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

Hello, everyone. Thank you very much for joining us today. For our next session, I'm delighted to host Liberty Global's CEO and Vice Chairman, Mike Fries. Mike, welcome to Barcelona.

Thank you. Good to be here. Yes.

And thank you for...

First session, I think, right?

First session for me, absolutely.

Yes.

I thought that a good place for us to start our chat today is with the business performance overview, if you could perhaps tell us how the business has performed this year versus your initial expectations. In particular, it would be helpful if you could flag the areas where you are pleased with the performance and perhaps some areas where you see more work to do.

Sure, sure. Well, good morning, everyone. It's great to see you. Good to be back in Barcelona. This is the first time I've done this conference, and I'm not jet-lagged since I now live in London. So it's great to be here every year. Listen, I think we had -- we have had and are continuing to have a pretty solid year. I'll give you a couple of examples. We provide 20 guidance metrics. I think we lead the pack, 20 guidance metrics. We're going to hit 19 of them. The only one we're going to miss is our U.K. revenue target. And if you factored back out of that our handset guidance, handset revenue guidance, which is always volatile, we would hit that too. So that's a pretty good outcome. And if you look at the most important metric for you all, which is our distributable cash flow, $1.6 billion, we're going to hit that as well. So I think from that point of view, all of the OpCos are hitting their free cash flow targets. So operationally, it's hard to say we've done anything but execute. Synergies are going well in our 2 core big mergers, Switzerland and in the U.K. Mobile service revenue, you're hearing this trend from a lot of telcos. Mobile service revenue continues to grow well. That's a big positive. We're seeing B2B, steady growth in B2B. And I think, look, strategically, we're doing all the things that we said we would do, right? We bought back a bunch more stock, twice the amount of stock that we said we would. Our fixed network strategies, we'll talk about those, I'm sure, are evolving really well. But let me just pause there and say that if anyone thinks this is an easy business, get back to reality. We are grinding in this industry. We are grinding, I will tell you that, and you all know that. You're watching it. There's too many operators. I was just in Brussels the other day. I mean just to give you a quick stat, in China, there are 450 million subscribers per operator. In America, it's 110 million; in Europe, it's 5 million. There's 110 MNOs in this country. So we have a lot of work to do on regulatory pressure, in my opinion, to get this market further consolidated, further rationalized. The macro headwinds have been tough, whether that's energy cost or cost of living. We're finding that in our business, particularly in fixed B2C, I mentioned that on our call, whether it's household spend optimization or general pressure in the lower front-book pricing, we're finding that the fixed B2C business is the one area where we have work to do. Now there are tailwinds, too, in our business, good tailwinds, strong tailwinds. Number one, pricing. This pricing action that we're all taking is working, right? We had ARPUs up in the third quarter. It's working. I think we're able to -- I mentioned already the B2B and mobile service revenue, that's steady and a really important piece of the puzzle for us. Mobile and B2B are about 70% of our revenue today. Just let that sink in for a second, 70% of our revenue is mobile and B2B. So that's a positive trend for sure. I think AI is going to be a game-changer. It sounds trite. Everybody is saying it. But when you look at what -- the way we manage our customers, the way we manage our operating platforms, productivity, going to make a big difference for us for sure. So there's a handful of tailwinds that I think will make a difference, and we're operating and executing against those tailwinds. But overall, I'm pretty happy.

Very good. With your Q3 results, Mike, you have flagged that you will be holding a more extensive strategy update with Q4. Could you talk about the main objectives of this strategy update?

Yes. Well, I think it's a handful of things, really. We have spent quite a bit of time simplifying our business, we think, and we're at an inflection point where we want to be able to really give you 3 bits of information, 3 really important pieces of information. Number one, how do we value these operating companies that we own? We think we're in the best markets. We think we have the best brands. We think we have the best teams. But as I said, it's a grind. How do we value these operating businesses? And then secondly, how do we intend to crystallize that value? What are the things we're thinking about? What are the things we might be doing? And I think people -- right now, generally, we've been talking about that theoretically, but I think we are going to talk about it more concretely. And then thirdly, we want to talk about capital allocation, which is a hot topic for everybody these days. But how do we generate cash? Where do we put that cash? How do we see leverage? These types of things. So I think it will be very helpful. It's not a Capital Markets Day. We're not going to bore you for 3 or 4 hours. We're going to be sharp and short and try to give you some concrete appreciation. I think you'll come away feeling like we are well positioned, we are motivated and nothing is off the table. I'm not sure what else you could ask for from a management team that's trying to bridge a value gap. So...

