Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global's Second Quarter 2019 Results 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 presentation materials can be found under the Investor Relations section of Liberty Global's Web site at libertyglobal.com. After today's formal presentation, instructions will be given for a question-and-answer session. 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 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 include those detailed in Liberty Global's filings from 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 condition on which any such statement is based. I would now like to turn the call over to Mr. Mike Fries.

Thanks, operator. And welcome everyone to our Q2 results call. We always appreciate the opportunity to talk to you about our business, of course and our broader strategic plan. And today, we are speaking to the two man show. So Charlie and I will handle the prepared remarks. And then we'll engage the other key leaders at, maybe in Q&A. And I'll kick it off on Slide 3, which is entitled delivering 2019 priorities. We thought that since we're halfway through the year, it'd be a good idea to revisit the key goals we laid out for you nearly six months ago. These were the big needle movers in our minds. And by all accounts, we're making or have made substantial progress. Number one, of course, was completing the announced M&A transactions with Vodafone and Sunrise. As expected, the deal with Vodafone closed eight days ago with net proceeds of €11.3 billion, and Swiss deal within the midst of a phase two regulatory review, and we think is on track to close in the fourth quarter. It might be worth reminding everyone that these deals are a result of purposeful rebalancing, which saw a capitalized on the strategic and financial value of our fixed broadband and video in what is a converging marketplace in Europe, and in each case generating double-digit OCF transaction multiples. Now secondly, earlier this year, we also talked about resetting our operating model and cost structure, and that was in an attempt to reflect the reduced size of our European platform and to unleash the efficiencies, which resulted in flat OpEx for three straight years. And Charlie has a slide on this in his section. But we are right on track, if not a bit ahead of plan here on reducing our corporate costs and radically…

Thank you, Mike. I'm on the slide entitled revenue and OCF growth. This is a summary of our key financial results. And the Group, as a whole, recorded negative revenue growth in the quarter of 0.9% and an OCF decline of 4.3%. Now, there were a number of one-offs impacting the OCF figures and turning around $12 million of severance from one-off retention payments. Some of these impacted the UK and Ireland, which reported negative OCF growth of 2.5%, a positive of revenue growth of 0.4%. Belgium was also impacted with the loss of the media land contract, which resulted in negative revenue and OCF growth of 1.5% and 3.6% respectively. Without this impact, Belgium OCF growth would have been broadly stable. Mike has discussed Switzerland and the Q2 performance remains in line with our financial expectations for the year despite reporting negative revenue growth of 3.9% and negative OCF growth of 8.7% in the quarter. CEE had good revenue growth of 2.9%, supported by new builds and B2B efforts in Poland with a slight decline in OCF due to programming cost increases. Central and other reported TSA revenues of $60 million for the quarter, and the net OCF cost of $90 million, which I will now address in more detail in the following slide, which we call de-scaling central. We think of central spend in two separate buckets. The first is more classical corporate spend during the group functions for finance, legal, HR and development. We spent $260 million on these functions in 2018, and are on track to reduce this by 20% by 2020 as we support a smaller group post the disposals. The second category is our centralized spend in technology and innovation. And broadly, this is the spend that we've taken out of country operations and…

The question-and-answer session will be conducted electronically [Operator Instructions]. We will go first to Maurice Patrick with Barclays.

Good morning, guys. I'm here with [indiscernible] from Barclays. Just a couple of questions please on the UK, and it's really my intention on your comments about pushing on investments to some of the comments on Boris Johnson and now generation access. There's being some press reports about you looking at investing beyond project Lightning. And I'd love to hear your thoughts around just about long-term investment once Lightning is done. And the article also touched upon entertaining the idea of offering wholesale access through your network. I wondered if your thoughts on the wholesale access in the UK changed. Thank you so much.

