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

Okay. I think we're good. So welcome, everyone. I'm Robert Grindle, Deutsche Bank telecoms analyst based in London. And it's my pleasure to welcome Mike Fries, CEO and Vice Chairman of Liberty Global. Mike, thank you for joining us today.

Nice to be here in person.

Absolutely. It's been too long. And would you like to say a few words to kick off? And I'll ask some questions. And then perhaps, if there's time at the end...

Well, I might just say 1 or 2 things about what's happening in Europe since we're Europe company -- European company. Primarily all of our businesses there. Obviously, we're monitoring, like everybody, what's happening in Ukraine very closely. We don't have any direct exposure. Most of our businesses are in Western Europe. We do have one business in Poland that we just got EC approval to sell to iliad. So that will be gone at the end of the month here. But we're monitoring it closely. We do have some engagement with Russian companies, and obviously, it's a bit of a tragedy. But I think for the most part, we're in fine shape, and we hope for a very peaceful resolution. We're providing free connectivity, of course, to Ukrainians to and from. Our Polish operation is very engaged in the refugee situation. We've made personal donations as a Board, as a management team. So I know it's a little -- it's a bit more distant for folks here in the States, but it's quite front and center for us in Europe. And we are hoping for some kind of resolution here shortly. Hasn't had a very direct impact, as I said. We're monitoring energy costs and things like that. But certainly, a tragedy nonetheless. And then I'll just say a couple of things. Listen, we had our Q4 results not long ago, and we felt it was a very, very strong quarter. We delivered, of course, on our guidance, which is most important, 40% free cash flow growth, 50% free cash flow per share growth. We delivered 1 million broadband and mobile net adds, so continued good demand for connectivity. And I think for the most part, we've been doing all the things we said we would do, in particular, buying shares and staying levered and all that important stuff. We've got some headwinds. I mean, 2022 has got some -- we have our work cut out for us. One, it's a competitive market in Europe, which you would all know. If you don't know, read about us and Robert's great reports and find out. Secondly, we're at a bit of an inflection point. We are investing in fiber and 5G, which is the right thing for us to do. And I think thirdly, we're in the peak cost capture period on 2 of our core merger integrations, which will deliver $12 billion of synergies over the next 3-plus years and on an NPV basis, but we're in a peak cost to capture year in '22. But we've got some great tailwinds, we think. Demand for connectivity, as you know, continues to be strong in Europe. Markets are really rationalizing in Europe for the first time in a long time. We're seeing pricing power, with inflation, a little bit of a boost to that. But still even without inflation, good strong pricing power. So a lot of positives, and I think we remain focused on value creation. That's our #1 goal.

Great to hear. A lot has changed since we last met in person 3 years ago, I think it was. You've sold Germany and Poland, you mentioned at great multiples; acquired Sunrise; merged with O2; bought back close to 1/3 of your equity. And yet the shares are still at $25 or so. Are you frustrated? I am. I've been a buyer all the way through.

Of course, I'm frustrated. It's pretty much the vast majority of my net worth and a big chunk of John Malone's, too. So yes, of course, we're frustrated. How can we not be? Having said that, as you just went through that list, we're doing all the things we believe are necessary here to create that value. Number one, our pivot to fixed-mobile convergence was the right move. We exited cable markets, imagine Altice USA or something like that, we exited our cable businesses in 6 countries at 9x to 11x multiples while our stock was trading at 6 or 7. And that was about $30 billion of total enterprise value, maybe $11 billion, $12 billion of cash. And then we doubled down in the other 4 core markets to create these fixed-mobile champions, where really, video itself is a relatively small part of the business. It's all about broadband and postpaid mobile. And those businesses are now have great scale, great synergies. We're #1 or 2 in the countries. So I think that pivot was, for sure, the right move for us, and we felt really, really good about it. And the champions that we've established will certainly go on to create great long-term growth and value creation. So that was the right move for us. And we remain -- listen. People ask, are you -- I was just talking about this off-line. "Are you focused on long-term value creation? Or are you focused on the stock price?" And I say, well, you have to be focused on both. There is no stock price if you weren't focused on long-term value creation. If you're not answering questions around technology, customers, talent, strategy, all that great stuff, then there is no DCF, there is no NPV. So we're focused on both. We invest heavily in long-term growth. That's our goal. We've repositioned our company entirely. I think we've allocated capital exactly how investors wanted us to. We bought $6 billion worth of stock in the last 3 years, $11 billion in the last 5 years. Our market cap is $12 billion. We have put $3.5 billion into Switzerland, where we doubled down on that 1 market. So 1 of the 4 core FMC champions we put investment in. We're sitting on $4 billion of cash. I don't see how anybody could complain about how we're investing capital and allocating capital. It's exactly what we should be doing. But then we're also very focused on the value gap, whether that's through buybacks or levered equity model or looking at ways to create greater transparency in our business. So I think we're doing all the right things. And we're confident, obviously, by buying a ton of stock as we sit here today, that this will obviously be the right strategy long term.

