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

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global's Second Quarter 2026 Investor Call. This call and the associated webcast are the property of Liberty Global and any redistribution, retransmission or rebroadcast of this call or webcast in any form without the express written consent of Liberty Global is strictly prohibited. [Operator Instructions] Today's formal presentation materials can be found under the Investor Relations section of Liberty Global's website at libertyglobal.com. [Operator Instructions] Page 2 of the slides details the company's safe harbor statement regarding forward-looking statements. Today's presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including the company's expectations with respect to its outlook and future growth prospects and other information and statements that are not historical fact. These forward-looking statements involve certain risks that could cause actual results to differ materially from those expressed or implied by these statements. These risks as those detailed in Liberty Global's filings with the Securities and Exchange Commission, including its most recently filed Forms 10-Q and 10-K as amended. Liberty Global disclaims any obligation to update any of these forward-looking statements to reflect any change in its expectations or in the conditions on which any such statement is based. I would now like to turn the call over to Mr. Mike Fries.

All right. Welcome, everyone. Thanks for joining us. We've got plenty to share with you today, so I'm just going to jump right in and then hand it over to Charlie. Of course, we've got the whole team here with me, so get your questions ready. And we are speaking from slides today. I'm going to kick it off on Slide 5. I really like to start with this graphic. I think indemnities pretty clearly how we operate, how we allocate capital. and how we create value at Liberty Global. Our story is, of course, anchored by world-class telecom assets in Europe that generated $22 billion of revenue and $8 billion of EBITDA in the aggregate that -- and while each of these markets has its own unique operating characteristics. Europe as a whole, in my opinion, is catching a bit of a tailwind, right? Deregulation, sovereignty, the benefits of AI, they're guiding to change the narrative, and I think we'll benefit from those trends. . Now you know I'm going to say next, despite the size and scale and growth prospects of our businesses, we believe our stock today reflects no value for these assets, and I'll show you how I get to that conclusion in a moment. That belief is what is driving us to unlock the intrinsic value of our telecom businesses. And fortunately for us, unlike many of our peers, we're lucky to have both the financial and structural flexibility to achieve transactions like the spinoff of Sunrise, which by any measure, created meaningful value for all of us. And as we'll discuss in a moment, we're making outstanding progress on our plan to do the exact same thing in the Benelux with the Ziggo Group next year. At the same time, as we reshape Liberty Global, we have pivoted resources towards our Liberty growth portfolio, where we have demonstrated again and again our ability to create significant value in neosports infrastructure and tech, the recent sale of our stake in Edge Connect, which we talked about in this press release and the slides, where we took out $0.75 billion, 4x our investment over about 10 years is just the latest signal of that. And finally, we have reshaped our corporate or central structure to be both more agile, more efficient and more focused on these 2 core platforms. As a reminder, we are generating today hundreds of millions of annual revenue into Liberty Global, the corporate group from tech, financial management services that we provide to both our telecom and growth operating companies. And when you factor in the recent restructuring of our operating model and reduction of our headcount, we've effectively brought down our net corporate costs by nearly 75% over the last 2 years, and we believe we're on a way to a breakeven position as early as next year. So that's the broad picture. So let me jump into the 3 key highlights, I think, are most critical for you to know about this quarter. That's on the next slide. Number one, it was a strong quarter commercially, and particularly in the Netherlands, where Vodafone Ziggo continues to execute brilliantly in fact, on its turnaround plan. This was our best consumer broadband performance in 6 years. I'll talk about that. And as Charlie will outline, we're confirming all of our 2026 guidance across the board. Second, our plan to spin off the newly formed Ziggo Group, which, of course, consists of our Dutch and Belgian operations is right on track. I'll go through this in some detail. But importantly, our fiber sharing arrangement with Proximus that will result in a single fixed network across 75% of Flanders was approved by the Belgian regulator yesterday. This is a big milestone for both our operational and balance sheet initiatives in this market. And I'm pleased to report that we will be closing on the acquisition of Vodafone and their 50% interest in the Dutch business at the end of this month. Then lastly, we have the only way to describe it overachieved in our plans to monetize assets and generate cash from our Liberty Growth portfolio. Year-to-date, we've raised $1.2 billion, well in excess of what we might have indicated, including $900 million from disposals of Liberty Growth and $340 million from an asset-backed loan on our wire stake in Belgium. I think it's important to point out that this $1.2 billion is above and beyond the EUR 