That's helpful. There are a lot of important topics there, and we'll go through them and dig deeper into them. But first, let's do a tour over the different operations across your footprint, starting with the U.K. The delivery on the Virgin Media O2 synergies is excellent. But the top line seems to be struggling a little bit on fixed B2C in particular. Could you talk about why Virgin Media O2 is struggling to yield its fixed price increases into more top line growth?

Sure. Well, we did see ARPU growth in the third quarter. So that's a positive, modest ARPU growth. Listen, I think it's 3 things, and it's the same 3 things whenever we take price increases. Number one, and we give you this guidance, we say generally, we keep 50% of the price increase. That's something we've said regularly and historically, and that's the case. Because when you have price increases and, in our case, when you don't have contracts, and we do now, but didn't have contracts that let people out if they didn't like the price increase, you're going to lose about 50% of that price increase through churn. That's happened. But secondly, we've got 2 other factors here that I think are unique to this moment. Number one, we've had this household spend optimization, we call it, for lack of a better word, where people through this cost-of-living crisis are saying, hey, maybe I don't need high-priced video. Maybe I don't need that fixed voice service. And then thirdly, we're finding that people were selling more products at that lower end, lower front-book pricing. So that's flowing through. So the combination of those 3 things is making it more difficult. But I think we took the price increase because it -- and I think we will take a price increase in '24. All of our operating companies today operate on contracts that require us essentially to take that price increase, RPI plus 3.9% in the U.K. All indications we receive informally are that everybody else will be doing it. And so next year, it's going to be a different outcome. One, we have -- there's no way out of a contract if we take a price increase. It's not the case this year. Two, we'll do a better job of segmentation and understanding the implications of each customer base and base management. So I feel more optimistic we'll be a lot smarter and we'll have advantages in the price increase next year, which we fully intend to take at this point.

I wanted also to ask you about your fiber strategy in the U.K. Could you update us on the fiber rollout or cable overlay with fiber in the brownfield areas, Virgin Media also, but also the greenfield areas with nexfibre? And related to that, could you discuss how do you find the right path between buying or rolling out fiber?

Sure. So we have 2 -- I always start with this, and just I always start with this. We reached about 16 million homes in the U.K. Today, every one of those homes, we can sell 1-gig products to. So like the U.S., we have a superior network today, and we are able and willing and are marketing 1-gig products across more than half the country. However, we have 2 big programs underway. Number one is what we call a fiber up, which is an upgrade of those 16-plus million homes to XGS-PON or fiber. Why are we doing this versus DOCSIS 4.0, the way Comcast and Charter are moving, is because the cost to upgrade to fiber is only marginally higher than the cost to upgrade via DOCSIS, and it makes more sense to us to do fiber for all kinds of strategic and competitive reasons. So we're doing that. We'll have about 10% of the homes upgraded by the end of the year, on track, on pace, on costs. So that's one program. The second program is what we call greenfield extension. Our goal is to reach more of the U.K. than we already do with fixed networks. So we're building 5 million to 7 million homes in a JV with a French infrastructure provider, 50-50 off balance sheet. We're fully financed, GBP 4 billion plus of financing, and we will build 5 million to 7 million fiber homes. We're on track there as well. I think we'll have 1.5 million -- well, about 1 million homes by year-end here. So overall, 2 million, 2.5 million fiber homes by year-end. And if you add the homes we'd already built years ago in fiber, closer to 4 million. So we're on our way. And I think from our perspective, it's going really well. The U.K. market, if you pay attention to it, is unlike many markets in Europe. There are probably 40 people trying to build fiber as we sit here this morning. Sadly, most of them aren't going to make it. Cost of capital, interest rates, competition, no penetration, it's a dream. And so the M&A market for AltNets is heating up. We've already bought 1, we're looking at another 6 or 7. For us, if they're off footprint, not overbuilding us, highly attractive. So the one we bought was 175,000 homes in the east of England where we didn't have a footprint. So I think there's going to be a pretty healthy rationalization of that market there and probably just 2 networks in the end, us and BT, which is the way it should be.