I'm going to pick up on some of those points in a minute. I think one of the reasons for weakness is that the market perceives cable is a bit inferior to fiber. Some of the operators have been a bit slower to roll out in your market, but they're now doing some a bit more. Do you think that's fair? After all, regardless of the upgrade path, consumers are reluctant, it seems, to lose their cable pipe into their homes. Now...

Look, I think there is a debate, hybrid fiber-coax, which is what Comcast and Charter and Altice use. I'm using U.S. examples because perhaps many of you know them, and fiber. But the truth is HFC is a very robust, innovative platform. Been around 60 years. It's not going anywhere. And I think most importantly, hybrid fiber-coax is fiber-deep and fiber-rich. Now having said that -- and it's also created for us the opportunity to lead the market. So in our 30 million homes today, 95% of them are 1 gig. So we're way ahead of fiber incumbents or fiber builders. Now having said all of that, in 3 of our 5 markets today, we are absolutely going to build fiber. Now I'll tell you why in a minute. But one of the reasons is it's very cost-efficient for us to take that last little bit of the hybrid fiber network, which is largely fiber-deep, fiber-rich, and make it fiber. Inexpensive when you own the duct and own the infrastructure. More expensive in America, not as expensive in the markets we're doing that in Europe. Secondly, it opens up great opportunities for new revenue streams, whether that's wholesale revenue or other B2B-type opportunities. So there's a cost issue, there's a market issue, an access issue. And from our perspective in the U.K. and Ireland and in Belgium, we are going to turn our cable networks into full fiber networks. And we think that is highly accretive, cost-effective and smart for us to do. That will happen. It doesn't mean that HFC, whether it's in Holland or other markets, is somehow a dead technology. Quite the contrary, it's going to be around for a long time. Charter and Comcast are not giving up on HFC and DOCSIS. DOCSIS 4 will be here, it will be faster, it will be sooner than we think. But where we have the opportunity to build a fiber network or really just, I would say, cap off the network with a little bit of fiber, we're going to do that in Europe and it makes a lot of sense for us. So I think the debate's misguided and mis-founded. I think it really is market-specific and operator-specific. And in our case, we're going to be a bit of both.

Best of both worlds. One thing that's changed since we last met in person is the outlook for inflation. How is that impacting on your strategy today? How can you mitigate the impact on the cost front?

Well, anyone who's looked at our industry over the decades as I have, inflation is a double-edged sword. On one hand, sure, it can result in higher cost. It does result in higher cost. Generally, not higher than rate increases and the impact that the positive revenue tailwinds we get from it. And I'll speak about maybe a couple of those. But on the flip side, it does create pricing flexibility. Let me give you an example. In Europe, in the case in the U.K., for example, we have CPI-based contracts. So in the U.K., our entire -- we are the largest mobile operator in the U.K. We just took an 11% increase on our rates. We are not seeing 11% increase in costs. We took a discretionary 6.5% increase on our fixed base, we're not seeing 6.5% increase in cost. So I think long-term inflation has been, in this industry, high fixed cost, asset-rich industries, it's generally been more of a positive than a negative. But we watch it closely. Energy, we did not anticipate. Let's be clear, what's happening in Europe today certainly has impacted energy cost. We're about between 50% and 100% hedged, depending on the country, on energy. But we will have some exposure in some cases if this doesn't resolve in Europe. So that's -- but it's a tiny percent of our OpEx. I think it's 1%, something like that. Tiny percent of our OpEx. But nonetheless, there will be some things, some gotchas around energy perhaps. But for the most part, inflation has been more of a positive for us over the years than a negative. And we -- generally where we can, we bake that into the revenue with little to no impact. I mean, we've seen -- even with those rate increases I gave you in the U.K., very little impact. O2 is the lowest-churn operator in the U.K., Virgin Media has record-low churn. We think we're going to drop GBP 150 million to the EBITDA line just from those rate increases. So it works both ways.