1.2 billion to EUR 1.4 billion we intend to raise from asset sales in Belgium and Holland to reduce debt in those markets. As a result, we're increasing our year-end corporate cash forecast, pro forma for the Vodafone acquisition from $1.5 billion to $2 billion. So essentially, we will end the year exactly where we started the year from a cash point of view. Now the next slide goes deeper. On our announced plans to spin off the new Pharmaceutical Group. The key takeaway here is that we are making substantial progress on all the key buildings required to achieve this major milestone for shareholders. You'll see on the left side, where we are on the 3 strategic and financial pillars that underpin the listing of Ziggo Group and the tangible progress we've made across each of them, as I mentioned, we have all the approvals we need and are on track to close on Vodafone's 50% stake in the Netherlands by the end of the month. This is obviously foundational for the creation of the Ziggo Group, and it unlocks multiple other benefits, including the realization of financial and cross-market synergies. The completion of our Netco-Servco split in Belgium into wire and Telenet was another landmark achievement. This gave us 4 key things, right? A fully financed fiber build-out that is off the Ziggo Group balance sheet; secondly, the rationalization of the fiber market in Flanders through our cooperation agreement with Proximus. I just referenced, third, the opportunity to raise capital and reduce debt through the sale of a portion of our wire stake and the rebalancing of debt between wire and Telenet, which will result in a less levered Telenet with a declining CapEx profile that goes into our Ziggo Group structure. And then finally, we've, of course, announced Stephen Van Rooyen as the CEO of Ziggo Group and [indiscernible] as the incoming CFO. And you should know we are making significant progress to round out the balance of the team, which we'll let you know about in September. Final piece of good news here. We have already increased in our own minds, haven't publicly increased it, but internally, increased our estimate of from this transaction and expect to be meaningfully higher than the $1 billion NPV we announced previously. So stay tuned for more details on that. As a result of this progress, we are a bit more ambitious on the timing of the spinoff, and we're currently saying mid-'27 versus H2 '27. Now let's see how things transpire here, could be even faster. Let's see. And as we said in the past, the equity story is built around 2 things: reducing leverage to 4.5x and driving free cash flow to EUR 500 million in the 2028 time frame. The bridge to $500 million of free cash we talked about on our last call, and of course, the deleveraging is further supported by asset sales of the EUR 1.2 billion to EUR 1.4 billion, as I just mentioned, all of which are underway, and we're making substantial progress on and you'll probably learn about before our next call. On the right-hand side of the slide is the money shot here, as I said. So I'll take a moment to walk through these valuation metrics. They break down into 3 main components. On the bottom right, you'll see our current stock price, roughly $11 in the orange bar. We believe this represents a 20% discount to the fair market value of our cash and our Liberty growth assets alone, and those are valued by independent appraisers, of course. Perhaps even more importantly, you normally say here, it implies essentially 0 value attributed to our Liberty Telecom operations on. We don't need to debate that conclusion. Everyone in some of the parts may look a bit different. It's not the main point of the slide. Moving up the scale about 19 months ago, we spun off Sunrise, which we now believe represents $12 per liberty level share that's the red bar. Sunrise, as you know, is traded on the Swiss exchange between around 10.5% and 13.5% free cash flow yield or roughly 8x EBITDA. And has really unlocked substantial value. And we believe over time, on a fully distributed basis, the Ziggo Group itself should trade on the Euronext at a value of up to $14 per Liberty share, assuming you reach can confidently guide towards the $500 million free cash flow target and the 4.5x leverage and the market applies similar free cash flow yields to summer. So that's what we're playing for here. It means that from an $18 stock when we announced the Sunrise spin-off, we have a clear opportunity to create $37 to $40 of value for shareholders, and you should assume we are squarely focused on just that, delivering that value, and we're making great progress on that goal every day. Our confidence in that goal or the Ziggo Group is bolstered, of course, by the great turnaround story at Vodafone Ziggo, which we highlight on the next slide. essentially just going to go right to the chart on the right-hand side of that slide, you can see in the second quarter last year 2025, we lost 26,000 broadband subs and 5,000 mobile subs. And quite frankly, that was after quite a long period of declining performance through a combination of commercial strategies including new pricing structures, new broadband bundles, new converged propositions, new premium sports content. And importantly, a strong campaign promoting the quality of our broadband network. Stephen and the team have delivered quarter after quarter of improved results since then, culminating in our first positive broadband quarter in Q2 since, I think, Q4 2022. And as I said, the best performance in 6 years. And that goes along with 32,000 new postpaid mobile subs, so great progress on the operating performance there. The next slide shows you that performance. And I've just discussed it, so I'll just jump to