best position to monetize the incremental investment that all of us are going to make in our networks to remain competitive. And broadband is a great product. Demand for broadband is growing across the world. So the good news is that we're in hopefully position A to take advantage of that increasing demand for broadband.

Yes, absolutely. And you touched on it. But in the U.K., you will be running a fiber and a HFC network in parallel for some time. Is that just the pragmatism there as you upgrade on a demand basis rather than switching out to full build areas all at once?

Yes, I think so. I think -- I mean if I don't know -- I mean, I suspect that if you went all one technology as opposed to the other, I suspect that you will get some incremental savings. But at this stage in the game, whilst that maybe something you can get to in 5, 10, 15 years' time, let's say our technology evolves. In the short term, it makes much more sense to leverage the existing platform investment that we put in, which in most regions is very, very competitive. If you take out of the urban areas, building fiber in a suburban or rural area, that's a very high payback. That's a very tough 5 to 15-year payback. So I think that it will be just naive to say, oh, it's really worth doing Dartmoor with fiber, just to have that sort of purity of the whole network.

So our research has highlighted that Liberty is one of the telcos with the highest exposure to undervalued infrastructure. I'm sure you didn't mean that.

Thank you. No.

The chief upgrade is cable in the U.K., so it's supportive of that theory. But it's not so chief in other markets, less so. But the other way to monetize infrastructure is to increase network loading via wholesale. Where are you on this debate? And is it just a U.K. one?

No, I think we pretty much signaled that. And as you know, we already have a wholesale partner in Belgium, Orange. So we have experience of being a "wholesaler" of the broadband network. I think where we stand at this stage of the game is that we are open to explore all alternatives. There will be occasions like in Switzerland that we will be a retail partner for certain wholesale networks. But more likely, we can be a wholesale partner for some of the retail brands. And clearly, if we can pull it off, there's a very, very big prize, particularly in the U.K., to go after if we could achieve that. I mean obviously, you get the benefits of network utilization. You get the benefits of securing the tenancy. So I think that you should assume that we're exploring all of those things. And as soon as we have something to tell investors, we'll let you know.

Okay. And in the U.K., is wholesale under consideration just on the FTTP upgrade as it happens? Or can you still do the whole cable as it is and...

I mean all options are on the table. All options are on the table. I mean there's no religion here. And I think -- by the way, you've seen -- look, we've done a DOCSIS wholesale deal in Belgium. So we can definitely do DOCSIS. We can definitely do fiber-to-the-premise. I mean someone once said that, how can you do a DOCSIS wholesale deal? Well, we've done it already in Belgium, so it can be done. I -- we weren't enthusiastic to be dragged to do it back in the day, but we know how to do it.

Okay. You've learned the joy of wholesale then now. And...

Yes. Yes.

Yes in a way. So post the growth in the U.K., for example, by offsetting the impact of the altnet and the incumbent FTTH build would be positive to the stock price. Virgin Media, too, is considering an expanded Project Lightning, 7 million to 10 million additional homes. Any update on this? It seems we've been spitballing for some time. But of course, the JV was only created a couple of months back. So I think it's a bit unfair to sort of complain about not having an announcement yet. But where do you think you are on this -- you've been thinking about...