Well, a little bit of growth, even if it's inflationary, would go a long way in this sector. Is the consumer going to wear it? I note in the case of O2, you're one of the few operators -- the only operator not to charge for roaming in Europe. Is this a case of you're raising your prices, but you're actually giving some value and mitigating the effect and making sure the consumer remains happy? Do you see this...

Yes, we decided that the roaming question not to bring back roaming across -- roaming charges. I think that was just an opportunity to distinguish ourselves from other operators who had gone right back into it as soon as they could. And as soon as the COVID ended, they said, "Well, if you're going on vacation, you're paying us a surcharge." We said, "Hey, why don't we not do that?" It's not a meaningful revenue generator anyway, not as much as people think. So that was us trying to be friendly. And we have a great customer relationship, highest NPS, lowest churn. So we are the most-beloved mobile operator in the U.K., we're going to keep it that way. And we have not seen great pushback on these rate increases. People, whatever reason, they understand it. It's a unique situation. Won't happen every year. But it's also contractual, it's built into the contracts. So that helps make the case.

Okay. Good. Well, the U.K. is very different from your other assets in that you have a major altnet opportunity because your footprint is smaller than in other countries. And as well as that, you've got an easy upgrade to FTTP through existing cable, and perhaps a wholesale opportunity. So on the 7 million homes JV, is it the case that, with the JV structure, you've just been liberated now to push fiber harder? And then even beyond that, if you do a JV under the JV for fiber build, has this just released the floodgates of something you kind of wanted to do for a while?

Well, let me unpack that for people who may not know our stock. There are a lot of JVs in that question, so let me unpack that a little bit.

A lot of JVs in your company.

Yes. Well, I know. We're trying to -- we're working on that. But -- so the U.K. is unique for us. So we are the largest mobile operator, we just talked about that. And we are the fastest, most important broadband operator, but we only have broadband reach in half the country. So not unlike telcos here, Verizon or AT&T, they've got national mobile footprints, but regional, if you will, fixed footprint. So in the U.K., 30 million homes, you reach about half of them with 1 gig networks, the best network's 2 to 4x faster than BT, all that good stuff. And so we've been attacking that issue because convergence requires reach. If I can offer a fixed-mobile product to half the home, but the other half, I cannot offer a fixed-mobile bundle, I'm disadvantaged in that other half. I want to drive convergence in that other half of the country. So we're doing it 3 ways. First, we have been building out homes, Project Lightning, for several years and we built 2.7 million homes. So we've added to our footprint very incrementally, very methodically, but I think very accretively; because we're generating great IRRs, great penetration rates, great build costs on that 2.7 million homes we've added to the footprint. Secondly, as we've announced, we are going -- as I just referenced, we are going to rebuild or upgrade those 15.5 million cable homes to fiber over the next 6, 7 years at a relatively efficient cost structure, just marginally more expensive than it would cost to do DOCSIS 4. So that will bring us to full fiber across half the country, plus, we're adding a little bit. And then thirdly, we've just announced, and we are in the market for, a network expansion project that will add 5 million to 7 million homes on top of the 15.5 million. So take us to 23 million homes, 90% of the urban U.K. market. And in that case, we are going to do it with financial partners. What we're going to do is essentially raise capital because infrastructure capital is quite inexpensive right now and relatively plentiful, and we are going to build out those 5 million to 7 million homes, extend our reach throughout the U.K. and create, we think, great opportunity. So that is -- would we have done that had we not been in the JV with Telefónica? Unclear. But I think the opportunity is there now and we're attacking. We think it will be great.

Why are Liberty and TEF, the owners of the JV in the fiber project, the new fiber project, rather than direct VMED O2?