the ARPU stats here for Vodafone Ziggo. fixed ARPU was stable, both sequentially and year-over-year, around EUR 56, and that's despite new front book pricing and can attribute that to both price indexation and some moves around content. We saw more or less the same outcome in mobile ARPUs, which were largely flat sequentially at EUR 17.60 and down 2% year-over-year. On the bottom, you'll see operating results for Telenet in Belgium, which continued its recent commercial turnaround with improved broadband and mobile net adds versus last year. Lots of commercial drivers at work here, including new campaigns, promoting our base brand and a revamped FMC offering, allowing customers to tailor really their own packages like an a la carte menu, which is well received and broadband mobile ARPUs are both ubsequently in Belgium and stable year-over-year. Now moving to the U.K. Before I jump into the operating results for VO2, let me just spend a minute highlighting where we see this business today and the core drivers of value tomorrow. First of all, it's important to remember that Virgin Media O2 is the only scaled challenger in the U.K., one of Europe's largest markets. with the #1 mobile network by connections and the #2 most reliable broadband network according to recently released research, which we agree with. By the way, our fixed network currently reaches just under 19 million homes, nearly half of which are already fiber today. Now you can add to that incredibly strong brands like Virgin Media O2, Gift Gap, which support over GBP 10 billion of revenue, annual revenue and facilitate regularly, the launch of new services like O2 satellite, which we were the first to do or broadband with Gift Gap or Volt, our new FMC product and a host of other commercial initiatives. So that's a strong foundation we have in the U.K. Now as we speak, about every quarter. This is a highly competitive market. It's becoming a street fight in the consumer retail sector, particularly with alt nets and MVNOs, which means we have to continue getting sharper, becoming more agile and more innovative, and I like the moves we're making to achieve that. I've listed just a few of them on the right-hand side here. First and foremost, we've just hired Lisa McGowan, our new CEO of Consumer, now has the entire consumer division reporting to her. She spent 10 years at Sky launching broadband, mobile and Sky Glass and in 2 weeks is already making a difference in our commercial strategy. So stay tuned for her keen eye and her strategic perspective on our Consumer business. We have great potential in wholesale, First in mobile, where we generate today over $800 million of extremely profitable revenue, and we'll shortly launch Monzo to our list of MVNO customers and in fixed wholesale, where we are striving every day to capitalize on our scale and our growing fiber footprint, which the eCom acquisition will only advance once that's approved. Now Lutz and the team are well underway with their AI-driven efficiency and growth programs. I'll talk about that in a minute. You're already aware of our commitment to advancing our works. For example, our 5G reach is now 88%. And even before fiber, we have 1 gig broadband available across the market. Now these commitments will pay dividends, both in our B2C and B2B business. Finally, just a word on our capital structure in the U.K., and Charlie is going to address this more specifically. The most important message I want you to hear from me is that both Liberty and Telefonica are completely aligned on our commitment to this business long term. While we appreciate that leverage today exceeds our original targets and as a result of slower growth in our decision to reinvest more in our network, I would urge you to remember that we have many tools at our disposal if necessary, both organic and inorganic to drive greater free cash flow, stronger operating performance and lower leverage over time. So more on that with Charlie in Q&A, if you like. Turning to BMO 2's quarterly earnings results on the next slide. You can see that while our broadband and mobile net losses were better than a year ago, we are still encountering significant competitivity and increased churn. I believe that the initiatives I just referenced and discussed on the prior slide as well as the new consumer management team and structure will address these challenges. Meanwhile, mobile ARPUs are up sequentially and flat year-over-year as we focus on retention efforts there, primarily maintaining value over volume. And fixed ARPUs were flat sequentially but down 4.6% year-over-year, and that's largely in line with overall pricing in the market. Now Lutz is on and, of course, we'll dig into these results further during the Q&A. Turning to Virgin Media, you'll see that broadband net adds have been steady over the last 5 quarters and that supported principally by our wholesale fiber business, good ample of what we can do with wholesale. It's worth mentioning that our fiber rollout is on track to be substantially complete at the end of the year, and we'll be expanding our retail footprint off footprint, both of which will help our business moving forward, particularly reduction in fiber CapEx. Fixed ARPUs have been very steady at EUR 61 and mobile postpaid net adds remained positive, and those are supported by a 15-year offer in retention strategies. Now I'll end with just a bit of commentary on AI. And I think the headline is the message here, right? The telco sector, in my view, is ready-made to realize AI benefits, which over time should be transformational for us and our peers. For starters, we sit on the assets, the very assets AI needs most to succeed. What am I referring to largely large amounts of