Well, I think let's say economic logic says that we should have the highest return on capital, right? Because we have a retail presence -- we own about 25% of the retail market, 40% our footprint. So we have strong anchor tenancy. We have incremental build. So for example, we already have a core network. We already have core programming relationships. We have a Tier 1 backbone, which we call AORTA. So any regional player -- and we are the regional player in some markets in our ventures portfolio. Doesn't have the kind of modular scale efficiency that we do. So all things being equal, we should be the most efficient builder. And the great news is it's not a question where we have to just going to build it and hope for the best. We can take our time. I mean we can see -- and we've had a lot of experience with Lightning. I think no one else is building at the kind of scale we were for 500,000 homes. So we can see -- we can make tweaks to the model. For example, we discovered earlier on in Lightning that we weren't doing as well as we thought we should do in MDUs. But [ Kevin ] has done a really good job of turning that around. But -- so I think that -- it's definitely ours to lose. Now are we committed to building a lot more? The answer is yes. As you rightly point out, we had to wait for the closing of the JV, but I'm not sure I'm stealing any thunder from the Telefonica folks. But nor -- I would say, we absolutely get it. They're committed to building. They've proven that in their own markets. So you should assume Virgin Media O2 is going to build -- and I would make the case that we have every prospect of having the highest return and hopefully be the biggest winners. And we have the biggest track record of doing this at scale. We actually have built 500,000 for 4 or 5 years. So again, I don't want to dismiss these altnets and I haven't a lot of time. Some are holding nice [indiscernible] years ago. But surely, he's in a weaker strategic position, has much higher execution problem than we do. And he doesn't have anchor tenancy. His problem is to get a 50% market share, he's got to get both Sky, TalkTalk and Vodafone on it because BT and Liberty aren't going to go with him. So he -- it's going to be a challenge for them.

Yes. [indiscernible] was -- attended our conference yesterday, and she absolutely expressed support for the sixth national connectivity champion thing. But you've been doing 400,000 to 500,000 homes a year. What does it take to get it up to 1 million plus? You have announced 400 new employees, I think, apprentices, engineers by the end of '21. And can an accelerated build happen at the same time as you are upgrading the existing network?

Yes. I mean look, it would be glib to yes, just glib. But Rob Evans, who runs the line and build we put in place I think it was 5 years ago, probably 5 around years. We've been at it 4 or 5 years. We've obviously been dealing with the question of how you build networks across Europe. We used to do upgrades and new builds for like 1.5 million in the early 2000s. So this is something we have a lot of experience in. And I think that he is very confident that we can scale up appropriately, both through internal and external resources. So I really am not worried about that. And if the question is can Virgin recruit folks -- Virgin is still perceived as a very high-quality employer -- Virgin O2, I should say. So we -- I'm very confident that we can get that done.

Okay. And with regarding the trade-offs between self-funding the build over to partner, could Liberty, parent company, holdco, be the intrabuild partner investor in a fiber JV in the U.K. alongside Telefonica for example? You've got quite a lot of unencumbered cash...

I mean possibly. I think -- I mean, look, we're driving -- we aspire to drive 15%, 20% return on our equity. Some of these infrastructure funds, obviously look for a lower return on equity, which absolutely their prerogative. There's obviously different financial characteristics to an infrastructure asset, like a network, to a perhaps a retail business. And I think these are all questions that are going to unfold not just at Liberty, but across the European telco landscape. How do you create liquid? How do you create clearly demonstrable vehicles to highlight the value of these assets? I mean it's clear private equity is seeing quite a lot of value in the telco sector broadly, private investors that has not been reflected in the current stock price. It's not just at Liberty but with everybody else. So I think the question for all of us is how best to structure and financially engineer this very exciting opportunity to invest against the ever-increasing broadband digitization opportunity over the next 5 to 10 years.

Yes. Well, sort of where I'm going with this is the dividend coming out of Virgin Media O2 is pretty [ predictable ] cash flow depending on whether your self-build or go with a partner. And is it -- I mean I guess that is the big debate on where your future free cash flow goes, right?

[indiscernible] is to reinvest free cash flow back into 15%, 20% IRR businesses. As you know, we for a long time have articulated that Lightning is a levered equity return in excess of 20%. And I'm happy to rehearse that debate of why I think 20% plus IRRs in equity is what we're realizing. But I think we have to strike that balance between how do we position this in the public equity markets. And we'll go through that. The one thing I would say about Virgin Media O2 is from a Liberty perspective -- and I certainly think this is true at Telefonica. They obviously should comment. We're very committed to this levered equity return. As far as I'm concerned, Virgin Media O2 is -- it can be levered and should be leveraged around 4 to 5x, possibly 5x consistently. And that obviously gives you a lot of recap potential, particularly as these synergies come through to fund any build that comes up over the next few years. Assuming the [ Anglo ] debt markets are there, which they obviously have been for the time being.