Yes. So in that case, we just -- we could have gone either way, it benefits to both. So VMO2, our operating company in the U.K., will do all the work. They will build the network, they will sell the network, even manage and maintain the network. But we will own it through a really light NetCo structure with financial partners. And the reason for that is it gives us a bit more flexibility as owners. It keeps it a little distance a bit from the OpCo from a consolidation point of view. It gives us more flexibility on leverage. And also the next move. There are, for those who may not be experts on the U.K. market, there's as many as you sitting in here, there are operators running around trying to build fiber in the U.K. and they're not all going to make it. It's just a fact of life. Most won't. And so we maintain some flexibility in our ability to consolidate those other builders, if we can, with, I think, a structure that keeps VMO2 out of the financial holding entity, but certainly an engine inside the operating strategy.

Got it. And will VMED O2 make a margin on the build? Or will it all be sort of happening within the JV?

That's been negotiated. Yes. process is underway. IMs are out. We'll have non-binding bids in the not-too-distant future. So all TBD.

Okay. Great. Great to hear. Exciting times. BT is effectively a fixed infrastructure monopoly in those new areas you're building out to. And historically, you've shown you can get to 30% penetration. The market should be more excited given your previous success. Why do you think does the public market may not get it, that there's a big opportunity?

Well, a lot of it's on the come, I'll start with that. But to begin with, the infrastructure investors are themselves unique. They are looking at long-term returns, relatively low hurdle rates, more capital than they know what to do with. So it's a different investment pool. And for them, they are excited by essentially a REIT-like structure in a fiber infrastructure tower company, whatever. So I think you're going to -- that it's just a different investor profile. And as a result, they're going to look at these assets differently. But it's a win-win for us because we get access to cheap capital, we expand our networks, we're getting fixed-mobile convergence across the U.K. We will come in right behind there with, we think, 30% penetration rates. BT is a monopoly today. As sure as I'm sitting here, that monopoly is over. Whether -- we're going to have 23 million homes, 90% reach of urban markets with fiber. The probability that BT is the only provider of access, wholesale access, in 1, 2, 3, 4 or 5 years is 0. So we're -- for us, it's a win-win as an operating company to take advantage of these infrastructure investors. Now for the average investor, I get it. There's moving parts here, there's a layer cake. All I want to see is growth. I want to see customers being added. I want to see fixed-mobile convergence working. I want to see you hit the synergies. We're doing all that. We're super busy, focused on that. But the fact that we can put this structure together as a sidecar almost and drive to 90% of urban homes with really inexpensive infrastructure capital is a -- turbocharges that whole fundamental organic strategy for us in the U.K. And I think with 30% penetration, as you say, 1 or 2 wholesale access seekers added to that, you get to 50%, 60% penetration. The returns on that investment alone are very good. And we think it's the right strategy.

So it sounds like you're optimistic on the prospect of getting wholesale partners over time. Will you have to put some of your own money in from the parent co?

Yes, this 5 million to 7 million home extension added to our networks will cost capital, but not much for us. I don't think we've come public with it, but plus or minus GBP 100 million a year for 4 years or something. I mean, it won't be a lot of money. Because we're 20% -- we'll be 25%, TEF will be 25% and then the investor will be 50%. And so our actual out-of-pocket equity will not be substantial.

Great. Well, I move away from the U.K. now. But sticking with infrastructure, you have flagged interest in other infra opportunities. And I think you have started to invest in Germany. Is that a sort of -- could it be a big thing? Or is it more of a side hustle at the moment?

Well, I don't think it's not a big thing. I think -- and I don't like the word side hustle myself, but it is a venture investment, so it's not a direct -- we're not looking to move the needle there. And I would say it's relatively small today. We'll start -- we have a right to play in that market, right? I mean, we were there for many, many years. We sold our asset and made great return on capital. We know the market. There's very little fiber in that country today. There are opportunities to make money. But I wouldn't get too distracted by it. It's a small investment with a partner that might be interesting. It's part of our broader venture strategy, which we think is worthy of people's attention, but not a distraction.

I'll come back to ventures, which is doing really rather well. In the Netherlands, how would you feel about acquiring Vodafone's stake in VodafoneZiggo?