data that can't be replicated massive cost structures, call centers, field ops and networks that are built for automation, millions of daily touch points with consumers and the infrastructure, like connectivity and data centers that support the distribution layer for AI. And not surprisingly, we are looking to benefit the very same opportunities that our peers are attacking, namely driving margins through cost efficiencies, driving customer and revenue growth through hyper personalization, driving demand for our infrastructure, including power, space and cooling and driving interest in our stock. As investors rotated the sectors that are net beneficiaries of AI and not candidates for disruption. And we learned a lot of lessons, like everybody, right? A big one for me has been finding the right balance between building and buying solutions. Increasingly, we're finding out partners, many of them listed here on this slide, are able to help us integrate faster, launch sooner and scale much more effectively. On the top right of the slide, we've shown some example of what we're doing today and the results we're generating and things like reaching 65% of our BMO 2 customer base with our personalization engine, generating 75% cost containment rates through our Agentic AI pilots in the Netherlands, reducing fraud, optimizing CapEx and lowering truck rolls and technician costs to be candid, these initiatives have to be on us, our table stakes for every telco. Don't get me wrong. I'm proud of it. On balance, we're realizing strong marginal improvements to our economics, our customer interactions and our network quality. And as we've said publicly here, we expect to generate annual savings in the hundreds of millions. But everyone on this call knows, certainly, I know we are just scratching the surface here based on some work we did with McKinsey and Google, we analyzed some of our core operating expenses across the group to assess both the proportion of that cost, which could be addressed by AI over time? And what some more ambitious savings targets might look like? And you can see this on the bottom right of the chart. Show savings of between 20% and 40%, even as high as 70%. It seems like customer care. And we're not providing guidance here. These are just indications of what we think could and should be achievable over time. These are not fanciful numbers in my view. They look more realistic to me every day. Why is that? A lot of things are working in our favor here. On one hand, of course, we're implementing our own AI solutions with sophisticated and scaled partners to drive benefits, but equally important. On the other hand, we're seeing our largest suppliers, typically software and outsourcing partners, looking for early renewals in exchange for passing along to us the significant AI saving they themselves are realizing and must realize to stay relevant. So we're getting it on both ends. Obviously, as we develop these initiatives more fully, we'll share more detail. And remember, this example just covers OpEx, right? There are significant revenue and CapEx benefits to be realized as well. And then finally, on my last slide, we're not only taking advantage of AI in our telecom and growth businesses. We're also prioritizing opportunities to invest in AI companies through our existing tech portfolio as part of Liberty growth. Now we discussed this on and off in the past, but let me get into a bit more detail here. As a reminder, we've had a pretty good track record investing in tech. Typically companies in their scale-up phase and where we see some strategic value to our existing businesses, good examples would be Plum or Aviatrix or SOMATV. Our track record has been good. Since inception, we've invested a total of $700 million into our tech portfolio and taken out around [ $600 ] million through distributions and exits. So we're funding our investments with proceeds, and with about $100 million and today, we're sitting on a market valuation of $400 million, so in a good spot. Now recently, we pivoted to AI-driven investments where it makes sense. I'm not talking about Open AI or SpaceX. Good examples would be 11 labs. Maybe some of you know this company, a leader in voice AI with advanced automated customer service solutions that we're actually using today, Expo and cybersecurity and Scan AI and data and automation are 2 good examples of companies directly addressing the operational backbone of a telco. So we're enhancing network security optimizing processes and driving efficiency there. Arcus is optimizing the next generation of network infrastructure, a perfect fit with the rest of our infrastructure businesses like Atlas Edge. And if you look at these businesses, and you look them up, you'll see that we're typically investing with the smartest VC firms and tech companies. We're not alone here. We're partnering with smart money on these things. And going forward, we'll remain focused on AI infrastructure models, in voice and video, cybersecurity, AI applications in things like customer care, sales and financing, all things that we think could be useful to us and also very successful. And lastly, I'll just point out that our infrastructure vertical within Liberty Growth is playing the AI space as well through our data center investments in Atlas Edge, of course. We have hundreds of millions committed there. and our alternative energy investments. So we're taking a 360-degree view of the AI opportunity, which we believe is the best way to innovate and transform our business over the long term. I think it's going to be one hell of a ride. We're excited about the stuff we're doing and happy to get into any questions you may have. In the meantime, Charlie, over to you.