There's a lot of questions there. On wholesale access, our position has been pretty consistent across here, which we don't think is particularly good idea and it discourages investment in infrastructure by cable, which is the only competitive platform our there to the phone operators. On the other hand, we have had to utilize it in Belgium where it was acquired. And in some instances, we have in the past looked at a voluntary, or I would say, private negotiation. So we're opportunistic and I think we're creative in how we approach it. But we certainly are positioned as always been, from a regulatory point of view, it should now be mandated. And in some instances, we have in the past, looked at whether we would partner with companies who might be interested in utilizing that, but that is a private transaction, not one determined or priced by the government, big difference is there, that's what I'd say. In terms of building beyond Lightning, we think the Lightning footprint that we originally estimated of 4 million homes and then we built about half of those almost is still attractive to us, and we're evaluating certainly market-by-market and city-by-city how to do that in the most effective and efficient manner. On the other hand, as I mentioned in my remarks, there is a quite a bit of activity occurring across the marketplace. And there is at least another 10 million homes that somebody is going to build. I don't see us doing that on balance sheet as a Lightning like project where we're funding it out of our operating free cash flow. But Virgin is, by far, the best partner if somebody is looking to build those homes, because we bring obviously a great brand, ability to penetrate quickly and potentially…

We'll move now to Ben Swinburne with Morgan Stanley.

I know you've made some comments earlier, Mike, about sort of the rationale behind the tender. But I just wanted to come back and ask my sense and maybe I just misinterpreted. But I sense over the last couple of calls is you guys were sort of suggesting the cash flow isn't going to burn a whole in your pocket, and you're going to take your time, et cetera, et cetera. And obviously, you still have a lot of capacity. So I'm not -- I get the numbers. But I just was wondering if anything changed between May and now to lead you to launch the tender for $2.5 billion. And if there is any sort of change in how you're thinking about allocating that capital that we should be aware of. And then secondly, on the subscriber trends in the UK, you mentioned competitive environment. I'm just wondering as you look out through the back half of this year. Do you see that getting any better, any initiatives you guys have on either turn management, it's probably for Lutz, or new bundles to help try to drive that. Are you -- or maybe you're just focused more on EBITDA and ARPU, and you're not going to change subs. So I'd just love an update there?

Lutz, why don't you work on answer to the UK question? On the tender, I don't think our position has changed materially. I mean if we'd announced this morning $2.5 billion buyback program, it would have taken us, based as you know, on rules and restrictions, pretty long time to get that money, put that money to work. So, it's our view these Dutch option tenders are efficient. You can launch them and be done in 20 business days. We're not suggesting this is the only one. We'll see what happens to the market, or our alternative uses of capital. What I meant to say on patience was really about and discipline, was really related to transactions outside our core markets and let's say in new markets or new opportunities. There seems to be a fair amount of concern, at least I hear it and our IR guys hear it, that we're going to turn around and buy something nonsensical. In a sector or a market where we have no expertise or no capabilities, and that's not what we're going to do. And the patient and the discipline comment was really related to opportunities outside of our core markets or our core capital structure. And I'm not -- I'm certain we have those capabilities to do interesting things. We're just going to be very, very selective about those. In the meantime, we will look at where the stock trades and we will look at what other opportunities we have to be, to solidify and grow the businesses that we already own and operate, which we think are substantial and great free capital generators and have the ability to be re-valued in this environment. So no question that our stock today has zero value for Virgin Media, maybe negative value for…

And we'll move now to Christian Fangmann with HSBC.

Good morning. I was just following up on the buy backs. I think the plan is a bit below of what the street was expecting. I mean for H2 definitely a big number. But beyond that, I was curious are you updating us on the quarterly basis or relatively in between quarters if you think you may do more tenders? Because you just mentioned that may not be the last one you do, so interest in your view on that one. And then maybe on the UK, I mean you find a new deal with Sky, a content deal. And I think for the full year, you have content costs going up £60 million to £80 million, I think was the guidance for the year. Can you maybe give some color if you're more towards the higher end, the mid end, or the lower end? So would be interested in that one.