Coming right out at it. Well look, I would say this. For those who might not know, we've been in a 50-50 JV with Vodafone for 5 years now. And I would say the partnership has been really good. We have seen eye to eye on most things. We have -- we respect one another. But I think even most importantly, we have achieved everything we set out to achieve. Successive quarters of revenue growth, strong EBITDA growth, $4 billion of capital back to us in that 5 years, through dividends, management fees or payments through TSAs, equalization payments, interest on loans we've made. $4 billion just right back to us. And the business is generating consistent free cash flow, EUR 550 million to EUR 600 million a year back to partners. So it's done everything we asked it to do. And it has been a fantastic example of convergence in Europe. We have -- I can't say that. We have KPNs, but I was going to say something else, over that period of time. We're the biggest B2C operator in the consumer space. They've started to gain a little bit on broadband. We'll talk about that, perhaps. But it's done everything we asked it to do. But we are at an inflection point. The fiber discussion is heating up in that marketplace. We've got some investments in 5G to make. We lost a little bit of content. And not coincidentally, our liquidity rights with Vodafone are appearing, meaning either party can trigger soft puts and IPOs and stuff like that. So we're in a discussion period, and we'll have to see what makes the most sense. We remain very bullish on that business, I think Vodafone does, too. We're not in the same position as Vodafone. I think they're a bit more -- well, you can just listen to Nick Read's comments in Europe. M&A and exits and things are really on his mind.

Activists, yes.

And so we're trying to be a bit more thoughtful about what is the right answer for that business. And I'm encouraged by it. Management team is super strong, I've got a lot of really positive things to say about the market. But it is at an inflection point. So give us 6, 12 months. Let's see what happens there. I wouldn't say more than that.

Okay. During the next 6 to 12 months, you are investing more in the customer experience, I think. Because you -- I think you alluded to it. You have been losing a bit of ground on the broadband share. Is that something that's a quick fix? Or is it sort of a...

The strategy the management team has taken there, not to get too detailed here, is rather than just go out and spend billions of euros building fiber, they believe that they can invest in the quality and the capacity of the network, as well as the customer experience, to drive lower churn. Listen, KPN is gaining 3,000 subs, not 50,000. It's small numbers. But when we're the larger operator, you don't want to lose anything. And so we'll see if that's the right approach there. It's a very rational market. There's 3 mobile operators, there's really only 2 networks. Then we'll see what the right structure is there. But I think whatever we're losing, it's marginal. The guidance for '22 is continued, small growth, but also another EUR 550 million to EUR 650 million of free cash flow even with that additional CapEx. So I think it's a great business.

Will certainly the financials have delivered, the KPIs. Maybe that's...

$4 billion of cash back to us in 5 years on top of the equity value appreciation through synergy. Hit their synergies a year early, hit their synergies ahead of plan, more than they even expected. So it was really a case study for convergence in Europe.

Well, the Dutch asset, I think, flagged that it was interested in selling its towers, as has Telenet and VMED O2, I think. What progress on the towers front, if any?

Well, Belgium, this is another thing. Again, for those who may not be familiar with the U.S. -- with the European market, but of course, towers here have been monetized for a while, but there are still lots of pockets of infrastructure within our operating companies that are not yet monetized, towers being one of them. So we have in Belgium already started a process that's well underway. I think final bids are coming in shortly. And we're seeing multiples not unlike publicly traded tower companies, low 20s kind of multiples on EBITDA. And that will generate, we think, very nice return to Telenet in terms of reducing debt and cash to the balance sheet. We have a similar tower portfolio in Holland that hasn't been monetized. And we have the largest tower portfolio in the U.K. that has not been monetized. So I'd say there's at least $3 a share just in our tower portfolios that we will be monetizing. And I know people will say, "It's too much. Don't give me those numbers. Until you do something about it, I don't care." Well, in this case, I think you'll see things happening on towers, that will be monetizations, and should be accretive.

Would that be an opportunity to delever in each of the businesses? Or could some of that cash be streamed up to the top?