Thanks, Mike. Turning to our Q2 financial heights, Our OpCo performance continues to track against 2026 guidance as I'll get into starting on the next slide. We closed the quarter with $2.4 billion of corporate cash supported by proceeds to our EdgeConneX disposal and additional corporate liquidity provided by a new wire stake asset-backed loan, and we've completed $4.1 billion of financings year-to-date in the imminent separation of the Telenet and wire capital structures following the recent approval of the fiber sharing agreement. The next slide I tell the Q2 financial results for our Benelux companies. And as a reminder, we now present Telenet's financial performance, excluding wire to provide greater clarity given the full separation of the 2 companies and their capital structures, which, as Mike just presented is set to happen following BCA approval of the fiber sharing agreement in Belgium. Turning to the financials. Revenue trends of VodafoneZiggo sequentially improved during the quarter, supported by fixed customer bonds returning to growth in line with the Howe Win plan. Whilst repricing remains a headwind today, we anticipate that impact to reduce as we move into 2027. Adjusted EBITDA declined in line with our guidance, reflecting the in-year impact of the Haven plan and some one-off investments in network resilience, which we identified when we gave guidance. Cost reduction initiatives remain firmly on track and continue to support our expectation of returning the business to EBITDA growth from 2027. Adjusted EBITDA less P&E additions were lower year-on-year, primarily reflecting higher CapEx in the quarter related to the network resilience investments. At Telenet, revenue continued to be impacted by our strategic decision not to renew Belgium football rights for a season and a one-off adjustment related to a VAT dispute partly offset by higher revenue from the new wire management services agreement. EBITDA growth was driven by the wire management services agreement and lower a wholesale fees. Looking ahead, we will see adjusted EBITDA impacted by the return of costs associated with the new Jupiler League contract in the second half. Times the U.K. and Ireland, Virgin Media-O2 service revenue was broadly in line with our expectations. Competitive intensity in the fixed market remained elevated, whilst the O2 business continued to rationalize parts of its portfolio to support long-term growth resulting in a reduction in headline revenues. This was partially offset by wholesale revenue growth in our market-leading MVNO business. There was also improvement in mobile service revenue trends sequentially. Adjusted EBITDA declined by 2.9%, driven by lower revenue, but supported by further cost efficiency measures. Our Virgin Media Islands service revenues modestly declined, impacted by continued competition in the consumer fixed markets, but because of this, adjusted EBITDA declined by 4.7%. Turning to the next slide. We remain committed to our disciplined capital validation model rotating capital into high-growth investments and strategic opportunities that drive long-term value creation. Capital intensity at our key opcos remains elevated, but all within guidance ranges for the full year. Virgin Media O2 continues to see elevated CapEx driven by higher investments in mobile capacity, including spectrum integration from Vodafone, the ongoing fiber upgrade program and IT digital spend to put us in better position into seamless FMC offerings. VodafoneZiggo CapEx was driven by network upgrades, including the DOCSIS 4.0, digitization efforts and one-off investments in network resilience and service reliability in 2026. CapEx is meaningfully stepped down at Telenet as the 5G network upgrades are now largely complete and as we complete much of our investment in our digital platforms. We expect this to continue to trend down further next year. And Virgin Media Ireland CapEx continues to step down in 2026 as we largely complete the fiber upgrade of around 1 million premises. We expect Ireland to be free cash flow positive because of this in Q4 for the first time since the beginning of the upgrade program. Moving to the Liberty growth walk on the top right. The fair market value of our growth portfolio decreased to $2.9 billion in Q2. This was mainly driven by the successful sale of Edge Connect, which I'll detail more in the next slide. and UPC Slovakia, partially offset by modest investments in Formula E, next Fiber and the tech pillar within the growth portfolio. The key fair market value adjustment for an increased value for EdgeConneX on sale and an increase in the Lionsgate stock price. Turning to our cash flow on the bottom right, we ended the quarter with a consolidated cash balance of $2.4 billion. This was mainly driven by the