All right. Well, I've certainly been writing a bit about that. But if you're going to spend significant CapEx on a new fiber build, of course, those recaps would get delayed in due course. But that's good investment essentially.

When you say that, I mean, it depends on how you structure it, of course. I mean there's obviously a lot of capital available for new build JVs on top. I mean the going rate seems to be the greenfield project with no EBITDA, which is certainly not the case of Virgin Media O2. Can borrow 70% of the construction costs, have very light cost of capital and put in equity accordingly, and then you could layer the equity. I mean again, the danger, I think, will be we've got to try and position this with equity versus so that it doesn't get too bitty and too complex, which perhaps is the argument for thinking about the right structure. And we've certainly seen the private market putting a very high value on these assets. And that's not been reflected in the public market because I do think the complexity and the duration risk, if you like, on these returns is much harder to do. So it's -- but we're very aware of that. And I think what we need to do is try and make sure that we structure it as best we can for investors.

Great. Okay. Well, moving off the U.K. to Belgium slightly. I mean they are in a sort of similar debate about FTTH. Been talking to Fluvius for a year. What's the current status on that? And any prospects for a resolution on Voo any time soon?

Well, look, I think first of all, they in a great position. And we now have got the best network, I would argue the best management. We've got the best retail brand. We've got the best product offering. They've got a fantastic fixed-mobile proposition. So [indiscernible] trade in line with that, what seems to us a very, very unexpectedly very high free cash flow yield. I mean they're doing great. So first of all, I don't know if they're under any time pressure. Obviously, like all of us, they're looking at the most economical and efficient way to keep upgrading the performance of their network. And Fluvius is definitely an option. And I think you should assume that they're diligently pursuing that, but I wouldn't necessarily say it's a must do or has to do. I think it's a question of evolving and seeing how that plays out. I think in the case of Voo, it was never us. Because a national consolidation makes sense when you're a national mobile and a regional cable company. I suppose it does. I mean they should have the higher synergies. Clearly, that's a very political process, that sale process, but you should assume that Telenet is absolutely involved in looking at it. And we believe at Liberty we're very supportive of them doing that transaction. And we think that particularly with the depth of management they have, they can drive very good returns for their shareholders. That's included.

Sounds good. So moving on to the second pillar of value creation, which is ventures. At ventures, it's said that you guys to be worth in excess of $3 billion or $5 a share, held towers, which is another $2. So that's a quarter of your market cap. It's a pretty big number. So what's the likely time line on towers asset monetization? Or any change to your towers portfolio?

Yes. So we have 3 buckets of towers: Belgium, Holland and U.K. Clearly, in Holland and the U.K., we have partners. So we're not the only people driving the bus. Having said that, both Vodafone and Telefonica have shown an interest in highlighting the differential value of towers within their portfolio. So you should assume that we're pretty aligned with them. And I think you should see -- and the same would apply to Belgium where we don't have a partner, but I think our public market partners would agree that there's a lot of value in separating out those assets. So you should see that -- you should assume that we are actively looking at how best to do that. You should assume that we're not in love with owning those towers freehold basis, and we'll hopefully announce it will come sooner rather than later, but let's see.

Okay. So it's a valuation sort of call. Are there any disadvantages to spin them out at this point?

Well, I think the debate was always if you lose ownership, do you give away value because the other guy can hold you to ransom. And I'm no expert, but I'm told by my friends in the mobile business who are experts that it depends on how you structure the leases. And I think it's a pretty well-trod path of how you structure those leases, whether it be Telefonica's lessons or Vodafone's lessons, or for that matter other lessons, et cetera. So I don't want to dismiss the risk, but hopefully, it's a pretty mature space where people really thought through the pros and cons and what you need to make sure you hold on to.