We kind of believe, rightly or wrongly, we think with 7-year, 8-year debt, all fixed rate, all currency hedged in the high 3s kind of cost of capital, that 5x leverage is not extraordinary. It seems right to us. And there will be ups and downs in the capital markets, but we are arguably the single best issuer in the European markets in high yield. I think we could go out tomorrow and get deals done if we needed to. And I don't see that our balance sheet is in any way impeding our ability to create value here. It doesn't mean we won't, in some instances, delever where it might makes sense. But for the most part, we feel strong about our 5x leverage. And it's not 5 everywhere, but it's averaging that, and we think that's the right level.

Okay. Well, cash at the holdco is about 1/3 of your market cap, $3 as you mentioned for towers, $7 per share for Liberty Ventures is what you highlighted, I think, in the Q4 results. Can you say a bit, please, about what's going on there? I think you've said you would divest away from content, tech self-funding, maybe more infrastructure. Do you expect to invest more in ventures overall? Or is it kind of a...

Well, listen, first of all, thank you for pointing it out. I think it is, when your stock is $25, $7 matters, right? Especially when it's stuff that people aren't paying any attention to. It isn't as if we're making a big deal of it or we want you to think that we're distracted by it, or somehow, I wake every day and think about ventures, because I don't. On the other hand, when it's that big a chunk of your market cap, it's worthy of pointing out. So I think some people reacted to our earnings call to say, "Oh my gosh, now it's all about ventures. And what about your core businesses?" Not the case. We just are pointing out here that we have assembled a portfolio of investments, nearly all of which are adjacent to our core business. We're not -- these are not fly-by-night investments. Whether it's in tech or content or infrastructure, it's all directly adjacent to our business, in stuff that you should be doing and we are doing, and it's working. So tech portfolio is about $1.1 billion. I think we've been added 8 years. Our IRRs in the 30s. We've already returned $400 million to the parent. We're all -- it's mostly cloud, software, stuff that we can use as customers. And it's working, and it's doing great. And I think that will be self-funding because we're getting out of deals as much as we're getting in them. So that will be self-funding but also highly value-creating. And then in the content space, honestly, 60% of it is 2 free-to-air assets: ITV and TelevisaUnivision, and then the other 40% -- 30% of it is some studio assets. And there, we're being a bit more opportunistic. Do we -- where -- how should we manage these businesses? Should we be bigger? Smaller? Are these exit opportunities? So I think you see us be opportunistic with that $1.7 billion really of stuff, all pretty tax-efficient. And then the third piece is Infra, which is small, $400 million, $500 million. But as we've been talking about, we have a right to play in some instances in infrastructure, where it makes sense, not where it becomes an overburdened or overweights everything else. So we will invest in infrastructure opportunities largely when they're adjacent to our business and where it makes sense. So again, I just want people to realize it's not a distraction. It's not something that we are calling out because this is where we put our time and energy. But when it is such a large piece of your stock price and implies a ridiculously low multiple on your core businesses, where I spend 99% of my time, it's worthy of being pointed out.

And it's worth pointing out, I think most of the assets aren't consolidated in your statement.

Yes, they're investments. We own small stakes or sometimes larger stakes. But they're investments, and that's why they're in the ventures portfolio.

Yes. The Swiss business, moving to Switzerland, just invested in a content company, 20% of Switzerland media TV. Is that a different market which needs more content? What's going on behind that?

Well, that's a small deal. Look, first of all, Switzerland has done great. This is one of the mergers we just completed last year. We're on our way to $3.5 billion synergy realization, management team is doing great. It's a big year for Switzerland. What do I mean? Rebranding. We're going to be sponsoring the Swiss ski team. We've got this new investment in content, new partnerships. So André, in addition to blocking and tackling, on synergies and commercial momentum and integration execution, which he's doing brilliantly, he's also building the wow factor in this market. And that investment with CH Media. They are the largest Swiss private -- privately held media company in Switzerland. They are the only free-to-air broadcaster that's not public or foreign. And they have a great streaming product that we will have access to on our video footprint. And they will also be carrying our hockey rights. Not to be too specific, but we have a sports product that could use more distribution. So synergistic deal. Small, but I think emblematic of the opportunity to raise the level of awareness and marketing clout in -- where we are #2 to Swisscom, but well ahead of #3, and I think can give Swisscom a run for their money. Swisscom, as you may know, is a gold standard; trades at, I don't know; 8x, 5% levered free cash flow yield. Wow. If we could get into those kind of numbers in Switzerland on our growing business with lots of free cash flow, that could be a great day for all of us. So I think it's just part of the broader strategy of growth and value creation.