proceeds received from EdgeConneX and UPC Slovakia transactions. And this excludes the $340 million of additional liquidity provided by our loan facility backed by our stake. half of which resides outside the Ziggo Group according to the terms of the Vodafone transaction. Next, I want to spend a moment on EdgeConneX, which was an excellent outcome for our growth portfolio and a clear demonstration of our strategy working as intended. We first invested back in 2015, taking a minority stake in what was then a relatively early-stage data center business. Over the following 11 years, we funded its growth consistently and russinaly with around $177 million of gross equity in total. We supported the company at scale without overcommitting capital. And today, EdgeConneX is a truly global platform with over 50 data centers across more than 40 markets and 4 continents, spanning the full spectrum of edge and hyperscale developments. Our exit strategy reflected the same discipline that characterized our investment approach. We monetize the position in stages, crystallizing value while maintaining upside exposure. We achieved a full exit in Q2 2026 with $604 million of proceeds from the final stake on top of $122 million from earlier sales, and the head numbers speak for themselves. $177 million invested, $726 million of total proceeds and roughly a 30% IRR and a 4x multiple of money. Now beyond the financial terms, the outcome of our EdgeConneX investment validates our right to play in digital infrastructure and data centers. We now have more than 10 years of hands-on experience in this space, and we're deploying that playbook to our Atlas Edge investment. Moving to the treasury slide. We've been proactively dealing with our 2028 and 2029 maturities. And overall, we have successfully refinanced more than $4 billion across our credit silos year-to-date. In Belgium, we are now formally separating the capital structures between Telenet and Wire following BCA approval of Wire's fiber sharing agreement with Proximus. Wire now can draw down the $5 billion fully underwritten facility to repay $2.3 billion intercompany loan with Telenet and a $0.4 billion wire dividend as part of the wider debt rebalancing. Telenet will use the proceeds received to repay $2.5 billion of 2028 maturities. At Vodafone Ziggo, we were able to refinance $1.3 billion, leaving us with no 2028 maturities and reducing 2029 maturities. We remain opportunistic here ahead of the spin-off. And as Mike noted, are on track to execute a number of deleveraging steps pre-spin. At Virgin Media O2, we remain opportunistic in the debt market as we look to continue to push out our 2029 maturities, but we acknowledge recent trading levels. Now as Mike discussed, we are committed to a stable long-term capital structure of VMO2. We in Telefonica recognize that leverage is above our 4 to 5x target and that credit spreads are currently elevated but we both believe that we are making the investments today that will deliver EBITDA growth to deleverage that company back towards our target range. We're investing CapEx at 22% of sales. It's actually 25% of sales if you exclude hardware sales, which is significantly above the average through the cycle for a telecom company to support this strategy, including significant near-term investments in the mobile and fixed networks to improve customer experience and competitiveness as well as in digital IT transformation to realize the cost reduction opportunities presented by AI. The small dividend projected to be paid to the shareholders will be reinvested into the net Omnia transaction, which is a key transaction for Virgin O2 to keep investing in its fiber plan which we believe will further strengthen the product offering for VMO2 and help establish a credible second fiber network to compete with BT and unlock wholesale revenues. Both shareholders continue to look at inorganic opportunities to further strengthen the competitive position and financial performance of Virgin Media O2 as we do with both O2 Daisy and the Net Omnia transactions. Both shareholders recognize the importance of credit providers, which is why they're making these investments and acquisitions to support the long-term future of the company. Now we remain on track to deliver against this strategy and will [indiscernible] investors as we always do in February of next year. And finally, turning to our full year guidance for 2026. We are reconfirming all guidance metrics of VMO2, Vodafone Ziggo and Telenet as well as our guidance for corporate adjusted EBITDA. And in addition, we're upgrading our full year corporate cash target from $1.5 billion to $2 billion, supported by the EdgeConneX proceeds and wire asset by loan. And that concludes our prepared remarks for Q2, and over to you for questions.

