Liberty Global plc (LBTYA) Q4 2017 Earnings Conference Call Transcript

Liberty Global plc (LBTYA 0.90%) (LBTYB -0.91%) and (LBTYK 1.22%)

Q4 2017 Earnings Conference Call
Feb. 15, 2018, 9:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning ladies and gentlemen and thank you for standing by. Welcome to the Liberty Global's Full-Year 2017 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. 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 website at www.LibertyGlobal.com. After today's formal presentation, instructions will be given for a question and answer session. As a reminder, this call is being recorded on this date, February 15, 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 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 include those detailed in Liberty Global's filings with the Securities and Exchange Commission, including its most recently filed forms, 10Q and 10K as amended. Liberty Global disclaims any obligation to update any of these forward-looking statements to reflect any change in its expectation or in the conditions on which any such statement is based. Also, please note that nothing stated on today's call constitutes an offer of any securities for sale.

I would now like to turn the conference over to Mr. Mike Fries.

Mike Fries -- Chief Executive Officer and Vice Chairman

Thanks, Operator and welcome everyone to our fourth quarter results call. We have a lot to cover today and we always enjoy these opportunities to share with you what we've achieved, but I think more importantly, give you a sense of what we're up to today and where we're headed. I'm joined on the call by Charlie Bracken, our Chief Financial Officer, who's going to review our financial results, as he always does, along with a host of other senior execs from around the world who all asked to chime in on issues during the Q and A, as needed.

We are going to speak from slides today. I hope you can grab a copy of those now or later. There's a lot of good data on there. I'm going to start on Slide 4 where we lay out a handful of operating and financial highlights for 2017, a year where we not only delivered some solid growth, but perhaps even more importantly from our perspective, laid the foundation for sustainable long-term operating success and value-creation for shareholders.

Now, I'm going to run through some stats on the left-hand side. As we do every year, we expanded our fixed subscriber base, ending with 45.8 million video broadbanded voice RGUs, and that excludes mobile. It increased to 760,000 net RGUs year-over-year. And I'll break that number down by country in a moment, but the big takeaway for me and hopefully for you is continued improvement in video losses, which were 30% better in 2017 than 2016 and represented an almost two-fold improvement over two years ago. So it's clear that our ability to retain 99.5% of our video subs every year, whatever the number is, is directly correlated to the evolution of our video platform, our go-apps, our user interface, our footprint expansion. It's all working, from our point of view.

On the financial front, rebased revenue growth was 2.3% for the full year, or $15 billion. That's up 3% in the fourth quarter alone, and that was our best revenue growth quarter in two years, driven in large part by the 4.5% revenue growth we experienced at Virgin Media.

Rebased OCF growth was 4.5% for the full year, or $7.1 billion. And as we indicated the last time, the fourth quarter and the full year were impacted by Switzerland negatively and if you exclude that one market, our fourth quarter and full-year OCF growth would have been 6% in each period. And Charlie and I will dig into Switzerland in a couple slides here.

Our capex or PP and E for the full year was $4.8 billion, or 31.7% of revenue. Again, you'll see how that breaks down in a few slides, but hopefully, it's clear to you that we are purposely investing capital into long-term, sustainable growth. This level of spend is not the new normal for us. Many of you have asked that question. And we are choosing to lean into our customers for all the right reasons, and we're been offensive and smart about our capital spend.

So how are we doing that? I think, first, we're driving broadband capacity and quality of service across the platform. That's the most important thing we can do. We're opportunistically expanding the reach of our networks through high-return, new build projects. We've talked a lot about that. The new build projects alone represent about a quarter of our capex, so that's clearly a discretionary spend. We're making discretionary investments in new products like Horizon, and we're rolling out next-gen digital boxes and one-gig wifi routers at a record pace.

And every quarter, we get deeper into fixed-mobile convergence, which we know drives turn down and drives NPS up. And then, perhaps most importantly, we're investing in the digital tools like advanced analytics, AI-based applications, better call center processes -- the things that we know will ensure we're retaining customers and growing ARPU.

And then finally on this slide, on the right-hand side, you'll see that we continue to demonstrate what we believe is an unwavering commitment to value-creation for shareholders. Now, this might be what sets us apart the most. We promised to create a pure-play European platform. And with the spin-off of Latin America, we've now done that. We talked all year about rebalancing our business to focus on national scale. So trying to be an inch wide and a mile deep in our core markets. And the sale of Austria, obviously, is evidence of that strategy.

We've talked about the disconnect between public and private market values. Clearly, the multiple of 11 times in Austria helps make that point. And then lastly, our prudent approach to balance sheet management. The $5 billion of liquidity we have all support our levered equity growth model. The biggest piece of which, of course, is commitment to owning more of our stock. With $3 billion of buybacks completed last year, and another $2 billion already announced this year.

So we remain focused on three key strategic goals. They should sound familiar to you. First, driving national scale through both smart rebalancing and footprint expansion. Second, investing in profitable customer growth through network and product innovation. And then third, optimizing our levered equity returns for the benefit of shareholders. That's a pretty strong combination, in our view.

Now, on Slide 5, we start digging into our 2017 results in a bit more detail, beginning with subscriber growth. In the top left, you'll see it again that we've added 760,000 RGUs for the group, split almost equally between the first half and the second half with the primary difference being slightly higher video losses in Switzerland and Germany in the second half, and I'll address that. Virgin Media generated 336,000 net adds. That's up 34% over last year with pretty modest growth in the fourth quarter. The good news is that we were much more disciplined in the fourth quarter and strategic about discounting in order to retain ARPU, which clearly worked for us.

Churn in the fourth quarter was also the lowest of the year. And rental ARPU is up sequentially as a result of the price increase and our discounting activities. That sets us up really well for continued growth in 2018.

You'll see on the top right that we added 229,000 RGUs in Germany, which was slightly weighted to the second half of the year. We saw 40% sequential uptake in the second half for data voice adds, and that is not abnormal for us. That's pretty typical. But total net adds were impacted by increased video churn in the third and fourth quarter from the loss of an MBU contract, but also from the Analog Switch-off Initiative, which impacted churn. And we've got both of those things under control, as a matter of fact.

On the bottom left, Central and Eastern Europe generated 266,000 new RGUs for the year, 70% of those in the second half as we added video subs, we turned things around in Poland, and we penetrated our new-build footprint. Telenet in Belgium lost 54,000 RGUs in the year, about the same in each period. And all of that -- almost all of that's related to open access. But as a reminder, there's a silver lining. Telenet largely breaks even economically on the access regime in Belgium, provided that for every Telenet sub we lose, Orange also adds a Proximus sub to their wholesale deal with us, and that's basically what's happening.

Lastly, you'll see that the Swiss and Austrian business went from a positive 8000 net adds in the first half to a loss of 26,000 in the second half of the year. And as we've signaled and have been signaling for the last 6 to 12 months, the Swiss market has experienced some pretty intense competition in both fixed video and broadband. And like we did in the Netherlands, we're in the midst of transitioning and investing in our business with new sports services, smarter bundles, and a popular fixed mobile product.

