LBTYB - Liberty Global plc (LBTYA) Q4 2023 Earnings Call Transcript

2024-02-16 18:12:03 ET

Liberty Global plc (LBTYA)

Q4 2023 Earnings Conference Call

February 16, 2024 9:00 AM ET

Company Participants

Mike Fries - Vice Chairman, President & CEO

Charlie Bracken - Executive VP & CFO

Lutz Schüler - Chief Executive Officer, Virgin Media

André Krause - Chief Executive Officer, Sunrise

Conference Call Participants

Stephen Malcolm - Redburn Atlantic

Maurice Patrick - Barclays

Robert Grindle - Deutsche Bank

David Wright - Bank of America Merrill Lynch

Carl Smith - Berenberg

Ulrich Rathe - Societe Generale

Georgios Ierodiaconou - Citigroup

Matthew Harrigan - The Benchmark Company

Polo Tang - UBS

James Ratzer - New Street Research

Joshua Mills - BNP Paribas

Presentation

Operator

Good morning, ladies and gentlemen. And thank you for standing by. Welcome to the Liberty Global's Full Year 2023 Results and Strategic Update Investor Call. This call and the associated webcast are the property of Liberty Global and any redistribution, retransmission, a re-broadcast of this call or webcast in any form without the express written consent of Liberty Global is strictly prohibited.

At this time, all participants are in a listen-only mode. Today’s formal presentation materials can be found under the Investor Relations section of Liberty Global’s website 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 statements regarding forward-looking statements. Today’s presentation may include 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 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. Fries.

Mike Fries

Thanks, operator, and welcome, everyone, to our Q4 results call. As promised, this will be a slightly longer session today with prepared remarks covering first our results and then followed by a brief strategy update that we think you'll find pretty interesting. About 20 or so slides in total will bear with us. I promise we will leave plenty of time for questions as we scheduled this call for 90 minutes.

Now as usual, I'm joined by essentially my entire leadership team, so we should be prepared to answer pretty much any question you may have. And with that, I'll get started on Slide 4, with 3 key takeaways from our fourth quarter and fiscal year 2023 results. Message number one is that overall, we feel good about our operating performance despite the macro and competitive headwinds we've been managing through this past year. Every market was focused on commercial and marketing initiatives that reinvigorated growth in the fourth quarter as we added 80,000 postpaid mobile subs and saw improved broadband performance in Switzerland, Belgium and Holland.

In every market, we continue to focus on the right balance between value and volume with price adjustments supporting stable to growing revenues. Financially, we saw a strong Q4 with accelerated EBITDA at BMO 2 and Sunrise, which reported nearly 8% and 6% growth, respectively. Importantly, this enabled us to deliver on all of our OpCo guidance metrics for the full year and to actually exceed our original distributable cash flow guidance when you exclude the unexpected tax payment in Q4.

And then lastly, we remain ahead of plan on synergy execution with both the U.K. and Switzerland, around two third of the way through their respective targets. More on all of this as we move through the slides, I promise. The last big takeaway is that our balance sheet liquidity profile and capital allocation model are strong and intact. Charlie will dive into most of these topics later, but certainly a highlight is our repurchase of 18.5% of our shares through the end of 2024, funded by our distributable cash flow. And we'll spend plenty of time on our balance sheet and cash position today, but the punchline is we are extremely well positioned with long-dated fixed rate debt and over $4 billion in cash and liquid securities.

Slide 5 provides our usual subscriber trend analysis for each of our four core markets. On the top left, you'll see results for Virgin Media O2, which delivered another positive quarter in both postpaid mobile and broadband net adds despite a highly competitive market. On broadband, BMO 2 remains the market leader, with customers receiving on average, 5x the average speed relative to competitors, and we're seeing a discernible increase in demand for higher speed services year-over-year. And in mobile, our complementary dual brand strategy with O2 and Gift Gap, drove positive postpaid adds for the quarter and the full year.

In Switzerland, on the top right of the slide, we see an improvement in Q4 broadband net adds driven by commercial initiatives, including a strong Black Friday campaign. And importantly, we're seeing reduced effects from the UPC migration that impacted net adds throughout most of 2023. Over 50% of the base has been migrated now with the remaining customers expected to be largely value neutral. And similar to the U.K., our mobile flanker brand strategy in Switzerland is supporting strong positive postpaid growth. In Belgium, on the bottom left, we saw improved commercial momentum in Q4, driven by successful fixed mobile marketing campaigns and targeted hardware offers....

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