[Operator Instructions] Your first question will go to the line of Joshua Mills with BNP Paribas.

Can you hear me, sorry?

We can hear you. you're kind of going in and out. .

Okay. So I just want to ask firstly on the U.K. ARPU trends. I think in the past, you've talked about the issues faced from declining legacy revenue, things like voice and TV. And today, you're talking more about the declines being related to front book price competition. So it sounds to us like it's no longer just a legacy issue. It's more related to market conditions as they stand today. So my question on this ARPU trend is, is that a fair characterization? And if so, do you think look that we're at trough ARPU declines and trough service revenue declines at the moment? Or could things continue to get worse in the second half given the level of competition we see in the market. And then secondly, on the volume side of the equation for the U.K., in the past, when you've had these kind of sub losses in markets like the Netherlands and Switzerland, you took a quite bold step to rebate customers aggressively, proactively on to cheaper tariffs to try and stabilize the base. It looks from today's strong results on VodafoneZiggo net adds, so that's had a good effect. So is it something you'd consider doing in the U.K. as well? Or do you think that you're going to remain happy with the level of subscriber losses in the near term as long as you don't think too much of a hit on ARPU.

Yes. So thank you for the question. So I mean, when we did the guidance for the year '26, we expect it to be -- the market to be very competitive. Remember, I said that 70% of the service revenue guidance of minus 3% and minus 5% will come from fixed consumer, which exactly is now kicking in. So that's number one. Number two, to your point, is the market more competitive? Yes, it is. So just one number compared to Q2 25 the average selling price is down 4% in the market. So I think your observation is right. Now where is this [ 4% to 6% ] coming from? The biggest driver for it is our own prevention. And I think what we are not doing is radically recontracting customers and forget about the ARPU. We have -- remember, we have built a very sophisticated retention machine, where we now down to every 60 homes what customers want and offer them that. And we have now built the same prevention issue. So the biggest driver for the ARPU down is prevention already, but in a very targeted way. And so we have now more than 80% of our customers on contracts with significant remaining term. And so we will keep doing exactly that in the future. Is this now work button or not? That is hard to say because I don't know how the market will evolve. Market is very hot. There are some new promotions announced from Openreach. Ofcom has to accept them. If they will kick in from October this year, the market will be even more competitive. If not, I would expect the same competitive level, and our prevention will help us a bit more in the future work, but it is hard to predict. I hope that helps.