But I want to point out that Switzerland is really not Holland, from our perspective. There's some big differences. For starters, there's only three mobile operators there today, not four. And the challenger has an inferior network. And I think Swisscom is largely a rational competitor and has been for some time. We're in a strong position here across the footprint. We have a super-fast broadband network that reaches two-thirds of the market. By the way, we just doubled speeds this week for half our broadband sub-base in Switzerland. And on top of that, we have very high OCF and free cash flow margins, which presents some interesting strategic options for us, as we've discussed.

Turning to Slide 6, as you know, we're in Year 3 of our Liberty Go Plan. And as we've done from time-to-time, we've highlighted here on this slide progress on a handful of those key drivers. We haven't included our new build initiative on this slide, which is arguably our largest source of future growth because I'll talk about Project Lightning in a minute. But we do talk about four other big drivers.

I'll start with pricing, on the top left and the good news here is that we have been able to successfully take price increases across our footprint pretty much without exception. And in 2018 we've already announced price increases in most markets, including Germany, Switzerland, Ireland, and certain of our CEE countries. But on the other hand, as we've also communicated throughout the year, both competition and discounting have been impacting ARPU growth, especially in the UK and Switzerland. So while ARPU is up around 1% for the company as a whole, year-over-year, we were flat at Virgin Media for the year and down nearly 2% in Switzerland.

Of course, the UK has turned the corner, as I've kind of indicated, and is back to ARPU growth, and I'll cover that in a minute. And Germany and Belgium were both up 3%. So it's a mixed story there, but one we continue to work on.

Certainly, a bright spot for us has been B2B. On the top right, you can see some numbers there. We have completely hit the mark here, we believe, and continue to generate double-digit, topline growth with 13% growth in the fourth quarter. What's driving this? First of all, SOHO and SME, which now represent together just under 50% of our B2B revenue. They each grew 27% and 10%, respectively, last year. And there is still significant upside in market share across Europe.

Two other quick observations. German B2B revenue growth was up 50% for the year, and that's mainly on the back of SOHO and SME. And Belgium, one of our most mature B2B businesses was up 21% in the year, as Telenet added an MVNO customer to the mobile business.

Now, turning to mobile, there are, as usual, some headwinds that we're battling, but also some really encouraging trends. And I'll go back and forth on both. For the full year, revenue was down 1%. But the top line improved every quarter. So from a negative 8% in the first quarter to a positive 5% revenue growth in the fourth quarter. Mobile revenue in Germany, in Switzerland, in Central and Eastern Europe, where we have just launched, really, MVNOs, we're up 30 and 60%. And that's really, of course, from a low base and is organic.

Virgin and Telenet, which account for 90% of our consolidated mobile revenue, were down around 1% and 7%, respectively last year. While they both added post-page subs, ARPU is impacted by competition and continued regulatory headwinds, as we've discussed. But Virgin had a strong fourth quarter with revenue up 17% on the back of higher handset sales and out of bundle usage. And both markets have some really positive drivers in 2018. Virgin in the UK will benefit from the transition to a new full MVNO with EE, which provides 4G, greater control over pricing and bundling and better economics, while Telenet will complete the migration of all mobile subs to the base platform and is going to generate the lion-share of synergies in that period. So good news in both cases.

Finally, on the bottom right, we highlight the fact that we've executed very well on the efficiency plans that we set out for ourselves. I'm particularly proud of the fact that we finished another year with flat indirect costs, steady at $4.5 billion. And that's despite all of our new-build product and commercial activity through the year. Now, these are largely scale-based efficiencies around support function, central cost, and our T and I operating model. And as an example, you can see in the call-out box that most, or if not all, of those savings in central support functions were invested back into customers in terms of both products and marketing.

So to recap, new build, cost efficiencies, and B2B are all contributing to growth. Mobile is showing some positive signs as we continue to migrate to truly converge services and better MVNO deals. And we're committed, perhaps more committed than ever, to ARPU growth, especially in the UK.

Which is a great transition to the next slide, where we talk about some operating updates for Virgin Media, which is our largest, and as you know, our most valuable operating business. And it ended 2017 on a very strong note. First, let me address the announcement about Dana -- Dana Strong, who will be joining Comcast at the end of March. Listen, I can't say enough good things about Dana, who I've worked with for nearly two decades. And while we're certainly disappointed to see her leave, we all understand the motivation. Comcast is a great company, and after 18 years outside the US, I think Dana and her family are excited to get back to her home state.

Over the last year -- I think this is most important -- she's done everything we've asked of her at Virgin Media. She's built a fantastic team of marketing and product executives. They've implemented the tools and processes we need to grow the base and the ARPU. And they've overseen an aggressive rollout of new products. You can see some of the teams good work on the top left of Slide 7, which shows the step-up in revenue from the 1 to 2% range through the first nine months of the year, to 4.4% in the fourth quarter and OCF growth increasing from 1% in Q1 to over 5% in Q4.

At the same time, the mobile team on the ground has done some terrific work adding postpaid subs at a record clipping Q4. In fact, we doubled our market share of Apple products in that quarter. And also driving mobile churn down with 4G and SIMO offers. They're also, by the way, preparing Virgin for a full-on rollout of converged FMC products later this year. So when you add in continued improvement in Virgin's network and product quality, where broadband congestion has been addressed, where we've just rolled out a 350-MG product nationwide, you add to that V6 boxes being rolled out and 1-Gig wifi routers being rolled out at a record pace, and we think Virgin is in a really strong market position.

And I'll end my remarks with a quick update on Project Lightning, our fiber-based new-build program in the UK. First of all, I'm really proud of the progress that we made through the course of 2017, especially on the construction front. It's night and day from where we were 12 to 15 months ago. We have a first-rate leadership team. We have much greater control over the pace and cost of the build at every level, from planning to working with contractors, to managing local authorities. And you can see that on the chart on the top-right. It really tells the story the best. We have now built and released 1 million homes from marketing, including 536,000 in 2017. That's up 70% from the prior year, and it was ramping in each quarter, as you can see. And we're not providing guidance for 2018, but I think it's fair to say that we like this general pace as we go into this year. And we're still targeting 4 million homes through the overall project timeframe.

Now, our confidence in Project Lightning is due in no small part to the fact that we continue to perform well on the key KPIs that matter most. And you can see on the bottom-right that customer penetration rates are trending toward our longer-term goal 39%, and we're generally hitting 24% after one year, and 34% after 33 months. Also, ARPU is in line with our overall base ARPU after discounts, currently around 50 Pounds per month. And build cost -- importantly, build costs to date have been steady around the 650 Pound per premise mark, with some variance depending on whether we're doing infill or green field. And of course, that number will also vary going forward, depending on the start-up capex, but also depending on the timing of wayleaves. Remember that in the denominator of that 650 Pound per premise mark, we don't include another 10% of homes that we've built, but yet haven't yet released for marketing because of wayleaves. So that number, arguably, is a bit overstated, looking backwards.