That makes sense. My last question on the U.K. is on the dividends and a recap from Virgin Media O2, which has been very significant. How sustainable is that, Mike, given the current rate environment?

Well, just for people who may not follow, in the last 2.5 years since that joint venture was created with Telefónica, we distributed GBP 4 billion of cash to the shareholders. We get half, they got half. So it's been highly profitable, highly successful, I would say. Half of that was free cash flow. Half of that was recaps. Because we were growing EBITDA, we're going to recap to 5x, which we've been doing. So, so far, it's worked brilliantly. Going forward, we'll make that decision together as partners. I mean they just had their Capital Markets Day. I'm not going to step on what they said, which is we'll make that decision when we need to make that decision. But I will add one point. I think we're the only operators in this market and one of a handful that have already refinanced $2 billion in debt this year at the same interest rate. Let that sink in. We haven't -- we pushed out maturities, and we haven't increased the cost of capital in the U.K. because we've had fixed base rates that we're able to roll into new financing. So we're very satisfied with that balance sheet. I think that we're very lucky, I think, in the U.K. to have a strong balance sheet, levered 5x with fixed rate, long-term capital. So we're in a good place.

Very good. Moving to Switzerland. The rebranding to Sunrise has been challenging. Could you update us when you see the surprising impact being behind you? And when do you see the business starting to grow, in particular, given that there is a market tailwind now in Switzerland given that prices have started to increase in the market?

Sure. So first of all, say, Switzerland is a pretty rational market as European markets go. There's 2.5 operators, really, Swisscom, us and Salt, which is much smaller. And lately, we took a 4% price rise. Salt took a 3% price rise on mobile. And Sunrise didn't take a price rise, but added indexing to their contracts and discontinued some of their discounting and shortened the duration of their discounting. So we think there's quite a bit of rational behavior in that market, which is a positive. Now what you had mentioned, the migration, just -- I'm sure closely you follow this. But when we merged Sunrise and UPC, obviously, we had 2 subscriber bases. The UPC base was on a higher rate generally. When we went to one brand, you're always going to have migration friction to try to get everyone to one brand. And so in our case, we saw some of that when you try to bring people down -- when people see a lower front book and they want to get down to one brand. I think the good news is we're about halfway through that migration, number one. Number two, we've already migrated most, if not all, of the price-sensitive, value-sensitive customers. So I think there's light at the end of the tunnel. Every month, it's a little bit better. So we'll be through that soon enough. We're not the first operating company conducting mergers that has this brand migration issue. It's pretty typical. But I think we see light at the end of the tunnel, and the business is solid, should grow next year.

My last question on Switzerland is on the network strategy, fixed network strategy. Today, you are addressing the fiber access through a wholesale agreement with Swisscom. What is the future of the cable network in Switzerland? Is it DOCSIS 4.0? Is it fiber? Is it a mix of both? Is it something else that...

Yes. Well, we're in a really lucky position in Switzerland. Number one, we have an HFC network that reaches 70% of the country with 1 gig. That's a positive. Number two, we have long-term access agreements with Swisscom and Swiss Fibre that get us to 90% of the market with 10 gig. So we have this hybrid approach that, quite frankly, is perfect. So I don't see us building or really rebuilding in the Swiss market, which is why you see CapEx intensity much lower than other countries because we've got access to fiber through Swisscom and Swiss Fibre, SFR, and we've got our own HFC network. So we're in a pretty good position there. I don't see us having any sort of existential questions around network in Switzerland.

Moving to Belgium. There are a number of exciting opportunities for your Belgian business. First, on the CapEx side, perhaps some CapEx optimization, given the recent news flow from BIPT, given that they seem to be open to see some co-investment coming into the market. So that's the first opportunity. The other opportunity is in Wallonia with the Telenet project to launch into the broadband business in Wallonia. Could you talk about these opportunities for your Virgin business?

