Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global’s Second Quarter 2018 Investor Call. This call and the associated webcast are the property of Liberty Global, and any redistribution, retransmission, or rebroadcast of this call or webcast in any form without the expressed written consent of Liberty Global is strictly prohibited. At this time, all participants are in listen-only mode. Today’s formal presentations can be found under the Investor Relations section of Liberty Global’s Web site at www.libertyglobal.com. After today’s formal presentation, instructions will be given for a question-and-answer session. As a reminder, this investor call is being recorded on this date, August 9, 2018. Page 2 of the slides details the company’s Safe Harbor Statement regarding forward-looking statements. Today’s presentation may include forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995, including the company’s expectations with respect to its outlook and future growth prospects and other information and statements that are not historical facts. These forward-looking statements involve certain risks that could cause actual results to differ materially from those expressed or implied by these statements. These risks include those detailed in Liberty Global’s filings 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.

Okay, thank you, Operator. And welcome everyone to our second quarter investor call. As usual, Charlie Bracken and I will run through the slide deck summarizing our financial and operating performance, and hope you can get your hands on that. And then during the Q&A that follows, I’ll be sure to get the rest of the senior management team engaged in answering whatever questions you may have. So I’ll begin on Slide 4, where we lay out main takeaways from what we believe was a strong quarter operationally and strategically. One quick footnote right upfront, you’ll notice throughout the presentation that we’re showing results for both the Full Company, similar to what you’re used to seeing, and for what we now call continuing operations, which excludes the businesses that have or will be sold. And in both cases we generate around 3% revenue growth in the quarter, and with operating cash flow growth at 3% for continuing operations, and nearly 4% for the Full Company. Both OCF growth figures were negatively impacted by some one-offs in the prior year, which Charlie will cover along with plenty of background on the financial results. Not surprisingly, most people are focused on our announced transaction with Vodafone involving the sale of our operating businesses in Germany and some smaller Eastern European markets for $23 billion, around 11.5 times OCF, and from our perspective that deal is right on track. And of course the only condition to closing is regulatory approval. As you would expect, several meetings with the competition authority in Brussels have taken place. And we expect a formal filing with the commission soon. And this deal will be decided by the EU, and at this stage we do not see any obstacles to that approval, and are confident that the transaction…

Thanks Mike and hello everyone. I will start with an overview of our Q2 2018 financial results on Slide 9. Here we present the consolidation results of our continuing operations and for the Full Company. And to reiterate, Full Company results include our discontinued operations in Germany, Hungary, Romania, and the Czech Republic, and more on those transactions later. We delivered rebased revenue growth of 2.7% or $3 billion for our continuing operations and growth of 3.1% to $4 billion for the Full Company. By reducing indirect cost year-over-year, we were able to regenerate rebased OCF growth of 3.3% to $1.3 billion for our continuing operations and 3.7% to $1.9 billion for the Full Company. These results were largely shaped by the record Q2 rebased revenue growth of Virgin Media and the strong OCF growth of Telenet, both of which I will address in a moment. While continuing operations Q2 P&E additions were $0.9 billion which represented 28.4% of revenue and the Full Company we spent 1.1 billion or 27.4% of revenue. And moving to the bottom left of the slide, we present adjusted free cash flow now on three different basis. Now first purely on a reported basis, our continuing operations had negative adjusted free cash flow of $131 million in Q2. Second, we supplement that reported figure with a per forma view of adjusted free cash flow from continuing operations which assumes that the aforementioned disposals are being completed on January 1, 2018. As specifically this incorporates an estimate of the net revenue from transition service agreements and adjusts for the estimated impact of the partial repayment of the UPC debt. But this amount is not allocated to discontinued operations in our reported financials. On a per forma basis, we estimate that our adjusted free cash flow was…

Thank you. [Operator Instructions]. And we’ll go first to Vijay Jayant with Evercore.

James Ratcliffe for Vijay. Good morning, it’s James Ratcliffe for Vijay. Two on UK if I could; first of all, can you talk about the ongoing dispute with UKTV and how you’re approaching that and particularly any color around what the OpEx savings associated with not carrying the content is and any sub loss impact of not having this has. And secondly, voice in general in UK was very strong in the quarter. Can you talk about what drove that and update us over what the economics around the voice services are at this point, thanks?