Now, many of you have asked for an example of project returns from Lighting. Now, on the bottom-left, we give you some data -- some high-level data, which should look familiar to you. Now, this assumes we never build another home in the UK and simply market to the 1 million premises already constructed and already released for marketing. Now, assuming we hit the 39% penetration number and the ARPU aligns with the existing base at 50 Pounds, those million homes would generate about 230 million Pounds of revenue. If we use a conservative range for an OCF contribution margin of 50 to 60%, we ought to generate annual OCF of between 115 to 140 million Pounds on that cohort. And then when you do the math, this should generate unlevered IRRs in the 25 to 30% range.

So I think it's important to note that while in the short-term, as we build out new communities with this fiber-based infrastructure, our capex spending is rising, but over time, we expect to return to normalized capex levels, just as we start to really see the OCF growth profile increase. That's the nature of this project. Spending today for a reservoir of growth tomorrow. And so far that's what we're seeing, and you'll see that kick in in 2018.

Now, I'll make one last point before handing it over to Charlie. There has been, as you've probably seen, some press speculation and even some announcements, about what we may or may not do going forward in Europe. And I'm not going to comment specifically on any of that. But I want to make one thing clear. We are not, quote/unquote, "dismantling our European business," as one paper noted. Quite the contrary. In today's competitive world, scale matters more than ever. And we are committed to the core markets we're in, where we see a pathway to becoming a national champion.

Now, consistent with this strategy, we have a pretty good track record of accretively rebalancing our business from time to time. Those who have been investors would know that. And that allows us to focus on what we do best, innovate, invest, compete, and build scale and grow. And the sale of Austria, UPC Austria, is really just the latest example of that.

So Charlie, over to you.

Charlie Bracken -- Chief Financial Officer

Thanks, Mike, and hi everyone. I will walk you through our full-year financial results and then provide some color on our segment performance and property and equipment additions. And then, finally, I will conclude with a high-level recap on our 2018 guidance targets.

So I'm on Slide 10 now where we present our full-year financials. Now, in terms of our top line performance, which you can see on the upper left, we grew our rebased revenue by 2.3% to $15 billion last year. This included 3% growth in Q4, which was our best quarterly result in two years. And I will get into some of the key growth drivers on my next slide.

On the OCF front, we regenerated rebased growth to 4.5% to $7 billion with our cost discipline continuing to be a key driver. And that's a point I will elaborate on later. Our 2017 P and E additions increased to $4.8 billion, or 31.7% of revenue as compared to $4 billion last year. And more on that in a minute, too.

However, our increased new-build activity and our commitment to next-generation CPE were the main drivers for the year-over-year increases in both absolute terms and as a percentage of revenue. Moving to the bottom left of the slide, adjusted free cash flow was $1.6 billion in 2017. From a leveraged perspective, our consolidated adjusted gross and net debt ratios stood at 5.1 times and 4.9 times, respectively, at December 31st.

We made great progress during 2017 with $24 billion of refinancings that extended our average tenant to nearly 8 years, while our blended, fully swapped borrowing cost was reduced to 4.2%. Finally, we repurchased $400 million of our stock in Q4, bringing our full-year total to $3 billion of buybacks.

Turning to Slide 11 in our Segment Reporting, on the far left, we show our rebased growth for the overall company, including both our fourth quarter and full-year results. Moving to the right, to Virgin Media, our operations in the UK and Ireland posted rebased revenue growth of 4.4% and 2.1 in the Q4 and full-year periods, respectively. The Q4 result was our strongest quarterly performance in two years, supported by an improvement in our mobile business in large part driven by handset sales, as well as solid growth in B2B.

As expected, in Q4, Virgin Media's ARPU grew 1% sequentially from Q3 as the November 2017 price increase took effect. Unity Media delivered 4.3% rebased revenue growth for the full-year, while rebased OCF grew 4.9%. Now, bear in mind that we switched off our analog signal in June and lost around $7 million of carriage fees in each of the third and fourth quarters, and we will have a similar headwind during the first half of 2018.

In Belgium, Telenet posted 1% rebased revenue growth in post-Q4 and full-year 2017, mainly driven by strong results in B2B, in large part offset by mobile headwinds. Telenet's rebased OCF increased 6.1% in 2017, benefiting from the continued migration of legacy MVNO customers to our own mobile network.

Moving to Switzerland and Austria, we reported relatively flat rebased revenue results in each of the fourth quarter and full-year periods. The 8% rebased OCF contraction that CHAT in Q4 was largely explained by increased content costs related to the launch of MySports in September last year, as well as competitive pressures. After considering the distribution fees that we receive from other cable operators, our MySports programming costs were approximately Swiss Francs 10 million in A4 and Swiss Francs 14 million in the second-half of 2017.

And as we mentioned in our last earnings call, we expect the net expenses associated with MySports to be around 30 million Swiss Francs in 2018. And it's also worth noting that the Q1 and A4 impacts will be higher than the Q2 and Q3 periods, primarily due to the timing of the Swiss Ice Hockey schedule.

Our Central and Eastern European segment posted 5% rebased revenue and OCF growth for the full-year, supported in part by new-build activities across the region. Rounding out our segments, we continue to streamline our cost base, reducing our central and corporate expenses by approximately 11% over the full-year period.

And then finally, on this slide, taking a step back, the vast majority of our operations have been executing at a high level, with the outlier clearly being our business in Switzerland. And when we look at our results without the tracking system, we're pretty pleased with our performance.

On Slide 12, we provide a bit more color on our P and E additions, which we categorize into five main buckets, CPE, rebuild and upgrade, capacity, product and enablers, and baseline expenditures. The key point that I will address is the level of our capital intensity, which stood at 31.7% for the full year of 2017. Prior to 2015, when our new build efforts began ramping, we were able to execute on our levered equity strategy by growing OCF with a lower capital intensity. More recently, and into 2018, the operational dynamic has shifted somewhat, as we have been increasingly investing in the customer experience while pursuing an expansive network expansion program. And this has been reflected in our increased capital intensity.

As you can see from the tables, spend on new-build and upgrades increased by 24% in 2017 and represented nearly 8% of revenue. And as Mike illustrated earlier, we do believe that our new-build program is establishing a reservoir of future growth with meaningful contributions to OCF expected to begin this year.

In the first line of the table, we detail our customer premise equipment category, or CPE. Growth in CPE of 27% was partly related to new-build volumes, but also reflects our decision to proactively increase penetration of next-generation platforms. Today, over 40% of our video and broadband basis have an advanced TV set, top-set, top-box, or a wifi-connect box, and we will continue to aggressively upgrade our customers in 2018.