Got it. Swisscom is getting a bit of trouble at the moment with regard to its fiber build project. Is that something you rub your hands for? Or is that -- would you rather them just be successful...

No, it doesn't matter to do with one way or the other. We have -- we reach 75% of the country with 1 gig today. We can reach the balance wherever Swisscom is built with fiber. The point you raised about are they building point to point or point to multi-point, it's just a matter of cost and timing for them. We're hedged either way, so we're not too fussed about what happens to Swisscom. They're our partner, really. We use their networks where we want to. Switzerland is where -- a place where we're going to be hybrid, build some of our own fiber, use our own 1 gig. We think we can get to 2 gig with DOCSIS 3.1 and then use Swisscom fiber. So we'll have a blend of technologies but the best brand in the market.

I think on the brand side, you are actually doing some interests things with Yallo, the second brand moving to full FMC. Is that...

Yes. So when in Europe, second brands matter, right? We are the premium brand in Switzerland, no question, highest ARPUs, best brand awareness, people love us. But we -- in Europe, it's very common to build these prizefighter brands -- or price fighter brands. And Yallo is a great example which has had great success on mobile, and now we're adding broadband and entertainment to it, making it a complete second brand for us. So that's going to help down the road.

Okay. Well, I would be remiss not to ask a question about Belgium. Telenet missed Voo, but it was right that they just didn't pay any old price. Fluvius negotiations, I guess, are ongoing. Are you optimistic in getting to a good result on that? And...

Well, listen, for those who think all we do is buy, buy, buy, we also sell at great prices. And sometimes, we walk away from deals. In that case, Telenet walked away from buying the cable operator in the South at 10x EBITDA when it was staring at probably a complete rebuild of the network, significant financial concessions to the government. Then we just said enough's enough. So good discipline there to walk away and opportunities to get into that market by themselves if they choose to in different manners. The Fluvius deal, just for those who may not know what that means, in Belgium, in Flanders, where we operate, we have massive market share, 70% market share, 60% market share on broadband. And historically, little known to some, 1/3 of our actual network was owned by some utilities. But what we've done is we've taken that 1/3 of the network, we've put it all back into 1 NetCo and given them 1/3 of the equity. So we'll have 1 network company together with the utility company and 1 ServeCo. And the NetCo will go out and raise capital, as it should, to upgrade its networks to fiber over time. And it will be the most important network in Flanders starting out life with 70% utilization, revenue and EBITDA and probably no capital obligations to upgrade because of the existing financial structure. So smart move for Telenet to kind of close the door on their network superiority and maintain their ServeCo, which is doing great and do it, we think, in an accretive way. So a lot of good things happening in Telenet. I mean, you've got the towers, you talked about they're sticking with their dividend, they've got this market rationalization around fiber. I think a lot of positive things happening in Belgium.

Great to hear. So I've got a few more questions, but I'm going to ask if anyone would like to ask a question from the floor. Don't be shy. They are shy, always the way. Okay. Well, if you do catch my eye. I'll press on. I can be here -- or I could do to Mike all day. May I ask you a bit about B2B. That's a thing that, your share is low in B2B in most markets compared to the incumbent. Do you still view it -- as you upgrade your network for higher speeds, is it a big opportunity?

Single most steady source of revenue growth over the next 3 years for us is B2B. Constantly low to mid-single digit, 3%, 4%, 5% revenue growth, driven by, obviously, SOHO, where we still penetrate where we can. So small office, home office. If you live in the States, your cable operators constantly advertising for your small office, home office. Still an untapped opportunity for us across many markets. We have strong position in most countries around enterprise, medium and large enterprise businesses. But we have to upgrade our position in really sophisticated services. And so we're spending a lot of time, both in M&A, but also in partnering and developing another level, if you will, of capability for enterprises. It's a great business opportunity for us. And as we go to 5G, where we are the #1 5G network in Switzerland, for example, that 5G gives you capacity and capability for more and more services, private 5G networks, IoT, you figure it out. As we build fiber, like we're doing in the U.K., that reach will give us great opportunity for enterprise revenue growth. So the network evolution of our business is sort of fuel behind expansion of the enterprise and B2B business. So I think it's arguably our most steady-growth segment for the next 3 to 4 years, so we'll be talking quite a bit about it.