Right. You can protect your interest through the MSA or something like that.

No, no. In a sense, we already are on that game. A lot of our technical sites, 2/3 of them, actually are rented. So we, for years, have built [indiscernible] analyst that towers are perhaps a hidden asset within our portfolio. But we've had experience of renting and on owning assets. But when you have a 25-year lease, what does that mean? Does that mean you own it? Or does that mean you rent it? I mean I can make you a case that 25, 30, 40-year leases are de facto ownership. Similarly, I would argue that we have experience in Switzerland, for example, we don't own the towers. They were [indiscernible]. And I can make you the case that last I looked, it doesn't seem to be that they're materially disadvantaged because they rent their towers as compared to the other markets, where we are the partner in CTIL in the U.K. or wholly own them in Belgium, Holland.

The U.K. government is taking some significant steps to reduce the cost of the towers for the telcos. And rugby clubs and churches are crying out at the lower value they're receiving. So maybe that takes a while to play out before you get to a point of getting full value. But it sounds like you're almost ready to go ahead.

I think we're not in love with owning them. We don't see the strategic to bundle up these very high, multiple assets with perhaps lower multiple retail assets that we also earn. So you should assume we are open to structures that will identify and release that value.

Okay. So with regard to other assets within ventures, should we expect a rolling program of investments and sell down more than...

And listings. And maybe listings. I think -- I mean, look, I think let's just talk a little bit about how we see it. We see our ability to play in where we have other insights because we have been an anchor tenant or an anchor customer or an expertise. We have experience in subscription businesses or, frankly, because we already own the assets. And we think that we are in a good position to try and drive higher returns by highlighting the differential value to them. So if you take something like an AtlasEdge, which is taking the hub sites -- so cable companies have hub sites around Europe. These are like in -- you can have Barnsley -- maybe not Barnsley. But Barnsley, which is a small English town in Yorkshire, there will be a, what we used to call a central office, but in cable land is sort of a building. Which, let's say, 30,000, 40,000 homes connect into a building that has -- I'm exaggerating, GBP 10 million worth of kit and it costs about GBP 3 million or GBP 4 million to move that kit. So these are pretty valuable real estate actually when you think about it. So just on a pure sale leaseback basis, they should be very valuable assets. They've got a great covenant. They're mission-critical to the network. They structurally seen with a capital structure, blah, blah, blah. The question is, is as the world moves to edge computing, do those assets actually have incremental revenue streams to be developed by hosting not just an anchor tenant, like Virgin Media O2 or in Belgium, Telenet? Or for example, could you start hosting Amazon? Could you start hosting Google, Ford Motor [indiscernible] HSBC, people who would like to be closer to the customer as this smart home digital revolution continues to gather pace. That is what we mean... [Technical Difficulty]

We just lost Charlie there.

The assets in our anchor tenancy, they put in a couple of hundred million of cash. And together, we're going to invest against that opportunity, both in terms of [indiscernible] but also in terms of upsell. And whether or not we choose to cash that out or whether we chose to enlist that business and highlight the value that we've created to our investors, to be determined. But that's the model where you should see us approaching our ventures portfolio with.

Okay. You were slightly intermittent there, but you're back on the phone now. More than half of that would be.

I'm sorry.

Yes. More than half the value of ventures is in content, which I think put off investors in Liberty in the past. Tech is the next largest, and then infrastructure is just a small part. Do you think that mix will change over time? You did highlight the infrastructure asset, the asset side there.