Yes, I think the Sky deal -- Lutz, you correct me. I think the Sky deal is where we thought it would be. So -- but you can provide some color on that later if I missed it. But I'm pretty sure it'd be right on where we thought we be in terms of what we might have forecast to you on the guidance. In terms of the buybacks, I think what I said in my remarks I'll repeat, which is we could be more of these. We could launch tender -- buyback programs as we've done in the past, or we could do neither. It doesn't -- it's not a good idea for me to signal to you, well, we're going to do these every quarter and people won't be interested in selling shares, and won't be tendering, and we're interested in owning more shares. So my goal here for shareholders who are going to be long-term shareholders is to acquire shares at the most efficient price that we acquire them. At this point, this is all we've got going on. And so, I don't anticipate quarterly updates on our "tender offer activities". But if we are to launch additional tenders down that road, you're likely not to know about that until we do it. I mean that's kind of how it works. So I don't believe this is something that we're going to discuss on a quarterly basis. I think we're going to look at how this particular transaction performs and our ability to efficiently acquire more of a company we believe in, and then we'll make decisions. Hey, we will be looking at it of course and making decisions around how best to utilize capital on a quarterly basis. But I don't know that will be signalling…

And maybe one follow-up, if I may, also on Virgin. I think there was some news yesterday from Virgin and that Virgin is addressing Ofcom's ongoing review of the broadband pricing and related efforts to protect customers running out of their minimum contract period. So looks like Virgin may address 100,000 customers that are vulnerable, I would call it's kind of disabled, petitioners, unemployed people. So can you maybe quantify the effect or the costs embedded to that approach that Virgin is taking for 2020 maybe, or just the rough feel?

I think it's very small accretion. So it's a small attempt. And at the end, if you do that and you're customer centric, you come to much lower churn with these customers. So therefore I think the impact on 2020 is neglectable.

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

I have two questions please. The first one just going back to the topic of use of proceeds please, I hear what you said so far. But I was just wondering if you could talk us through how you see some of the relative merits of some deals that are being discussed? I mean mobile in the UK is one area. But I think in the past you've been nervous about mobile performance. I mean are you now feeling more comfortable with that. There's also been some speculation you might look in Latin America. I mean given your comments about geographical focus. Are you able to rule out categorically doing any deal in Latin America with the capital you have? And then thoughts around on deals in the Benelux area as well, interested in your preference, order and thinking around those options? And then follow up I have is just going back to the price rise in the UK. I mean how do you weigh that up against what your market share tolerance is? I mean, I'm looking at BT who has been taking price for a while, and it seems like they now have to reverse engines a bit and say they're no longer willing to seed share, because their pricing approach led to customer losses. How do you think about that potential trade off going forward? Thank you.

James, on the use of proceeds, I'm not going to get into that here on this call. I can just repeat what I said, which is looking at things in our core markets first as we should and then possible consider things outside our core markets if they make sense and fit, a pretty tight group of criteria for us. So I hear what you are asking and I'm sure it would be a great info. But it's not prudent of me to get into the relative merits of any one transaction or anyone opportunity. As things unfold and become real, we will certainly comment on them. Do you want to talk about the price increase? Lutz Schüler: Yes. We are growing still the market share, right. I mean although it was not the strongest quarter, in general -- this quarter we are flat. But in general, we are growing market share. According to our information, our churn is substantially lower than from the competitor you mentioned. And so far customer reaction is in line. I mean don't forget we are targeting the value segment of the market. And we spend a lot of money for increased speed, now intelligent WiFi, better content, higher upload speed, better boxes and also lot of money in better service. So I think we are not in a position to say do we really shrink as a business or not. And I think when you look at the UK market, you see higher competition on sales growth at market, but you see still a pretty rationale approach in the customer base. Sky has taken price rise. Netflix has take price rise. TalkTalk has taken price rise. Even BT has taken price rise on BT sports packages. So I think we have not to a reason to change our approach here.

I mean Sky took a 5% price rise in April, as you guys -- which by the way, we did not pass through to our customers. So our price rise will, to some extent, compensate us for not having to ask you the Sky price rise to our customers. So I think that's noteworthy. Does that help, James?

Thank you for that. Yes, that's great. Thank you. Just going back to the point, I mean what outside your core markets might look more attractive than doing a deal within your existing pull markets today?