Hi, James, we got Tom and Robert on too. And I’ll ask them to chime in here. But I’m pretty sure we’re not going to say much about the UKTV dispute since that’s an ongoing negotiation. Clearly, there would be savings. Clearly, we think the content was overpriced and we’re sort of in the midst of those conversations as we speak. And I will tell you without being specific that the impact on subscribers has been minimal. In terms of voice, Robert or Tom, you want to deal with that? Margins are basically 100% [ph] in that product, yes.

Yes, I will chip in there. I think what we are seeing is a couple of things there. And particularly, we have made a concerted effort as I think is seen through the numbers to go back into the triple play and where we can quad play. So we have gone for the more complete customers and a part of that of course is the telephony bundle. So we are growing that segment of the business quite consciously. But we’re being very much assisted by the fact that Virgin Media has now a significant voiceover cable or 21st Century Voice as we call it in the marketplace, digital home telephony product, which is making a significant difference, particularly, in the lightning areas. When we didn’t have that available we often found we couldn’t sell at all in Lightning because customers still want that landline. And so we’re growing that segment of the business. And whilst we are seeing home telephony usage declining at the margin, it’s a moderate decline. And of course we’re picking up the landline revenue. So there’s still a very significant revenue stream for us in home telephony.

Great, thank you.

We’ll move now to Ulrich Rathe with Jefferies.

Thank you. Two questions, one is you mentioned the strategic optionality in Switzerland; I’m wondering what are the building blocks to Switzerland back to growth organically beyond MySports? Second question, coming back to the intake in the UK, there was high telephony intake; there was also high video intake. But actually the broadband intake was flat quarter-on-quarter and year-on-year. So I was wondering is the broadband intake sort of now settled down at this level or is there anything going on that would suggest 2Q is an unusual quarter on broadband within this very, very strong overall MDU intake? Thank you.

Tom, you guys can plan for the broadband question on this. In Switzerland, listen, we’re not going to say much about rationalization here. I’ve made some remarks in the past. Needless to say, we have a pretty strong turnaround plan for Switzerland. It doesn’t happen overnight, it takes multiple years. But we’ve been in these positions before, you remember Romania or Holland. And I think the new leadership team, in particular Severina are going to make a bid difference in that regard. Yes, MySports has an impact, will continue to have an impact, but that’s not the main driver. The main driver is getting the video business stable and growing again, and that’s a function of many things, not the lest of which is getting the EOS box rolled out, making sure the platform is stable, reliable, and that people are getting what they’re requesting, which is state-of-the-art video platform and video service. That’s probably the number one thing. We have a great broadband product; it’s the fastest in the market reaching the largest number of people. Mobile is making a dent, and the B2B business is solid. So it’s really, from our perspective, about getting video most importantly back on track, and that is as much as anything a function of product – quality of the product in that competitive market. On the rationalization front, I think we’ve controlled that process. The market does require some consolidation, and then any observer would give you the same observation. And in the end we’re sort of the fulcrum asset there, so we’ll see what opportunities arise and what we can get done. But fundamentally we’re focused on organically turning the business around. Tom, you want to talk about the broadband in the UK?

Yes, thanks, Mike. Look, on UK broadband the issue there, I think, is there’s the flip side of our pursuit of ARPU and high quality triples, as we’re focused on that. It doesn’t mean that we haven’t gone down to the bottom of the market to the extent that other operators might have. If you look at the UK you can see the broadband additions by each of the other two major, Sky and BT, are certainly below our number. And there’s been a fair bit of activity right at the low end with some of the other operators coming in. In our experience in the past, this has tended to be transitional, but this is business we did – we want to chase. Very easy to sell a good product cheaply at a low ARPU, so we have been focused on the more quality end of the market, driving our overall ARPU up and getting our revenue and lower churn out of that. We do see ourselves as being assisted going forward by these new rules that have been implemented in the UK around the ability to market broadband speed. So we now have a top speed of 350, and due to the great network we have and the high-quality router, we can go out there and say that we can actually offer 362 meg across that network. All the other operators on the BT network are still stuck at 80, and BT itself can only say that it has limited availability for 100 meg. So the new rule prevents you marketing a speed unless you can offer it to at least half of your network, which of course puts us in a much, much more advantageous position against those competitors. So fundamentally I think on broadband we just very deliberately target the full ARPU customers, and we’ve always got that option to dive down and pick up some cheaper ones. But we’re better off doing it when the market is not being fed at the lower end.