Yes. I mean, look, I think the content, we have 2 broad buckets. One is obviously underlying content production, whether it be All3Media, which is producing TV production, which we think is a long-term good bet. We also have underlying sports assets. Formula E, I think, is going to be a great asset. And now we have the free-to-air broadcasters where I think we would not necessarily view that they're very high value, but we're happy to buy them at lower valuations. We did in Belgium and Ireland because we think we can add more value than the other owners. And I think we've hopefully proved that out in what's going on in Belgium and Ireland. Sometimes it depends. I think in the future, though, I think you'll see a lot more weighted towards infrastructure. I think that as we investigate that opportunity, we are getting very excited about the opportunities for us to leverage existing undervalued assets in that space. So I'm not going to make any predictions. But I think hopefully, you're going to see some unicorn assets emerging in all 3 buckets. But infrastructure, I'm very optimistic about.

Okay. We're certainly making progress recently with the markets running, et cetera. Then just on moving slightly to other M&A outside of ventures. UPC Polska, you announced a tentative deal at least with Iliad with Q2 results. What's the latest there, please?

I think it's on track. I mean I don't want to -- I mean, typically, we wouldn't have announced that transaction until it was signed. And Iliad had to because they had certain legal requirements. So there's obviously no update we can formally give you, but I would confirm we're on track. And look, I would highlight this is another example where the private markets put a different value on these assets than the public markets. Poland is a great market, but it's obviously got to [ harness ] the capital, it's less tax efficient, it's perhaps more competitive, the regulatory regime is a little tougher. But even in that market, you're just under 10x multiple announced basis. That, I think, highlights the underlying value of these assets. And clearly, you would expect a premium from markets like Switzerland or Belgium or Holland or U.K., which have different cost of capital and political characteristics.

How do you think about sale proceed from this transaction, towers? How would you allocate those? Is it -- I think you said you weren't interested in deleveraging. You're happy with the 4 to 5x leverage ratio. So is that upstream in a sense?

Yes, it's upstream. And I think we're nudging $5 billion now of excess capital. We made this commitment to buy back 10% of our stock in the next 3 -- this year, next year and the year after. We might buy more, to be honest. But for the time being, I think we tried to give a very clear signal to investors who want to have some sort of commitment on capital returns. So in some respects, you could argue we're putting in a 10% dividend yield on the stock because of that commitment, whatever the price is, actually. And as I said before, we will look for opportunities to deploy capital. But again, just to reassure people, it's got to be a pretty high bar for us to deploy capital at scale in transactions when you look at the returns we think we can make on buying back our stock. So let's see what happens. But I think the good news is there's plenty of opportunities for us to deploy stock with a market cap our size.

Indeed, the buyback announcement, certainly have raised eyebrows. The unlimited share price was interesting. And so -- and then that sort of cause us to focus on free cash flow or spreads for the Virgin dividend, et cetera. But just before getting back to the big...

[indiscernible] Yes, the 10%, remember, the 10%, we don't need at least -- would have a lot of free cash flow, he says without making commitments. But we have a lot of cash flow. But with $5 billion, you can -- I mean, that's about 1/3 of our market cap, we can -- just from existing cash resources. And we do understand cash rates are at a discount in the public markets, but we clearly don't -- I mean, whatever the free cash flow is, that's not necessarily going to materially impact this ability to buy back 10% of the company. We have a very unusual position to [ hold about ] 30% of the company the last couple of years, perhaps more than any other company in the world, perhaps [ from Altice U.S.]. That's what I read. But we have got a lot of capital to support that 10% commitment. So I don't think it's dependent per se on the free cash flow.

That's an important point. Ireland and Slovak, sort of out there, sort of wondering what happened. What's the latest there? They got sold, still an open question.

I think the playbook is pretty clear. You're going to look at fixed-mobile combinations. You're going to look at national consolidation, but we already have that in Ireland. You might look at infra RetailCo. I mean I would say, still, it's very small. It's a very tiny business. I mean Ireland's not bad. I mean it's $200 million. I mean I think I would describe that at the -- not quite the Swiss end of cost of capital and political stability, but it's definitely a low -- it's a low discount rate market, very attractive. We've got excellent management of the business there. So I think the answer is that you may well see transactions there. And as Mike has always said, we'll do whatever we think creates the most value for our shareholders: buy, sell, hold, merge, grow, invest. I mean we'll see what happens. But I mean, currently, both those assets are actually performing pretty well, particularly under Tony. He's doing a great job.