I mean, again, I'm not going to get into that with you. I think that wouldn't be smart for us to start. Are they divulging or if we have things pre-empting those opportunities. It's just not a good idea. I would be -- it would be a generic conversation, and I don't think it would be particularly useful for you. I did describe that we like businesses and have always benefited I think from owning and operating businesses that have scale, capability that are in our wheelhouse around technology, and subscription, and businesses that we understand well. We know who we are and we know who we're not. So you can look backwards perhaps than look forward. And at one point, we were operating at 40 different countries around the world. So there is very few places we haven't done business. Doesn't mean we're interested in doing business in those places today. I'm just saying that every -- we have a pretty long history of, I think, investing in the types of opportunities that we think fit our profile. But to be specific about a territory, or market, or an opportunity would be prudent at this point.

And Evercore's Vijay Jayant has our next question.

Hi, It's James Ratcliffe. Just on the -- now that the Vodafone check is clear, and you've got the cash on the balance sheet. I'm wondering if you can talk about the trade-offs between having a lot of liquidity available for opportunities? And I think Liberty generally done well by having liquidity when other didn't historically versus the negative arbitrage associated with accounts because if which back of the envelop be 100 million bucks of quarter or so. And do you have flexibility to essentially reduced that negative arbitrate, while still keeping a lot liquidity readily available should opportunities arise. Thanks.

You mean the negative arbitrage on our debt basically?

Yes, I mean just having cash versus having…

Yes, I got it. So I think it's -- there's couple of answers to that. One I think having the liquidity, as you point out, is a huge advantage. One thing John and I have seen and many of you have seen is market volatility comes and goes, and there are many -- there is -- it's always good to be in a cash position when you don't know what the future brings, and that's more opportunistic than anything. And so there isn't -- while there is a cost of carry, there's certainly an opportunity cost of not having liquidity. So as you say rightly, we balanced it off and we balanced it off dynamically. And actually generating cash, Charlie and the team, are charged with -- one of the reasons we put all the money into dollars is we believe we can generate a better return on that capital than we could in euros, or any other currency. And so Charlie and the treasury team are going to do their best to generate a maximum amount of return that can be prudently achieved on that capital. And so that will certainly help a little bit. And then as necessary and on occasion as we talked about around leverage, we'll trim here or there. So, it's needed. So I think it's going to be a combination of things as you rightly say, little tension between liquidity and opportunity and cost of carry. But if we can get the treasury guys to work their magic, hopefully, we can shrink that a little bit. Charlie, you want to add anything?

Yes. The one thing is the $100 million a quarter, I think it's -- the cost of debt is 4%, and so in the U.S. dollar you're getting something north of 2%, so it's roughly a 2% negative carry and pro forma the buyback we got about $12 billion, so it's more like $240 million is the bid offer in terms of the cost of the option. And as Mike said, we will continue to evaluate the best way to run that negative carry, but it's more -- it's not the $100 million a quarter, I think.

We will move now to Matthew Harrigan with Benchmark.

I guess, it feels fairly vindicated on VodafoneZiggo given the turnaround there, the fastest growth business in Q2. How do you feel about the big mobile convergence benefit? I mean do they come in line with what you expected, were they even higher? Is there anything, any runway still on getting that? And then clearly, if you get a little more expensive on the VodafoneZiggo valuation, your stock is even more ridiculously inexpensive. And I know you're not going to comment too specifically on any transaction on unwinding the JV, but logically created a somewhat lower multiple if those synergies have pretty been realized at this point. I think it's an asset that maybe the street, maybe including myself is neglecting a little bit. Thanks.

First of all, the synergies haven't all been realized. I believe we're only about halfway through this synergies. They may or may not have addressed that, so that may or may not be public. But my understanding is that we are only about half way through the synergies originally projecting $210 million. And I think as we've indicated likely to exceed that just because we always do in these types of businesses. And I do agree with you. It's been terrific to see the business return to revenue growth and good OCF growth, and raise their expectations around that. And it is a function of both the natural synergies that occurred in fixed mobile mergers, there's a reason why we repaid 12 times for Germany, it's because the synergies are massive and they're real and they work for mobile and fixed platforms. And we've proven this out now and how many transactions, I can't even keep count in Europe so far. And so I think all positive indicators there, and we're pretty excited about how they're performing as a team. What it's worth is you can come up -- come to that value map in a bunch of different ways, whether it's a levered free cash flow yield or an operating free cash flow multiple, or even an EBITDA multiple. I would suggest -- we would think there is very little value for us to talk with that business today. But we continue to be supportive of it. We think the team has done a great job. We think it's been a terrific partnership with Vodafone, and we're very pleased with the business as it sits today.