Sure. So in Belgium, we operate in Flanders with basically incumbent market share, I think 50-plus percent broadband market share. We have been in open network in that market for broadband with Orange. We have a long-term relationship with Orange where they have access to our HFC network. Recently, if you're paying -- if you're following us, you would have noticed that we launched, fully launched and separated a new NetCo in the Belgian market. We took the entire network, listed it out, put it into a new company called Wyre, W-Y-R-E, with a 30% partner, which was the power company there essentially because they already own parts of our network. That NetCo is already -- has world-class economics. It's going to have roughly 70% utilization rate. For example, I'm trying to think of what -- only Openreach would have something of that nature. So it has 70% utilization rate because Orange is a long-term partner accessing our network and a fully funded program to build fiber. So EUR 2 billion set aside to essentially build 80% of the Flemish market fiber. So it's a winner, for sure. And recently, the government, as you point out, said that they're open-minded about consolidating our collaboration in fiber builds. Well, I have 2 networks. Why don't we share infrastructure? Why don't we share -- we divide and conquer. We don't know what that means just yet, but it's very positive. And that would obviously optimize that spend for us, but it doesn't change our relatively dominant position in that market. So very excited about what's happening up there. We can bring in network partners. We could bring in financing partners. It's a pretty strong asset. And then in the South, just quickly, there's 2 million homes down there. We will launch nationally down there and maybe get 10%, 15% market share. So it's an exciting opportunity to take Telenet and make it a national footprint on the fixed side. We're already national in mobile. To be national in fixed is what we're trying to do everywhere. So it's a net positive.

Moving to the Netherlands. You've been conducting some trials on DOCSIS 4.0 with VodafoneZiggo. Could you tell us more about some of the takeaways from these trials and perhaps update us, Mike, on the time to market in the Netherlands? And any color about the cost of deployment as well would be helpful.

Yes. So I think, listen, in Holland, because it's so expensive to build fiber, for us anyway, and we have 1 gig available across 7 million homes in the country, we are looking at the one market where we are really seriously looking at DOCSIS 4.0. And let me just back it up and give you some comfort. DOCSIS 4.0 isn't a maybe. It's already rolled out in the U.S., where 80% of broadband homes use cable in the U.S., 80%. And the entire industry is rolling out DOCSIS 4.0. It's already rolled out in Colorado. Comcast has already rolled it out. So this isn't sort of a maybe it will work. It's just not something that we're hoping is technologically sound. It's real. It's happening. It's a no-brainer. It's happening. And so we are looking at it seriously in Holland, obviously, because it allows us to upgrade to 10 gig, perhaps, 8 to 10 for sure in -- with a much lower cost of capital or cost per home. So we'll look at that. We have trials. We did a live trial, got 15 gigabits out of our cable network. So there's a nice road map for HFC, and that market could very well make sense. So we're evaluating it seriously. I can't give you updates on timing because we're working on that right now with our partners. But the cost will be a fraction of what it's going to cost us to build fiber if we -- in that market if we go that direction. So it's a positive indicator, for sure.

Right. And then I wanted to ask about the partnership with Vodafone in the Netherlands. It's been a great integration story between fixed and mobile. It's a 50%-50% JV. What is the next step for this partnership?

Well, listen, as you say, it's a good partnership. It's a great asset. I mean this is a market where we are neck and neck with the incumbents, reach the entire country. We're bigger than them in some things, they're bigger than us in others. We have high margins, a great team. So it's a strong asset, highly profitable. We're lucky to have such a strong asset. But I have to -- I'm on my third CEO as a partner at Vodafone. So we started with Vittorio and then Nick and now Margherita. So priorities change. But I would say there's a renewed focus, I would say, thankfully, on this particular marketplace. So I've had good conversations with the Chairman, with Margherita. I think we've all kind of amped up the energy level on what's the right outcome for this particular marketplace. More to say perhaps in February, but I will just say the conversations are much more strategic than they were in the past.

Right. Looking forward to hearing more there. Moving to the Ventures portfolio, which is a key pillar of your value creation strategy. Could you update us on the capital allocation there?