Similarly, we will continue to invest in our networks to ensure that our customers' experience first-class connectivity. We spent over $600 million on capacity investments to improve reliability and meet the ever-increasing demand for broadband data consumption.

The next category is products and enablers, which increased 28% year-over-year. This spend allows us to develop enhanced functionality and a more robust product suite for both our residential and B2B customers. And then finally, we had a modest increase in our baseline capital spend, where we've been proactively choosing to accelerate certain investments in core areas of our infrastructure.

So in conclusion, we continue to invest heavily across all P and E, or property and equipment classifications. But once our new-build program subsides, we would expect to see our capital intensity to fall back into the low 20% of sales.

Slide 13 wraps things up. And to summarize, we are focused on continued subscriber, ARPU growth, and topline growth. We remain committed to new build and expect to see a much more meaningful OCF contribution this year and beyond. B2B continues to achieve double-digit revenue growth and we expect strong growth to continue in 2018. And from a cost perspective, we have delivered on our promise of keeping our indirect costs base flat.

Our balance sheet, we will continue to term-out the average tenor of our debt, hedge both currency and interest rate risks, and maintain ample liquidity. And as Mike mentioned, we will analyze all scenarios where we can create shareholder value, most recently evidenced by the sale of UPC Austria at a very attractive multiple.

So finally, moving toward 2018 guidance, we expect to generate around 5% rebased OCF growth this year, spend $5.1 billion on property and equipment additions, including $1.2 billion on a new-build and upgrade projects, deliver $1.6 billion of adjusted free cash flow, and repurchase another $2 billion of our equity in 2018.

And with that, operator, we would like to turn it over for questions.

Questions and Answers:

Operator

The question and answer session will be conducted electronically. If you would like to ask a question, please do so by pressing the * or asterisk key followed by the digit 1 on your phone. In order to accommodate everyone, we request that you ask only question with one follow-up if needed. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We'll pause for just a moment to give everyone an opportunity to ready for questions.

And we'll take our first question from Ben Swinburne from Morgan Stanley.

Ben Swinburne -- Morgan Stanley -- Analyst

Thank you, good morning, guys. Mike, you talked about wanting to build to be a national champion in the markets you're in, and that's consistent with what you've said in the past. Can you talk about both Germany and Switzerland in that context, and what those paths look like in those markets? And related to just the asset sale idea, in general, maybe for Charlie, can you just talk a little bit about your tax assets and how you can or cannot tax efficiently, sell assets for cash. I don't know if you've talked about any tax leakage with Austria, for example, but just maybe remind us of your ability to, sort of, tax efficient on asset sales, particularly for cash, as you guys think through your portfolio.

Mike Fries -- Chief Executive Officer and Vice Chairman

Sure, thanks, Ben. Look at, I have to be cautious here because we're not specifically addressing any particular market in what we may or may not be doing. But I think if you look at Austria as an example, we had roughly 35% reach in that market. We had a business that was, for quite some time, ex growth or low growth, but it's been doing slightly better recently. We had an MVNO deal that was pretty good, but a competitive mobile marketplace. And we felt that in that particular instance was going to be a tough path to becoming a national champion. And I'm not suggesting you go through every market, comb through the stats and then draw a conclusion.

Germany, there's optionality there. We have a great business. It's been, for us, a home run investment just on any economic basis. And we have, we think, a company that continues to grow steadily and with a broadband market that's extremely exciting, and continues to be, and a great, great management team. So I don't want to be specific about any particular market, Ben. It's a bit awkward for us. But I think that for whatever we do in that particular instance, it's a market we ought to grow with or look at options.

In Switzerland, I've said before, we have greater reach there, almost two-thirds, coming up on 70% of the market. I think it's a market that is probably screaming for rationalization on some level. Certainly, there are some options there for us to consolidate and/or become a larger player in that particular marketplace.

We've got challenges. I mean, Charlie mentioned them. I mentioned them in my remarks. It's a market that will continue to have some issues in the next year. I want people to know that. We don't expect a rapid turnaround in the Swiss market, just as we didn't get a rapid turnaround in Holland. It took us a couple, three years, to really get the fixed business in Holland back on track, which it is today, as you look at the VodafoneZiggo results. So I think we're being opportunistic and thoughtful about that, and I'm trying to dance around your question as I should in this context.

Charlie, you want to hit the taxes? Charlie, you might be on mute.

Charlie Bracken -- Chief Financial Officer

Yeah, I think we have, as you know -- oh, sorry. Can you hear me now?

Ben Swinburne -- Morgan Stanley -- Analyst

Yeah.

Mike Fries -- Chief Executive Officer and Vice Chairman

Yep.

Charlie Bracken -- Chief Financial Officer

I think we have a very substantial tax asset.

Ben Swinburne -- Morgan Stanley -- Analyst

Okay. That cut out clear enough.

Mike Fries -- Chief Executive Officer and Vice Chairman

Yeah. No, sorry. I'll be more specific than that. I think he may have cut off. Clearly, as you would imagine, Ben, we are all the time evaluating our tax posture with respect to all of our businesses. And we plan for many eventualities and we plan for the long-term. And I would say that we have a very efficient tax structure. I'd leave it at that. I think you can --

Ben Swinburne -- Morgan Stanley -- Analyst

Okay. Yeah.

Mike Fries -- Chief Executive Officer and Vice Chairman

-- you'll see through what we mean by that.

Ben Swinburne -- Morgan Stanley -- Analyst

Yeah, sure. Helpful. Thank you both.

Mike Fries -- Chief Executive Officer and Vice Chairman

You got it. Yep.

Operator

We'll take our next question from Nick Lyall with Societe Generale.

Nick Lyall -- Societe Generale -- Analyst

Hello to everybody. Just, now, a couple please, if possible. Just the first one on the UK ARPU, please. I'm still a little bit confused why it was down 0.6% year-on-year. Is there anything I've missed in there in terms of discounts or maybe a shift in mix of the people you're bringing on into the business? And then secondly, just very quickly, the overall question on fixed and mobile. You sound very convinced on fixed-mobile convergence. But just looking at the Telenet business so far, and also VodafoneZiggo, the result is, like, a little mixed with tone nature being up, and also the OCF being really quite sharply down at VodafoneZiggo. So why are you so convinced given the performance of the businesses so far? Again, is there something I'm maybe missing? Thank you.

Mike Fries -- Chief Executive Officer and Vice Chairman

Sure, sure. Tom, I think you're on. You might want to address the ARPU question. In principle, however though, as you'll remember, in the first quarter of last year is when we really started managing through some heavy churn related to the price increase toward the end of the year. And so the results at year-end, which is what this is measuring year-over-year, wouldn't have reflected the first quarter's experience around churn and discounting in that business. And as you may know, we've talked about, our average discount rate in the fourth quarter of this year -- last year -- was about 22%, whereas a year ago, it was 29%.