O2, the background of O2 being part of BT, they were always big in enterprise mobile. Is that -- is there a sort of skill transfer there in the U.K. and to the rest of the group? Or is it...

Yes, in fact, when we merged O2 and Virgin Media, we kept the head of O2's B2B business. We think she's terrific and she is driving growth across that. Plus, we now include in B2B this wholesale opportunity, right? Wholesale is becoming actually a source of B2B growth. So that will be tackled in the B2B space.

You touched on Poland right in the beginning. The EC has approved that transaction. Is that the only approval that's needed? Or is there...

Yes, that will close, I think, we said April 1. So that will generate -- we're selling that for 9x EBITDA. As you know, it's basically a cable business. We will generate about EUR 600 million, I think, of net cash to us, to the TopCo, after paydown of debt. And just another example of where the buyer is a mobile company that sees the same benefits we see in fixed mobile, except we were too small for us to buy the mobile operator there, we decided to exit as we did in the other 6 countries. So just continuing that theme of, if we can't be a #1 or #2 player with national reach in mobile and quasi-national reach in fixed with a great investment strategy and a great opportunity in each market, then we're exiting. Which quite frankly sets us apart from almost anybody sitting on this stage in the last day or days to come. How many of them sat up here and say, "Happily, we'll exit half my markets if I can get bigger in the markets that matter, create significant value for shareholders and growth." That, I think, sets us apart significantly from other operators because we're much more agile. We understand that you've got to kind of shift at times, and that private market values often exceed public market values, in fact, almost always do. And if you can't take advantage of those, what the heck are you doing? You should be doing that. And that's what we've done in 6 markets. And we'll -- we think we're in a good position now in the 4 core markets we're in to create real significant value.

Ireland is one market that's yet to see a deal. What's the prognosis there?

Well, it's small country, small market. There, we are going to build fiber, also fiberize our HFC network there and immediately start selling wholesale access, which I think will create a new dynamic for that marketplace. There could be a mobile transaction down the road there. We'll maintain optionality about the right move. But of the 5 countries remaining, that's a small one and the only one that's not a champion yet in its market.

I'm glad you called it a small country. A former CEO of O2 called it half a country. And given where I'm from, you don't want to say that.

Yes, no. It's a wonderful country. It's just small.

It's a full country, even though it's -- absolutely. Well, as always, there's a lot going on with you guys, a lot of good value being created as far as I can see. You're not the only European telco that's trading at a big discount to sum of the parts. It sounds like there's a good setup going forward, in my opinion. And I expect the share price will follow. Any closing comments?

Well, look at it, you put your finger on it, and you do write a lot about the European telco sector. And I think it's -- you're spot on in what you're saying. Some real tailwinds here that I haven't seen a lot of in the last decade. One is demand is going nowhere but up for fixed and mobile connectivity. Two, we're seeing pricing power that we had not seen in the past. That is a real accelerant, if you will, to growth. Three is we have, in our particular case, seen real market rationalization that we're part of. But nothing matters more than rationalizing your markets from irrational competition or too many competitors, and that's happening in all of our core markets, which is a huge positive. And I think lastly, we're -- among the operators there. I think we're the only one that you can have this kind of conversation with. Well, how are you going to fix that? Well, here is how we're going to fix it. We're not dead set on a particular strategy, we're always looking at how to maximize value for shareholders. And we have this catalyst around our capital structure, whether we're levered equity, buybacks, we're going to buy 10% of the stock this year, we're going to buy 10% next year whether it's $50 or whatever price. And that, I think, creates -- should create for investors a pretty strong incentive. You might be the only left -- you might be the only shareholder left, but we'll be worth a lot more than we are today. So to me, that's a unique component of who we are, set in a maybe more traditional market environment in Europe, but one that I think has some real tailwinds here.

Perfect. Well, we're out of time. I wish you all the best for the next year. Looking forward to high-fiving you this time next year in sunny Palm Beach.

I appreciate it. Nice to see you, thanks.

Thank you, Mike.