Yes. So this is -- for people who may not be following it, we've got about $3 billion in what we call our Ventures portfolio, about $750 million in a tech vertical where we've been investing for 8 to 10 years, essentially, and things that are only strategic to us. So what do I mean by that? Products, services, software, hardware that we can be a customer of. And we've had great success. I mean most companies do this. Tech does this, Comcast, every -- most people have a venture portfolio that gives them visibility to the technologies that will matter over time. And so we've done really well there. We've made great best-in-class kind of IRRs. That's a winner and largely pays for itself because we have exits every year and then we invest every year. We have an infrastructure vertical, which has grown from 0 to about $750 million. And honestly, this is just us doing what we do well. We understand the infrastructure space. We understand Europe. We understand how to build, [ buy ], finance structure. And so we've got some really exciting opportunities in the infrastructure space already, in particular, a company called AtlasEdge, which is focused on edge data centers, edge compute, utilizing our properties, our facilities, our power as a starting point, so in partnership with Digital Bridge. So we've got some really exciting opportunities in the infrastructure space. And then lastly, the biggest piece is what we call our media content portfolio. And quite frankly, that's one where we're looking very hard at whether there is or are strategic adjacencies with those businesses. So we'll be looking at those closely. We're already in the midst of exiting one called All3Media we own together with Warner Bros., GBP 100 million of EBITDA. We're hoping for double-digit multiples. So we're going to definitely entertain disposals when it makes sense. And I think I said on the call between ventures and noncore assets, between $500 million and $1 billion of disposals before mid next year, that should be easy to achieve. So I think that's the way we look at Ventures. I mean, if you step back and look at our -- I mentioned this on the call, if you were listening -- not if you were listening, if you were on the call. I'm sure you were listening if you're on the call. But anyway, if you look at our business today, you look at our cash and you look at our Ventures portfolio, it's about our stock price today. So all this good stuff we're talking about, all these incredible businesses that we really think are valuable, $25 billion of EBITDA, 85 million fixed and mobile subs, I'm using dollars now, $9.5 billion of EBIT -- $25 billion of revenue, $100 billion of EBITDA, massive free cash flow, all of that valued at 0. So I think from our point of view, whether you believe in ventures or not, it's anchoring, potentially anchoring a big chunk of our valuation today. And these are assets that we think have great strategic value to us as well.

Vodafone has been a new investment today -- not today, this year for you guys. How is your appetite to do more on the telecom side?

I don't know if we'll do more or not. I mean the Vodafone stake, for those who may not know, we own 5%. We're the second largest shareholder in Vodafone, which we're not an activist, but we intend to be active. And we're partners with them in 3 countries, right? We're partners in Holland. We just signed a wholesale deal with them in Ireland where we're building fiber. And of course, we own networks together in the U.K., the entire wireless network we own together. So we have strong relationship with Vodafone. And we felt at the time, listen, there are catalysts here largely undervalued, and we think new management team has generally the right approach to things. Remember, our investment is fully hedged. So while the stock might be off X percent, we're off a fraction of that because we are hedged. But let's see. I don't -- we don't have any current plans to make any other investments in the region, although there's quite a bit of activity. I mean it's entertaining to say the least. You got BT, you got Drahi and Deutsche Telekom. In Vodafone, you got us, Etisalat, Xavier Niel. Xavier just bought a piece of Proximus. So what does all this mean? You'll rather report on it at some point, and you'll tell us what it means. But I think what it means is smart money is looking at assets that are undervalued. That's what it means to me. And we never say never, but it's not something that's on our radar right now.

Very good. I wanted to talk about complexity with you, Mike. The transformation of the business into a fixed mobile convergence assets, it made a lot of strategic, industrial and financial sense, but it was done through JVs, which add a layer of complexity to the Liberty Global story. So my first question is, do you see this as a challenge for the equity story? And if so, how to solve it?