So I think we've just been mostly focused on being particularly disciplined about the front book and how we actually -- and the back book -- and how we actually maintain ARPU. And that's probably what you saw in the fourth quarter around net adds. And churn was better in the fourth quarter, but sales were also a little bit down as we became more disciplined around the ARPU line. So I think Charlie mentioned that we had sequential ARPU growth. I think you'll continue to see that. But year-over-year, it's just a matter of when you're measuring those two numbers. Do you want to add to that at all, Tom?

Tom Mockridge -- Chief Executive Officer, Virgin Media

Yeah. Just thank you. I'd just add that maybe the estimate there of the year-on-year decline was a bit overstated. Remember, a year ago, we actually had two concentrated price rises, so we were coming off a particular high. In this period, as Mike's mentioned, we feel we've managed it significantly better. We were always going to see that difference in Q1 of this year rather than Q4 of last year because as we said on the deck, there's only a half a quarter's price rise, and it's pretty much a nominal increase in that first period. So it's really an issue about how we're performing through this Q1 period and through that whole range of actions that Mike's mentioned about a more structured approach to discounting, about the V6 EOS boxes being deployed, about better routers, about better base management overall. We are in significantly better shape than we were 12 months ago.

Mike Fries -- Chief Executive Officer and Vice Chairman

To your mobile question, it depends on what you're measuring. Right? In both Telenet and particularly in VodafoneZiggo, we have seen the sort of improvement that gives us confidence, and in particular, I'm referring to NPS and churn. If your NPS spikes, which it has in the case of Holland, for example, then your churn declines, which it has there, as well, as you combine and bundle customers across fixed and mobile, that is a really encouraging trend for the long-term. And remember, fixed and mobile for us in Europe, it's partly offensive because we know customers want more and more products from us. And in the case of markets where we have MVNO services, we're a challenger, and we're growing revenues 20, 30, 40% as we enter markets with mobile.

There's also some defense involved, as there should be because our competitors, mostly the incumbent telcos are also converging. And so we have to be responsive to the market, and in knowing that fixed-mobile convergence is inevitable on some level. It varies by market. Some are far more converged than others, of course. But in the end, we want to be in that business and we want to be in it profitably. And I think we have the ability to do that in just about every market we're in.

There are headwinds in the mobile business. We've talked about them endlessly. And there are some tailwinds, as we've seen. Both with synergies and with things like Wego in Belgium, which is clearly improving all sorts of metrics across that relatively small, today, mobile base. So I've described it as being quote/unquote, "in transition." As we look out over the long-term, we know that being in the fixed-mobile space makes a lot of sense for us, either through an MVNO or and MNO relationship, the latter coming with massive synergies, the former coming with reasonably good economics and the opportunity to be a challenger. So that's how we'd describe it.

Nick Lyall -- Societe Generale -- Analyst

Great. Thank you.

Mike Fries -- Chief Executive Officer and Vice Chairman

You got it.

Operator

We'll take our next question from Michael Bishop with Goldman Sachs.

Michael Bishop -- Goldman Sachs -- Analyst

Yes, hi there. Just two quick questions for me. Firstly, just picking up on the capex points that you usefully pointed out and spit out in the presentation. If I, sort of, look at it another way and I take out the new-build from the $5.1 billion, it implies about 24% capex to sales. So I was wondering, is there anything else that's, sort of, exceptional one-off in that, and whether we could see the underlying rate fall further toward 20%. We actually had a pretty similar debate on the Telenet call about the future level, as well.

And then secondly, given your 5% OCF growth guidance for the full-year, accordingly the UK is going to be a driver of that. So I was just wondering if you could help us better understand where you're thinking the contribution from Project Lighting will shake-out in '18 given your comments that that didn't really contribute at all in '17. Thanks very much.

Mike Fries -- Chief Executive Officer and Vice Chairman

Yeah, on the capex point, I think Charlie should be back on. I'll just add one thing and then let him address it more specifically.

Tom Mockridge -- Chief Executive Officer, Virgin Media

He's not back on.

Mike Fries -- Chief Executive Officer and Vice Chairman

Yeah, great. So, I mean, and one thing I would add that is happening both last year and should happen this year and contribute to incremental capex beyond what we would consider normalized capex, are things like what we're doing in the UK with the V6 box rollout. So we had a million toward the end of last year. I think we're budgeting a million-and-a-half or more this year. So we are proactively, both with our EOS box, or our upgraded 4K, super-fast video platform, as well as with our Connect Box, so the new routers that provide a Gig of speed in the home. Both those sorts of CPE, for us, are really powerful tools to retain customers and grow customers. So we are, I would say, leaning into that CPE business a little bit more than we might otherwise.

My view long-term is we do trend back down to the low 20s if you were to exclude all of that. And that's, kind of, where we were before we started new-build. But the one thing beyond new-build that we are leaning into, as I kind of indicated, was to get these devices in the home, we know NPS is up, like, 20 points when we put a V6 box in somebody's house. That's good capital spend. Any other color on that, Charlie?

Charlie Bracken -- Chief Financial Officer

Yeah. The two other things I would say, I think Telenet taught us that project dial-in to investments and customer experience, IT, which is a front-loaded investment, as well as their investment in the mobile phone network of base, which I'm sure they explained to you that that is a front-loaded investment. The other big numbers is, as you saw, is in product. We're investing a lot of money in products. And that's good capital. We're putting a lot of money to B2B, to conserve [inaudible] is frontloaded. And quite a bit again to what we call enablers, which is global digitalization of the customer experience, which we think will pay back very richly.

So I do think this year has got a lot of, as you said, one-offs in it. The last comment, Mike, [00:43:40] you threw out a number of 24%. I wouldn't go about that the CPE growth is also, as Mike said, to do with the V6 boxes. But it's actually also to do with new-build volumes, which it definitely -- I mean, that's part of the new-build spend, if you like. So it's not quite so clear that the new-build we're talking about on the slide is pure to the access network investment.

Mike Fries -- Chief Executive Officer and Vice Chairman

Yeah, great point. Great point. Yeah. And on the Lightning question in the UK, we're really not providing any detailed guidance around either Lightning or the UK, except to say, sort of, anecdotally that the contribution in '18 will be materially higher than it was in '17, as you would expect because we're scaling through some of those start-up costs. We have now a million homes to market aggressively. And I think we're much better and more efficient at that process. So it should be a meaningfully larger contribution in '18 than '17. But we're not going to give you any specifics.

Charlie Bracken -- Chief Financial Officer

Just to give you some color on that, as Mike brought up, the faster we can grow that start-up base, ironically, the more EBITDA we lose because obviously, we'd need to start acquisition costs. So in some respects, one of the reasons we don't have any guidance is because it will take -- we want to grow as fast as we can, but that obviously will have a big impact to the profitability. But just exactly what he's saying, is genuinely accelerating in terms of new asset and profitability.