Thanks very much for both comment, thank you.

We’ll hear next from Barclays’ Daniel Morris.

Good morning. Thanks for taking the question. Just another question on the UK around the Lightning run rate we saw in 1H, clearly demonstrates some disciple around the cost. And I just wondered if you can talk a little bit more about what’s changed in your thinking around the UK Lightning build and how much things might change again as the regulation shifts, as you alluded to in the opening remarks? And related to that, is there any reason the 2H trends on Lightning would be very different to 1H? Thank you.

Yes, I think as I said in my remarks, we kind of like this pace that we’re building at now. And it’s driven, most importantly, by just optimizing the capital cost and ensuring that the returns stay where we want them to be. We could build faster. I think Tom and the team could easily ramp up. But I think from where we sit today this is a steady pace, and one that ensures we’re driving the lowest cost per premise and attacking and penetrating the most attractive areas of the market. And that’s going to continue. So we’re not giving guidance on Lightning, you know that. But as I said in my remarks, we like this pace. And we don’t see anything that would probably push us to increase the pace and really no headwinds that would slow that pace down materially. I think the trend going forward is going to be lower cost per premise as we look at MDUs, as the legislation we referenced gives us an opportunity to penetrate those markets more aggressively. And as we just get smarter about our own build commitments and strategies. So I think it’s steady as she goes, and I don’t see a material change one way or the other. It’s a great use of capital for us. It’s driving significant returns, it’s driving growth, it’s driving EBITDA. So we don’t see that changing.

Thank you.

We’ll move now to Jeff Wlodarczak with Pivotal Research Group.

Good morning. I wanted to follow-up on Switzerland. It’s obviously gotten a lot more competitive. How much of the 2Q RGU result was related, as far as you guys can tell, directly to Salt’s aggressively priced rollout of that triple-quad-play offer? And then just to confirm, your overlap with Salt these days is about 30%. And then what’s the outlook for Salt being able to materially expand that footprint by wholesaling more FTTH from municipalities. And then I’ve got one follow-up.

Yes, I would say, and I don’t know if Eric is on he can chime in here or Severina. We would say that the impact of the Salt triple-play rollout or quad-play rollout was minimal. I think they would say the same thing if they had their earnings call, they have – that is roughly the footprint they reach. It’s an aggressive product, clearly much cheaper than everybody else in the market. But it doesn’t appear to have had much of an impact. Other operators in the market are saying roughly the same thing; we’re not seeing it have that material impact. I’ve talked to Sever twice in the last few weeks, you know, probably say the same thing if asked. And Eric, are you on? You want to take the second question?

Yes, I am. Again, as Mike said, we’ve seen limited impact of their launch at the moment. And I believe as we rollout our EOS platform, which Mike mentioned, that will allow us to reverse the trends on the good year side. Also, we’re planning improvements to MySports in the new season which starts in early September. And then earlier this year, through the base management efforts, we have a stabilized ARPU. And as Charlie said, ARPU modestly grew in the quarter. So I’m optimistic that we’ll be able to battle in the coming months with the new launch of the TV product.

And then, Mike, just wanted to get your latest thoughts on what you plan to do with the $12 billion or $13 billion or so you’re expected to receive from the VoD transaction?