Well, boy, if you think we're complex today and you've seen us 5 years ago, I mean I think we've done a lot to simplify the story. What did we do? We spun off our Latin American business entirely. We reduced from 12, really, to 5 countries, got rid of all of our subscale markets at double-digit multiples. We focused on FMC. And of the 5 countries we're in, we own 100% of 3 of them, to be fair, 2 JVs, U.K. and in Holland. But JVs have some benefits, too. What do I mean? We're getting a lot of expertise, each of us contributing and getting expertise. Number two, there are time-limited exit provisions in those deals. So we don't do JVs forever, that I can promise you. So there will be moments where the JV is no longer a JV. We'll own it, they'll own it, somebody else will own it, we'll find out. But for sure, it won't be a JV forever, and that has at least an end date to it, an expiration date at some point. And that's a healthy thing in these markets. I mean we didn't set out to form JVs. But in the U.K. and in Holland, they weren't a seller and we weren't a seller or we couldn't agree on value. So we formed these companies together. And the convergence benefits of these businesses is real, and the convergence value is real. I mean you can't be successful today without a broadband product. You can't be successful today without 5G. You can't be successful today without a converged bundle that reduces churn and drives NPS. So we're in the right spot. And I'll say one last thing, which is each of those individual OpCos are not complex. So you would never ask KPN, how are you dealing with this complexity thing, right? Because it's just KPN involved, right? You wouldn't ask Swisscom, your next company here. You're not going to say to Swisscom, you're so complex, how do you deal with that? Well, you know what, Sunrise isn't complex either. And VodafoneZiggo is not complex. And Virgin Media O2 is not complex. And so our job is to find analysts, investors, structures that allow that lack of complexity in this single market to be fruitful and valuable. So think about it that way, which is why we talk regularly about maybe spins or listings or things of this nature to create transparency on that single market, which in and of itself is not complex. So take your point, and we're working hard. But the things that we're thinking of doing, we think, will solve that.

That's an excellent transition to my next question about Bermuda. So why Bermuda? And how will it facilitate this transaction?

Well, I mean, I don't know how many people here are experts on plc, public U.K. law, U.K. process. But we found it pretty cumbersome on a handful of levels. And for a company like ours with the DNA we have at Liberty to do things quickly, to do things creatively, to do things that we think are value creating, it was very challenging. So I -- redomicile into Bermuda, has no tax benefits to us, it doesn't change our listing, doesn't change anything. It just means that now we're operating under a U.S.-style corporate governance structure, which is going to allow us to do things, M&A, spins, listings, buybacks, everything much more simply, less costly and quicker. And the Board can do more if you were a shareholder vote, which you might think sounds odd, but not really. Because even though we have 3 classes of stock, every class of stock had to get -- had to approve certain things. So they were blocking stakes building up in classes of stock. So for all of us, it's a better outcome, I think. And now that closes, I think, later this month, something like that, and we'll have more to say in February.

You have a strong track record in monetizing assets. Should we expect imminent action after the Bermuda move?

Well, I mean, I don't want to say imminent action because I can't control the timing of things. But you're going to -- you should expect some concrete expectations. And so the narrative is understood. You all understand the narrative. But what you're waiting for, and I get that, you're waiting for concrete examples. Let's get going. And so that's what I think we'll provide greater detail on.

In the list of options, you have mentioned listings there. So I have 2 questions. The first one, which assets in the portfolio you see as ripe for listing? And then secondly, how do you find the right path between a listing or a disposal given the gap between public and private multiples for telco assets?

Listen, we're open-minded. What I said just a moment ago, nothing is off the table. So let's take Switzerland, for example, was a public company when we bought Sunrise in, might be a candidate for a listing or a spin-off. Yes. I mean, if nobody -- if the people are giving us 0 credit for these OpCos, that's just hypothetically, which I think you could make an argument for, and we dividend out, not going to give a number, but if we dividend out a sizable per share price, per share value on one or more assets, that's value accretive. So we close the gap in lots of ways, and we'll close the gap in lots of ways. And we need to be open-minded about things. And that's one market where we could possibly do something.

Then my next question is on leverage. You have a strong balance sheet, and yet you get the leverage question quite often from the market. Could you explain to the audience why a levered equity story is the right way to create value for Liberty Global?

Listen, I understand the concern you may have, I mean, about leverage. I think fundamentally, in our case, we think 4 to 5x is the right level because we have businesses with high margins, with long-term free cash flow characteristics. So we think it's the right way to drive equity. But more importantly, if you look at our balance sheet compared to other maybe even less levered balance sheets, we are religious about derisking the balance sheet. We don't -- we are siloed. There's no corporate debt. We only borrow at operating companies, no corporate debt. We're long term. We don't owe really anything for 5 years, more or less, and no material maturities until '28. We are fixed rates. So we don't have any floating rate debt anywhere. We're currency hedged everywhere. And we're -- and so in our opinion, we've got a balance sheet that's super strong. We got $3.5 billion of cash, $5 billion of liquidity. We don't feel that there's an issue in any of our operating companies around leverage. And now that there's Telefónica in the U.K., now that there's Vodafone in Holland, which are our 2 most levered assets, so I think we feel really good about our balance sheet. And as I said earlier, we're tapping the markets. And that's one thing you may think we're -- you may rate us differently on different things. But when it comes to balance sheet and leverage and treasury, nobody does it -- we don't think anybody does it better than we do. So we feel really good about where we are. We're not -- there's not going to be any issues to be concerned about there, and we've worked hard to be able to say something like that.