Michael Bishop -- Goldman Sachs -- Analyst

Great. Thanks so much.

Operator

And we'll take our next question from Robert Grindle with Deutsche Bank.

Robert Grindle -- Deutsche Bank -- Analyst

Yeah, hi there. Thank you. In terms of the Project Lightning question, you're obviously gaining traction in the market and in the UK, and you have retreated to 4 million homes target. I wonder how you feel about the new entrance to fiber rollout in the UK. Obviously, you guys are well ahead of the game, and they'll be slow to get going. But is there either an opportunity to help on the costs of Project Lightning by sharing? Or is there an incremental opportunity beyond your original plan by leveraging off some of the other operator's build programs. Thank you.

Mike Fries -- Chief Executive Officer and Vice Chairman

That's a really good question. I'll let Tom address what's happening, really, on the ground. I'll simply say that you're correct. We do have a head start. We've been building for over two-and-a-half years, now coming on three years. We have been through the challenges, as we all know on the call, but also responded very, very aggressively and positively to those challenges, and feel today that we've, kind of, nailed it. You know, we know exactly what it costs, how to build efficiently, how to get it done, and how to market in the wake of that build. So we do feel like we have a big head start. And I think that a lot of the activity you see today in the fiber announcements, I would describe them as -- not necessarily projects since most of them haven't really begun much -- is partially tactical, partially politically, partially also strategic.

So you correctly point out that some of these announcements might create cooperation of collaboration for us or others who are looking to reduce costs and be more efficient. We'll see. It's a lot of capital. We know we've got the capital. We know we've got the rate of return. We're showing it to you. We know we've got both the inclination and the conviction around it. I don't know whether the rest of them will have the capital, the conviction when push comes to shove. So it does feel like we are way out in front. And it does feel to me like there could very well be opportunities to make our project even that much better.

Tom, do you want to add some color to that?

Tom Mockridge -- Chief Executive Officer, Virgin Media

The only thing I'd add is that today, this moment, we've got over 500 crews out there averaging six people on a pretty wet and drizzly day actually making it happen. And as Mike alluded to, we've learned some lessons, maybe the hard way. But under [inaudible] and with the cooperation of the core technology and innovation group across Liberty Global, we've really reorganized ourselves and we are much, much more confident about our ability to execute. And if other people see the opportunity to compete with BT, net-net, that probably helps us.

Mike Fries -- Chief Executive Officer and Vice Chairman

Next question, operator.

Operator

Next question comes from Daniel Morris with Barclays.

Daniel Morris -- Barclays -- Analyst

Yes, morning. Thanks for taking the question. I've got one with a follow-up. I just wondered if you could talk more top-down on your ability to take price in the market. I mean, obviously, specifically looking at Germany. That's the market where '18 is going to be quite substantially smaller in terms of price increases versus '17, and that versus '16, as well. And maybe also you can also talk a bit more conversely in the UK, I think maybe the direction of travel is a bit different, that we could actually see year-on-year ARPU growth again in '18. So how do you think about your ability to take price in the market, generally? And then I've got a bit of a follow-up. Thanks.

Mike Fries -- Chief Executive Officer and Vice Chairman

Well, I mean, as I mentioned in my remarks, we did execute price increases in 2017 pretty much across every market. It wasn't necessarily across every sub in every market but it was across every market, and generally, they range from 2 to 4%, 2 to 5%. In 2018, we've either already announced price increases or intend to in, again, pretty much every market, most of those kicking in, I would say, in the April to March timeframe. And really, the UK is the only one that, sort of, we're benefiting from in the first and certainly all of the second quarter because it was a Q4 price increase. And so we're, like our peers in these markets, we are, where we can, being I would say, optimizing the price-value relationship for customers. And I don't see that changing materially.

What we have to do a better job of, and what I think we have been doing a much better job of is retaining as much of that price increase as possible because, clearly, as we learned a year ago -- and it was over a year ago now -- the price increases we do take ultimately have an impact on both churn and discounting, and you've got to have the tools, the right processes, the right people, the right incentives to both retain and manage that base once you take those price increases, especially in large markets like the UK. I feel really good about our ability to do that today. And that's a good segue to the ARPU question, Tom. You want to hit that -- in '18?

Tom Mockridge -- Chief Executive Officer, Virgin Media

Yeah. I've got, clearly, all the issues you have alluded to are going to play out. And as I said earlier, we think we are in a much better position, and we are operating in a much better position than we were 12 months ago with a new team in there and a new structure.

Another thing I would point out going forward is the PL rights deal, which has come through. I know it's not complete yet, but potentially overall lower, certainly no higher than it was beforehand. That's going to give us a cycle of three years where we don't have the cost pressures from football rights driving a nominal price rise is just a pass-through from our point of view. So that should give us an opportunity to take price rise where we actually can retain a share of that outcome.

Daniel Morris -- Barclays -- Analyst

That's helpful color. Thanks. I think you've, kind of, partially answered the second half of the question, which was very much that if we look mechanically, the price tailwind in Germany and the UK, your two key markets, looks like it's smaller in '18 versus '17, but your OCF growth guidance is stablish and Charlie already mentioned that there's a possibility that actually Lightning isn't a big tailwind if you're successful, ironically. So I was trying to just understand how you get to a stable OCF growth. But I think you've partly answered that. I don't know if there's anything to add.

Mike Fries -- Chief Executive Officer and Vice Chairman

Well, I think there's a -- I'll give you a bit more color on the guidance. Clearly, if we're staying around 5%, that would include a range. You can decide what the range is. Our full-year results in '17 would have been closer to the lower end of that range. So obviously, we believe there's a very good chance we're at or above the mid-point of that range. And so I would suggest to you that the trend we see for our business in '18 is up. But we are also being cautious because there are headwinds.

And one headwind, in particular, is our Swiss market. As I indicated just moments ago, we don't anticipate a massive turnaround in Switzerland. We have sports cost, and we're in the investment phase in a number of areas of that business, and so we're being conservative there. If you took Switzerland out of our results in '17, we would have been at 6% or higher in the fourth quarter.

So clearly, we understand the moving parts of our business, but as we aggregate everything, there are always going to be headwinds. And we want to be transparent about those headwinds, but they might impact the overall results, it's not necessarily something that is reflective of our aggregate business, but as we've had in the past, whether it was Holland or some of you may remember Romania, sometimes with 12 countries, somebody catches a cold. So we want to be transparent about that.

Daniel Morris -- Barclays -- Analyst

Very helpful. Thank you.

Operator

I'll take our next question from Jeff Wlodarczak with Pivotal Research Group.

Jeff Wlodarczak -- Pivotal Research Group -- Analyst

First, the UK RG result this quarter, how much of that's related to price-hike churn versus backing off aggressive promotional activity? And then assuming you continue with these strategies, is it fair to assume, despite the benefit of Project Lightning, that your UK and net new RG use are probably going to be lower in '08 than '07, although, obviously, you'll have a higher quality customer and better ARPU trends? And then I've got a follow-up.