Thanks Mike.

Anybody want to add to that? Charlie, you are on the board and anything you want to add to that?

Michael, you said it very well. In fact, I think in some respects it could be the most successful in town, which is obviously one comparable you could look at. I mean, the free cash flow conversion as we grow in other synergies should drive towards the similar type of margins that Telenet get. So I think, Mike, it's a very attractive asset and we're delighted with how it's performing.

We'll go next to Pivotal Research Group's Jeff Wlodarczak.

Hey guys, one on the UK and one on the Belgium. UK, you've had a number of one-offs hitting EBITDA, mainly the higher network taxes, but as far as I know, are not going higher out to 2020. And you obviously got a large program price increase this year. Do you feel comfortable that the core UK business is going to be able to sustainably grow EBITDA once you get past these overhangs? And then on Telenet. Mike, I wanted to get your thoughts on this wholesale situation. It just seems like the regulator just wants the wholesale price to go down, and just continuing to try to push it down, trying to force you guys to do a single play. How do you push back against that?

Well, I'll let Lutz cook up his views on the UK question. I think Belgium wholesale question remains a throne in our side. And as I said many times and John Porter had said many times, it's a highly political marketplace. And we do the best we can to address those politics. And to point out the absurdity in some cases of what they're proposing, we fight them in court, we appeal to the EU. We do all the things we're supposed to do. We're irascible and a pain in their butt. But at the end of the day we know that they way in which they're trying to regulate this market is wrong, fundamentally wrong. Now, the flip side of that is we're doing pretty well either way. If you look at Orange Belgium, their subscriber base on our platform is not that material, I think it's roughly 130,000, 140,000 subs. I mean none of revenue "at risk" and a wholesale change of pricing is not that material either. So I don't want to overstate the impact of what may or may not occur on the regulatory side. On the other hand, I do want to -- I don't want to understate, and I want to be sure, it's clear that we don't agree with the way in which we're approaching this market. And in Holland where we have similar conversations, it's much more reasonable on rational. We also don't agree with what they -- how they're approaching it. But on the other hand, it looks to be, they coming at it certainly healthier point of view. So we fight the good fight. I mean I think good news is it's not a material impact, at least based on the current wholesale revenues. We can't be certain how it…

But we do have headwinds, I mean just to your point, Jeff. Next year, there are -- we do still have increases in both year-over-year in network taxes and programming. So we will provide more visibility on that as we get obviously into our guidance for the following year. But there still is some -- there are headwinds there. Having said that, I think Lutz is actually -- is absolutely right. We are doing all the things that we think we need to do in that market to grow the base, and to grow profitably and to drive cash flow, in particular free cash flow. I think that brings us to the top of the hour, so I'll disclose it out. First of all, I appreciate everyone joining. Second, I'll just repeat that we feel like we are doing what we told you we would do at the beginning of the year. Number one, we'd get the deals closed. A lot of people didn't think we would. We always thought we would. And we got them closed on original terms, and that's important to us. We're driving costs down in the corporate and T&I space in our company, that's critical as we de-scale. We need to de-scale what we do and how we do it. And a lot of good work happening there, which I think will benefit, both operating cash flow and operating free cash flow. We're driving CapEx down, actually not 20% but 25% through the first half of the year. And that hasn't been difficult and it hasn't had an impact, material impact at all on our ability to create growth. And we're delivering on the promise to put capital to work. And we didn't waste any time. It's only been a few days since we closed that deal, and we are in out about, more excited about getting the tender launched formally on Monday. Stay tuned for that paper work and those details. Thanks for joining us. And we'll speak to you soon. Thanks everybody.

Ladies and gentlemen, this concludes Liberty Global's second quarter 2019 results and 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.