Our next question will go to the line of Robert Grindle with Deutsche Bank.

So well done on getting the BCA approval, I think it's taken a bit longer than you thought, but probably been trapping away in the meantime. What's the time line from here on the fiber collaboration and the separation of Telenet? And alongside that, the monetization of wire. Would you hope the monetization announcement is a 2026 one? Or is that in next year now because things have gone a bit more slowly? .

Thanks, Robert. It has taken a while to get to this point. But as I tried to articulate in my remarks, it's a building block. It's a foundational piece of the building block. And now that a standard opening up a lot of key next steps. You mentioned one. I mean Telenet is already split out Wire and Telenet have been really separate businesses for a while, the second quarter, I believe we've supported on them separately. So that's happened. What the BCA approval allows us to do is essentially rebalance the stack on each of those 2 entities, and proceed importantly with the sale of a stake in wire, which is well underway. We've got actually, I think, 6 to 8 people doing the work, have hired advisers, and we will be diligently proceeding with that transaction through year-end, and it's possible that even as soon as year end, but perhaps Q1, we will have concluded that transaction, but that's well underway. And just one of many things that the BCA approval unlocks, all of which, in our view, are very positive and helping accelerate our timing on the ultimate Ziggo Group spin.

Banking process was to take place next week and they will access to $4.35 billion of wire financing, just clarity.

Our next question will go to the line of Polo Tang with UBS.

Vodafone Ziggo and broadband. Can you clarify when you will be able to start offering broadband in the Delta fiber footprint. Also, what do you think has had the biggest impact in terms of helping stabilize the Vodafone Ziggo broadband base. So was it the ESPN content offers? Was it pushing harder on recontracting customers? Was there a notable tailwind in terms of the [indiscernible] data breach? Or was it something else? And do you think that you can see improving or positive net adds going forward or is stable a more likely outcome?

I don't know if Stephen was on and then off Steve, let me know if you're on.

Yes. Mike, I'm on.

Welcome to take this.

Yes. Great. Polo, thanks for the question. Let me deal with the Delta question first. We're planning to roll out in the Delta footprint that we are operating in the second half of the year. We don't fall from that now. So we expect to see that turn up in our numbers in the fourth quarter... [Audio Gap]

Our next question will go to the line of Nick Lyall with Berenberg.

I hope you can hear me. Just a quick question again on the U.K. to follow up on Josh's please. What makes you think this isn't a long-term decline for the U.K.? I'm just interested, your pricing is quite a bit above BTs and substantially above the old still. So I think Lutz's point that he's got a lot of customers locked in for now. But why should you be able to sustain this pricing point? What helps you get there? Is it rolling out fiber and completing the fiber footprint or something else? Or is this a problem maybe for the longer-term ARPU just keep on slipping for many quarters? And just a second point, John, can just clarify on what you said about inorganic options in the U.K. That sounded like you were thinking about potentially buying assets, not selling to reduce debt. Have I got that the right way around you over misunderstood that.

Charlie, you want to address the first one?

Yes. Just I think on the -- I think the point we're trying to make is both Telefonica [indiscernible] are firmly behind this company. we're very committed. We're investing at very elevated levels to secure the long-term competitiveness of the business, and we have been ready to do inorganic moves, whether it's flying indeed selling, as you know, we've sold for example, CTIL. So not to be specific about what we're buying or selling. It's more to say, look, we are right behind this company. And we think the company is in the right direction, performing to the plan we set it for this year. Look forward to giving the update to everybody in February on the next phase of financial development.

I'd just add to that, that the Netomnia deal would be an example of an inorganic transaction, I think, on balance, is beneficial to VMO2 from both a credit and equity perspective. For all the reasons we've articulated along the way. So inorganic could include really everything that's not simply driving cost reduction or revenue growth or free cash flow in the operating business. So it's a wide definition. Lutz, do you want to address the first question? Lutz you might be on mute.