Mike Fries -- Chief Executive Officer and Vice Chairman

Well, I would say, and again, I'll let Tom provide some color here -- the fourth quarter was a function of a number of things. But as I, kind of, indicated earlier, Jeff, it was really discipline around discounting. And our average discount was meaningfully below the discount a year ago. So year-over-year, that explains quite a bit of it. The other thing I would suggest to you is churn was down in the fourth quarter compared to a year ago. But also sales were down a little bit as we were careful and disciplined about marketing and sales expenditures, as well.

So I don't personally believe, and Tom I'm sure will agree, that fourth quarter is necessarily an indication of how we're trending. And consistent with what I just said a moment ago about the overall business and how we see it trending in '18, and I would suggest to you that that applies to the UK as well almost across all metrics.

Jeff Wlodarczak -- Pivotal Research Group -- Analyst

Alright, fair enough. And then Mike, can you comment on press speculation in the UK, you may have been on 5G? And if that's something that might be interesting, how are things different today than, say, compared to your experience in Chile with building out your own network? Thanks.

Mike Fries -- Chief Executive Officer and Vice Chairman

Well, there have been some rumors around that. I would simply say that to the extent we were looking at that, it would be really optionality, Jeff, as opposed to something more strategic where we would be, as we did in Chile, looking to spend all of the capital to build a competitive network. I don't see us doing that in the UK. I wouldn't consider -- I wouldn't look at it in that light.

Jeff Wlodarczak -- Pivotal Research Group -- Analyst

Great. Thank you very much.

Operator

And we'll take our next question from BJ Giant.

BJ Giant -- Analyst

Thanks. Mike, obviously, you guys are making a lot of investments with high-end boxes, faster broadband speeds, and you keep talking about you're really focused on driving ARPU. Can you give us some sort of sense on how the ROIs are sort of developing on these advanced advantages that you have? Because when you look at aggregate numbers, we see more capex, and we don't see the ARPU rising the way you would think.

So at the unit level, any color? Because there's obviously a question about will customers pay up for these advanced services broadly? And any experiences you could share would be great.

Mike Fries -- Chief Executive Officer and Vice Chairman

Yeah, well, I'll say that the largest part of our increased capital profile is, of course, new build and upgrade. And we do know, as we showed you in the case, in the slides, that that is a very high return on an unlevered basis. So it may be the highest return investment we're making. It is the highest return investment we're making today. So the vast majority of this incremental capital that we're describing here and talking about is rigorously examined, and constantly evaluated, and must come through a gauntlet of Charlie's team to ensure there's a rate of return on it that's acceptable to us. So hopefully you take some comfort in that.

The smaller piece of the incremental capital that might be related to V6 boxes or connect boxes, I'll simply say that we're careful about how we roll those out. It's not indiscriminate. We generally are focused on customers that generate high ARPU for us. And we know that when NPS spikes and churn goes down, a happy customer is a profitable customer. So that's more anecdotal than detailed, and I'm not going to share any specific product economics with you around that. But if we weren't seeing an NPS spike, if we weren't seeing a churn reduction, that would suggest to you that maybe we aren't -- maybe we should be backing off that. But we are seeing the opposite. And just intuitively, if not financially, that's smart capital.

BJ Giant -- Analyst

And just on DOCSIS 3.1 rollout across the footprint, any update on faster speeds? Is that also generating excess returns?

Mike Fries -- Chief Executive Officer and Vice Chairman

Well, you mean the return on our capacity spend.

BJ Giant -- Analyst

Yeah.

Mike Fries -- Chief Executive Officer and Vice Chairman

Historically, if you look at the pace, or the rate at which consumption has been increasing 20 to 30%, and the rate at which broadband speeds that we deliver have been increasing, say, 20 to 30%, there is a correlation between speed and consumption. And generally speaking, whenever possible, our higher-end customers are paying us more. And if you look at the game -- the business that we're in, which is competing with incumbents and staying superior to incumbents in most instances, that model has worked for us historically.

In terms of breaking down exact capacity spend to return, I mean, I'm not going to do that for you on the call here, except to say that we look at that spend very rigorously, too. And we're always optimizing the capacity in relation to usage and speeds and consumption. On DOCSIS 3.1, we are darn near all the way there in terms of having our entire footprint gigabit ready with 3.1. I think we reported last year, we were about 75 -- 80% ready. I think that'll grow to 90-some-odd% this year. And the expenditure to bring that network up to 3.1-ready has not been material. The only cost we'll really incur down the road, BJ, is for new 3.1 modems. And of course, we'll do that when we're ready. And we'll do that in the most economic way possible.

And to your point, we won't just roll out a 3.1 modem indiscriminately. We'll roll it out to customers that pay us more for the higher speeds and the better services.

BJ Giant -- Analyst

Great. Thanks so much.

Operator

And we'll take our next question from Matthew Harrigan with Buckingham Research.

Matthew Harrigan -- Buckingham Research -- Analyst

Oh, thank you. I was curious, you didn't talk really about the emerging European telecoms' framework. Aetna has really come out and said that so much of the profits in the new digital economy are basically being allocated to Facebook, Google, etc., and at the same time, you had that interesting consultancy study a few months ago from Arthur D. Little, really talking about numbers that were just large in a macroeconomic context, even for Europe. How do you see the field moving over there so that your growth could even accelerate as you capture more of your fair share of the innovation in the digital economy?

Mike Fries -- Chief Executive Officer and Vice Chairman

Well, I think the framework in Europe is evolving. As we've said many times over the last decade, it's really been very favorable to us, the challenger, allowing for consolidation and stimulating investment, and I would say benefiting and rewarding those who invest and innovate quickly in markets. And the consumer's been the beneficiary, I think. So the last ten years have been very favorable. We're in an interesting moment here. We've talked about this publicly. It's an interesting inflection point. You have the commission that, I would argue, is looking to advance the framework exactly as it was, for the most part, which is incenting investment, encouraging investment, and ensuring that there's a rate of return for all players in the ecosystem.

There are some political winds that are brewing around national regulators, in particular, who'd like to get more control over how you define market dominance, significant market power. And we're all scrambling a bit to ensure that the right outcome occurs. It will be some time, Matt. It'll be probably this summer before any resolution, and maybe even summer '19 before there's any real implementation of a new plan. My instinct is, it's not going to discourage investment. It's not going to discourage competition. It's not going to be something that we have to be too concerned about.

The European Union, as you have already, kind of, highlighted, is much more, in my opinion, rational and balanced about the actors in this business. And in particular, it has a healthy view of digital platforms and wants to ensure that there's fairness in terms of both their contribution to taxes and employment, as well as what they're doing to disrupt existing businesses. I'm not suggesting they're swayed one way or the other, I'm simply saying that they have a healthy view of how that should evolve, and I feel good about in principle. We have to do our work. We've got to keep making the case, as do our peers. But I think in principle, the European market has historically been reasonable and rational and I suspect it will continue to be so.