I wanted to ask you also about the cash build related to that. One of the core initiatives that you presented in the Q3 results that I think you'll be discussing also in the strategic update is selling assets and increasing the cash position. So what is the rationale there? And what is the best use of cash today?

Yes, good question. So we're sitting on a lot of cash, right? We started the year with about $4.5 billion of consolidated cash. We added $1.6 billion of what we call distributable cash flow to the top of that. So we arguably started the year with a lot more cash than we needed. We bought back $1.6 billion of stock or we'll be buying back $1.6 billion of stock. We made some investments in ventures. We had some other aspects. So we'll end the year with plus or minus $4 billion of consolidated cash, let's say. So it's a fair question, why do we need more cash? Well, I'm not saying we need more cash, but we need to show discipline in some of the assets that we own. If they're not providing value, if we think they've capped, let's sell them. That's the right thing to do. And then we put that cash into, number one, buyback. So you haven't asked me about buybacks. But historically, for those who may not know, we bought back 60% of the company since 2017. This year, we're going to buy back close to 18%. 18% of the company we'll be buying back this year. And we spent almost $14 billion doing that. So that's a lot of cash. Cash has to come from somewhere. I'm not saying we're doing $14 billion in the next 5 years. Well, it wouldn't be possible because the market cap is too small. So my point is that we think having cash in -- first of all, having cash at moments like this is really valuable. Secondly, being able to allocate that cash to the highest returns, namely buybacks, when our stock trades where it trades, you can assume we're piling in, and we will continue to do that into next year as well. So having cash for that is super important. By the way, we've used cash in the past to, for example, buy the Sunrise asset here -- or in Switzerland. So there might be needs in some of these OpCos. And then lastly, while we don't feel we're over-levered, if we're going to execute on some of these strategic opportunities to shrink the gap, we might need to delever. So if we're going to list an asset, we might have to delever into a value-creative, value-accretive transaction. So that could be another use of cash flow. I think it's great to have cash at this moment. We don't want to sit on it forever, I want to put it to work, but it's certainly a net positive. For a company of our size, to have that kind of cash balance is a net positive.

My last question is on the share buyback. You've been buying a lot of stock. Just this year, the first target is for 10% then 15% and now 18% to 19%. What is the end game? Is taking the company private is the end game?

We're doing that slowly. It's happening at a -- so listen, I am not happy with the stock price. Don't get me wrong. I own a lot of stock. I've got tons and tons of options are all underwater. So nobody in our shop is happy at all about this. And we're all -- that sense of urgency perhaps that you're picking up on is because we're not happy. Having said that, there's a silver lining, to some extent, for long-term investors, which is we're able to slowly take the company private at pretty attractive valuations. So you can do 2 things to return capital to shareholders. You can pay dividends, has its moment, has its value, or you can buy back your stock. Quite frankly, I think some of the telcos on stage here this week should be buying stock. I'll start with Vodafone. Why would you buy stock if you're trading at 5x or 4.5x, whatever your multiple is? If you believe in your equity story, you should put your money where your mouth is. So certainly, we're doing that, and we will continue to do that. And if that -- if in 2 or 3 years' time, the market [ capped ], that's okay. I mean it's not -- for us, the fundamental logic of that makes great sense, especially if you're sitting on businesses you think are undervalued. If you've got cash, strong balance sheet and strategic opportunity, then you should be doing that. And that's how we see it. So there's no end game per se. We're not -- but there's also no end point to it. We'll continue to do it as long as the value gap is there.

Very good. Thank you very much, Mike, for the helpful conversation.

Yes. Thank you, Nawar. Nice to see you. Yes.

And I look forward to hosting you next year as well. Thank you all.

Great. Yes, it's good to be here. Thanks, everybody. Have a good week.