Yes, thanks Jeff. I mean we’re not adding a whole lot of color to what we’ve said in the past, which is it’s quite a ways off. And so we’re trying to be sure we’re not prematurely showing a direction one way or the other. I can say a couple of things though. I think if you look at what we’ve done in the past, that’s probably a pretty good indicator of what we’ll do in the future. If you go back over the last five, 10, or even 15 years, I think you’ll find that we’ve been pretty consistent. We’re either putting our capital into buyback; we’re putting our capital into acquisitions. In fact it’s about 50/50. If you had – and we have called those numbers up, about 50/50, and we do that just based on returns, what kind of returns are we generating on our stock, what kind of returns are we generating with acquisitions. On the M&A side, looking if we could do more deals, like Germany, where we can take €2 billion and turn it into €13 billion, we’ll do deals like that. And I think if we can find transactions or opportunities where our track record, our market knowledge, our operating and technical expertise can be put to work, we’ll do things like that. But on the other hand, if we don’t see those opportunities with the stock where it’s trading and the valuation we see it’s likely we’ll be focused on buying back stock or finding a way to reduce equity. And that shouldn’t be surprising. I understand there’s some preoccupation with this, I totally get it. If were in our shoes I think you’d probably say what I just said, which is we’re going to try to keep our options open. It’s quite a ways off. We don’t know where interest rates will be, where market multiples will be, where we’ll be, where operations will be. So we’re going to – but I think we’re not going to change our stripes here, guys. And that’s the main point. And I think, as I said just at the outset here, what we’ll do going forward probably has a lot – looks a lot like what we’ve done in the past.

Great. Thanks, Mike.

We’ll move now to Jonathan Dann with RBC.

Hi there. Two questions if I could. The first, could you just, Charlie, how much is the vendor financing drag that’s been incurred in the first-half that you’d expect to swing positively in the second-half? And then secondly, just on Project Lightning, are most of the homes added in the UK or is there any sort of material change in the rates in Ireland?

Charlie?

Yes, on the vendor financing, as you probably know, for us it’s very cyclical. In the first-half of the year we’re typically unwinding the vendor financing at the back end of – at the backend of last year, and then we pulled it back up in the second-half. I think net-net you should see a net increase in our vendor financing in the low hundreds of millions year-on-year. So I think you’ll see a reasonably significant swing in the second-half. And that’s pretty much on track based on what we’re looking at today.

Yes, and the new build in Ireland is relatively small, but Tom or Robert can respond to that.

I’ll just add we have tailed off a little bit in Ireland essentially because we had local authority governments asking us for fees that we didn’t wish to pay, so we have moderated the rate of build there. But of course it’s relatively small compared to the UK, but we have begun to tail off a bit there. So if you mention Ireland we would point out our strong business performance in Ireland around both the cable business and the TV3 business, both of which are going very well.

Excellent. Thank you.

We’ll hear now from Morgan Stanley’s Ben Swinburne.

Hey, good morning guys. For Mike or Tom and the UK team, just looking at the B2B is mobile businesses there; under the hood on mobile I think the service revenues are kind of flattish, B2B low single digits. What’s your expectation for the ability to accelerate those growth rates as you look in to kind of the next 12-18 months, because obviously those are decent sized businesses, particularly the B2B piece and at Virgin. And then just maybe one follow-up on the ITV deal, Mike, is this a step towards sort of a re-trans regime either in the UK or Europe, or do you view this as fundamentally different and part of a more offensive partnership with ITV to sort of differentiate Virgin’s offerings in the UK?

Well, I’ll let Tom work on the B2B mobile question; I’ll just quickly address the ITV question. We really think the deal we’ve done with them is a positive one. Fundamentally it gives us more rights, access to more content. It’s a very cooperative relationship we’ve developed with them and then we’ve had with them. We’re not either of us – neither of us are speaking about the terms of the transaction financially, but we will repeat what we said publicly, which is we’ve reserved our position on the issue of re-trans, and I believe they’ve done the same. So all we can say, and I guess if I had to answer you more directly, I do not think it’s trending towards that. And I think we’re pleased with the outcome, and we feel like we’ve reserved our position. But it is an important relationship. And ITV of course has a very strong position in the content market in the UK and we want to have access to their content, SD and HD, 4K, you know, the ability to get all linear rights, and all of that was achieved on what we believe were traffic jams for both parties. So, hope that helps; that’s helpful. Tom, do you want to talk about B2B in mobile?