So hanging on to them is completely a scenario in the same point.

Yes, absolutely. Although I'd be surprised if there wasn't some strategic moves in our future just to normalize what we're doing in the other markets.

Yes. I'm sure you'll keep us on our toes going forward. And so going back to the cash flow. You have given this strong buyback guidance for 3 years, but not the group cash flow guidance. Bringing it back together again, is that because you're just super confident and you don't really mind about the cash flow number. As you say, you've got the cash flow related to the buybacks. Is it down to the VO2 dividend that's the most important sort of variable? And looking at your group free cash flow, should be just [indiscernible] free cash flow?

Well, [indiscernible] we're going to increase -- all things being equal, our free cash flow materially because of all these synergies. I don't think that's a particularly controversial statement. We quarter called 4 or 5 years ago when we made multiyear commitments. So I think Mike and I are extremely reluctant to make multiyear commitments just because we are -- we want to get in the game or hope to be in the game of over deliver, under promise. So having said all of that, free cash flow is the key metric for us. And we're very confident there is a road map to create significant value creation by increasing our free cash flow. I think a lot of the research analysts having us doubling in the next 3 or 4 years. And note, it's going to reflect the benefit of all these synergies. So I wouldn't read a lot into the multiyear guidance point. It's more about, let's just go steadily as we go. And obviously, we want to also maintain a flexibility perhaps to increase our buyback or whatever we want to do. So I think it's prudent for us just to keep giving annual guidance.

Okay. Well, if you just strip out the unencumbered cash and ventures from your market cap, it's a company with very high equity, free cash flow yield, which counts on the buybacks you're planning, that's for sure. What do you think the key challenges are over the next 6 to 12 months? What's keeping you awake at night?

Well, I mean, I think -- I mean I said it before, but in our industry, regulation is always a risk. I mean having said that, I have to say within the mobile business, we've had a lot of adverse regulation. You kind of wonder what's left with -- and so in the U.K., we had the [ best ] tariff thing, et cetera. So regulation is traditionally the biggest risk in the telco business. I mean from our perspective, the reason why I think we're in as good a shape as we've been for many years is we have this runway of synergies to realize over the next 3 or 4 years with a reasonably well-proven road map. So I'm not saying it's not without challenges, but I mean I think it's ours to lose in those markets. And I think also in the next 3 or 4 years, particularly in Switzerland and the U.K., there are also significant opportunities on the revenue side, SOHO, FMC conversions and the like as well as these new build opportunities. So actually, I'm pretty excited. I think that if I was to worry about -- what would I worry about? I'm not that worried about leverage when we've got very long-term debt, 8-, 9-year debt. Average cost of debt is 4%. It's all fixed. You could argue we shouldn't have fixed, but we fixed. So I'm pretty confident about that. Maybe I'm going to regret this, this time next year when we talk. I want to go, oh, d***, I wish I thought about this. But I think apart from regulation, which is always a risk, I think we're reasonably the safe.

That's great to hear. So just looking through the questions from the floor, I think we've addressed pretty much those points. So with that, I'll say, Charlie, any final comments from your end? You're seeing now...

No, I just -- yes, well, just to say, look, thanks to everybody for their interest and support of our company. I'm sure you may even have -- Max Adkins, who was our -- under [indiscernible], was coordinating our Investor Relations here in Europe. He's now the CFO of Ireland, which tells you he thinks it's a great business. And we've had Mike Bishop out of Goldman Sachs to replace him. So those of you who haven't met him, please do. And obviously, we'll try and get out and talk to you all. Please do reach out, and we would love to catch up.

A bunch of great hire. Thank you. So thanks very much indeed for your time today, and looking forward to catching up in due course.

Great. Thanks, guys. Cheers.

Charlie.