Matthew Harrigan -- Buckingham Research -- Analyst

Do you have a personal reaction to the IOT numbers and aspects like that from that Arthur D. Little report? Because, I mean, they were just absolutely blue sky numbers. I mean, if you got even a small percentage of it, it would be integral to your business. And I know that we're talking [inaudible].

Mike Fries -- Chief Executive Officer and Vice Chairman

Well, that's another -- yeah. It's a very good point. I think that the IOT business, as it evolves, and it'll take some time, is going to benefit all players in the market. If you're in the mobile business, clearly, a lot of the applications will be applications that are low bandwidth, that don't require a lot of capacity but require ubiquitous coverage. So that's a positive for us. But also if you're in the fixed business, those applications that require more bandwidth, having fiber as we do throughout these markets is going to be a huge advantage for us as 5G becomes more prevalent and as these applications develop.

It's early days. I think if you ask anybody, even Vittorio, to Randall Stephenson, to Brian Roberts, it's early days for everybody in the IOT space, and it's largely application-driven. So it doesn't mean it won't be interesting, and it doesn't mean we won't benefit from it. I just think it's too early to say, you know, here's how we're budgeting revenue and here's how we're spending capital. I think over the next 24 to 36 months, some of that might be clear to folks.

Matthew Harrigan -- Buckingham Research -- Analyst

Not in the '18 budget. Thanks, Mike.

Mike Fries -- Chief Executive Officer and Vice Chairman

You got it. Okay, I think, is that our last question?

Operator

And the last question --

Mike Fries -- Chief Executive Officer and Vice Chairman

Okay, go ahead operator.

Operator

We have one final question from James Ratzer with New Street Research.

James Ratzer -- New Street Research -- Analyst

Yes, thank you very much, indeed. So this is kind of a last question. I was wondering if I could just come back to the issue around UK ARPU, please. I know we have the price rise in for six weeks of the quarter. You've also talked, Mike, about doing less discounting in the quarter, but yet the year-on-year ARPU trends actually didn't really seem to improve. It's still down, I think, about 0.4% year-on-year. So just interested in digging in a bit more on what's happening here. Is there something more, maybe, fundamental that UK consumers are just getting more price savvy and sensitive and it's just going to be tougher to push through ARPU due to mixed effect of spin-down? And secondly, just a -- sorry, Mike. Go ahead.

Mike Fries -- Chief Executive Officer and Vice Chairman

No, you go ahead and ask the second question. It's fine.

James Ratzer -- New Street Research -- Analyst

Yeah. And it segues also to how the UK, but on a slightly different topic, coming the Vodafone press release made it clear you're in discussions on the continental European assets only. So if you can comment at all, I'd just be interested in why the UK assets aren't part of your negotiations with Vodafone at this time.

Mike Fries -- Chief Executive Officer and Vice Chairman

Well, I can't comment on the second question. Maybe they will, but we're not going to. On the first question, the main point here -- and Tom, I'll ask you to jump in -- the main point is, when you're looking at year-over-year, so let's say December 31 to December 31, that's ignoring the path of travel throughout the year. So as you may recall, we had some ARPU erosion last year, sequential. And the important point I think in ARPU is to look at sequential ARPU, James. And between Q4 and Q3 and between, certainly, Q1 and Q4, you want to be looking for sequential ARPU growth, which we didn't have. We had some challenges last year, as we went through and talked about quite a bit, the year-over-year number isn't the most important one. It's way are we coming from in the last two quarters, as I would say.

Tom, you want to add to that?

Tom Mockridge -- Chief Executive Officer, Virgin Media

Yeah, no. I'd reinforce the point -- I think it's about Q1 '18. The issue is where we had the particular pressure last year. We're just going to have to prove ourselves to you in three months' time when we come to this earnings call that we have a much better team, effectiveness, systems, and organization, and discipline around that.

James Ratzer -- New Street Research -- Analyst

You'd be hopeful of more -- further sequential ARPU growth going into Q1 next year, or this year, I should say.

Tom Mockridge -- Chief Executive Officer, Virgin Media

I don't think I meant to say that. I'll just say that we are -- we certainly feel that we are much better organized around the price increase. As we've mentioned, if anything, we took some pain on volume in Q4 in order to defend the ARPU. And in combination, we have better systems, frankly, better people, a better commitment around that.

James Ratzer -- New Street Research -- Analyst

And you're not seeing, then, just to kind of follow-up here from the last question, any kind of general pressure around discounted having more, kind of, favor with consumers as the economic climate in the UK bites at all?

Tom Mockridge -- Chief Executive Officer, Virgin Media

I think in the broad, that's less of an issue for Virgin Media than it is for some of the other operators. We're clearly the highest ARPU operator in this market. And if anything, that position is widening. We avoid the heavily discounted piece of the market there on the bottom, essentially because that's not our product. That's a BT open-range product that other people sell. So I think in our position in the market about primarily being a triple-play operator, about being the fastest, most effective provider, having the best router, frankly, we think now the best Tivo V6 box to support that -- we sustain the highest ARPU. So we really, we continue to focus on ARPU accretion as a positive thing for the business.

James Ratzer -- New Street Research -- Analyst

Great. Tom and Mike, thank you. Very clear.

Mike Fries -- Chief Executive Officer and Vice Chairman

Sure. Thanks, guys. Alright, we appreciate everybody joining the call. Sorry we went over just a little bit. Look forward to talking to you on our first quarter results in a few months, as Tom said. We remain focused on the few things that I talked about up front. Right? Driving national scale wherever we can, investing in profitable customer growth, and that really means putting money into our networks and our products, or smart money. And then optimizing levered equity turns for you guys. So we think that's a strong combination, and we'll speak to you in a few months. Thanks very much.

Operator

Ladies and gentlemen, this concludes Liberty Global's Full-Year 2017 Investor Call. As a reminder, a replay of the call will be available in the investor relations section of Liberty Global's website at www.Liberty Global.com. There you can also find a copy of today's presentation materials.

Duration: 65 minutes

Call participants:

Mike Fries -- Chief Executive Officer and Vice Chairman

Charlie Bracken -- Chief Financial Officer

Tom Mockridge -- Chief Executive Officer, Virgin Media

Ben Swinburne -- Morgan Stanley -- Analyst

Nick Lyall -- Societe Generale -- Analyst

Michael Bishop -- Goldman Sachs -- Analyst

Robert Grindle -- Deutsche Bank -- Analyst

Daniel Morris -- Barclays -- Analyst

Jeff Wlodarczak -- Pivotal Research Group -- Analyst

BJ Giant -- Analyst

Matthew Harrigan -- Buckingham Research -- Analyst

James Ratzer -- New Street Research -- Analyst

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