Yes, thanks Mark. B2B has been a consistently strong earner for the Virgin Media business. It’s been very well-supported by Liberty Group both in product Samsung and in capital and knowledge. Peter Kelly who leads that business has expanded its discipline on the Soho areas, and we see continuing growth in B2B and a continued focus on it. I think they have a track record there of being able to acquire small businesses that are key to WiFi, which I think we are paying back on that well within the two years by the time it was integrated into the business. So we see that as a continued growth area in a broader market, where businesses are of course looking at their own expenses, and so there is different competition in that area. But basically we have the advantage of not being BT, and operators are looking for alternative supplies. On the mobile business, yes, look, we have had some service revenue pressure, and I think probably less than the bigger operators. I think we are transitioning that business entirely to a contract business and working out prepay. We have moved the business increasingly on to our IT stack, and so we’re getting a better service and better operations on that. And the handsets, yes, have been a significant element of our revenue, but also significant element of margin, the fact that we sell people a handset with a good service is all part of effective mobile business and solid profit contributor, and also big part of their ongoing increase in FMC, which again has picked up in this quarter. So we do see combination that are continuing to be a good contributor to Virgin Media overall, both in the UK and in Ireland.

Got it. Thank you, guys.

We will move now to James Ratzer with New Street Research.

Yes, thank you very much indeed. I have got two questions please. First one, just reflecting on the past three months or so, I mean it looks like the stock market has taken quite a negative view to the German transaction you did last quarter, you’ve responded in a positive way up in the buyback rate by around 60% or so. I mean given that kind of disagreements, I have seen the way you have reacted to investors, I mean does that affect your thoughts on your future M&A strategy in general, I mean given that kind of different opinion would you consider following Elon Musk’s footsteps and consider taking the company private at this level? And then second question just on the pace of build and lightning, you mentioned you are comfortable with that. Does the 4 million target long-term still remain in tact, I mean, if so, should we be thinking that that’s still another kind of six years of build ahead of you on that project? Thank you.

Well, I’m not going to take bate on the first question. I will try. Yes, I appreciate that. I think our approach to M&A and our approach to buyback has been pretty consistent over the last 10 to 15 years. I don’t see us operating or managing or allocating capital in a materially different way going forward. We are who we are. But I think we will look creatively and honestly at the best rate of return and the ability to create value for shareholders. And that – and as I said a couple of times now, if we see our business trading at these sorts of levels and we believed in the growth of our underlying continuing operations, particularly Virgin Media, which I think we do seriously believe in, as well as having great strategic optionality in the other markets that we operate in, we will go and look hopefully pretty hard at how to own our own business. I’ll say that way. On the other hand, we are operators first, and we have had a very you know, I think terrific track record of buying and building businesses, and when appropriate or when attractive, monetizing or consolidating or finding ways to create value from those businesses. So that’s what we do. And we have I think great experience in Europe. We have pretty, as I said, strong track record in making smart acquisitions at appropriate and attractive prices. And that’s something we will continue to do. On the pace of build, Tom, you can chime in here. Those 4 million homes still are out there, so to speak. And so long as we are having success and the success we are already having and churning of returns we know exist. And I think we are realizing it would be foolish for us not to look at new build as a great source of book growth and high return capital investment. So we are not going to give you a long-term guidance on that. We have built 1.3 million homes. We have built more homes in the UK market than anybody else. So, I would be cautious as you look at these business plans from other operators in the market who have talked a pretty good game but haven’t done much. So we are way ahead of the rest of the market in terms of understanding both where and how to build these homes and how to make a return on them. So we want to take advantage of that knowledge, that experience. And I think if we are plough ahead, we are not going to give you a longer-term guidance on whether it’s 3 million or 4 million expect to say so long as we are getting great returns, it’s a smart use of our capital.

Great, thank you.

We’ll move now to Akhil Dattani with JPMorgan.

Hi, thanks for taking the question. The first is just I guess to pull together some of the comments you have made on UK and I guess in reference to the future telecom infrastructure, it came out a bit earlier. I guess, Mike, you just mentioned I guess your skepticism around some of the build ambitions from some of the new entrants into the market. I guess just keen to understand your broad thoughts around that. I mean the UK government seems to have pretty optimistic views around what might happen. How are you thinking more broadly about the competitive threats and how will if it might change the landscape? And I guess linked to that you said that you would expect other initiatives the governments take in the UK to help reduce your build cost. Obviously understand it is premature to maybe talk about numbers now, but is this something you might formalize more a bit later? And if so, when might you do that? And then I guess the second one is just a big picture question. Your first-half OCF growth is 2.8% versus the full-year target of 4, so truly you are expecting trends to improve in 2022? Just wonder if you might be able to give us any color around kind of key markets and key sensitivities. Thanks.

Sure. Maybe working backwards we have a strong OCF growth rate in Virgin in the first quarter. The second quarter, of course, was impacted by the one-off settlement in the prior year. If you took that settlement out, we were closer to 6% EBITDA growth or OCF growth in the second quarter. So we are trending where we need to trend in the UK I think that was your question because you started referencing UK Where we think we need to trend, there is a lot of tailwind in the second half of the year both in the UK and some of our other markets which I think we identified. So that is what supports our view of guidance. And UK is a big part of that of course. In terms of fiber-to-home builds I mean you have all the same press release as we have. And that’s pretty much all there is go on in terms of where people are hoping to build and the number of homes we are hoping to build I think adds up to 4 million to 5 million or something like that, that they are shooting for by 2022 - 2020, there probably be some overlap in those homes. And some of them won’t get built at all. Not to say that the market isn’t trending towards faster mobile BUS broadband competitor. That is undeniably the case. We plan two, three, four years out. We expect to have a bit more fiber, more robust competitors and faster speeds. And that’s why we are constantly investing ahead of the curve. And while we put so much money into our capacity and while we have already up speeds in the UK across our 50 million homes to 350 MEG plus/minus. And we are as everybody else’s…

No, no, I think that’s absolutely right. And we’re still around that 650, I would say, slightly higher, but in our minds around the 650. And there’re also reasons to believe depending on build mix and as we obviously get better at building that should trend down, and we certainly saw that in other build projects actually in Chile back in the day. We saw over time the trend cross – the bill cross trend down over time.

Yes, we will be at one gig. We have the ability to take the entire Virgin platform to a gig. And when we choose to do it, which would be some time probably in the next one to three years and it will be in response to both competition and the right capital allocation decisions.

That’s great. Thank you.

Thank you. We’ll take our final question from Carl Murdock-Smith with Berenberg.

Hi, thanks very much. Following up on Project Lightning again, I’m afraid. You’ve talked a lot about the third party builders there, but to what extent might you be open to possibly share in build costs and partnering with third party network builders to improve economics of rollouts as you push into more rural locations. Is that something you’d consider, kind of improving build costs to sacrifice and market exclusivity? Thanks.

Well, I think the answer is possibly. And clearly Tom and the team have uncovered or been approached by any number of competitors who are looking at their own CapEx needs and capital needs as they intend to build and try to build out. So I think the answer is, possibly. We haven’t announced anything, and we haven’t concluded anything. But it would be smart of us to try to create the most optimal outcome we can in this particular area. And as I said, we’re the only ones who are building at this pace. We think the cost that others have disclosed are likely to be higher than they think and certainly if there are opportunities to reduce cost and reduce overbill and overlap, we would look at that. Right now, we have nothing to disclose on that, but we would certainly look at it.

Thanks a lot.

Okay, great. So I appreciate everybody joined in. I think as we had indicated, we thought it was a strong quarter in particular, you know, Virgin Media right on track and performing great. And we have a strong second half of the year, we think, in front of us. All the M&A deals are on track. The Vodafone transaction, we think, is going to be a great outcome for us and looks to be received well by the regulatory authorities. And the businesses as part of that deal are performing really well on top of that. We’ve got work to do in the continuing ops, we talked about it, we have strategic optionality in some, but more importantly, great turnaround plans in all of them. And I think the team has never been stronger. So appreciate you joining us, have a great summer, we look forward to talking to you on the third quarter call. Thanks very much.

Ladies and gentlemen, this concludes Liberty Global’s Second Quarter 2018 Investor Call. As a reminder, a replay of the call will be available in the investor relations section of Liberty Global’s Web site. There, you can also find a copy of today’s presentation materials.