Liberty Global PLC (LBTYA) Q4 2018 Earnings Conference Call Transcript

LBTYA earnings call for the period ending December 31, 2018.

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Liberty Global PLC  (NASDAQ:LBTYA)
Q4 2018 Earnings Conference Call
Feb. 27, 2019, 5:00 p.m. ET

Contents:

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global's Full Year 2018 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 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 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 any other information and statements that are not historical facts. These forward-looking statements involve certain risks that could cause actual results to differ materially from those expressed or implied by these statements. These risks include those detailed in Liberty Global's filings with the Securities and Exchange Commission, including its most recently filed Forms 10-Q and 10-K as amended. Liberty Global disclaims any obligation to update any of these forward-looking statements to reflect any change in its expectations or in the conditions on which any such statement is based.

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

Michael Fries -- Chief Executive Officer

All right, thank you operator, and hello, everyone. We certainly appreciate you joining the call today. I know, it's a bit late in Europe, actually where I am now. So we'll get right to it. I'll kick off the prepared remarks and then hand it over to Charlie, after which we'll take your questions. I understand that we haven't allowed much time for you to grab the results presentation off of our website. But if you do get a chance, I think you'll find the slides, particularly useful as you walk through the call, and I'll begin on Slide 4. With some highlights, the first of which not surprisingly addresses the announcement today regarding the sale of our Swiss business for CHF6.3 billion or around 10 times this year's operating cash flow.

I'm going to talk more about this deal in a moment, but view through just about any lens. The last 14 months for us have been pretty transformational after two decades of buying, building, and growing world-class cable operations in Europe, we have now announced or completed transactions to exit 6 of our 12 markets at premium valuations between 10 times and 12 times operating cash flow.

I'm sure, you're all keeping track, but in case, you're not, together these deals, the Swiss deal, the sale of Germany, in Eastern Europe to Vodafone, the disposal of our DTH business and then of course the sale of Austria represent an aggregate enterprise value of $31 billion and net cash proceeds to the Company, both received and pending of $16 billion. As you said many times, it has long been our ambition to create or enable national champions in Europe and we couldn't be more proud of these combinations, each of which is going to challenge incumbents, accelerate innovation and benefit customers for years to come.

Again, more detail on the Swiss transaction in just a moment. The second highlight here, we also announced solid results in our continuing operations here. Virgin Media delivered around 4% revenue and OCF growth in 2018. Even with a tough comp in Q4 last year. UK ARPU continues to rise at the 2% level and we added nearly 290,000 RGUs. We are going to talk quite a bit about Virgin today.

Telenet reported 8% OCF growth for the full year, and that was driven by the last phase of mobile synergies and the strong efficiency program and then together all of our continuing operations, so also including Switzerland reported consolidated rebased revenue and OCF growth of 2.2% and 3.5% respectively.

Interestingly, if you back out, Switzerland which we will do in our 2019 guidance, those numbers will be 3% and 6.3%. And then lastly, VodafoneZiggo, our JV in Holland, which we don't consolidate has turned the corner and is guiding to positive operating cash flow growth in 2019. And the third major bullet here, the third major point on this slide is that our free cash flow profile continues to improve. We hit the $1.6 billion free cash flow target for 2018 at guidance FX rates and we saw operating free cash flow growth -- OCF growth increase over 20% from both continuing operations and the full company.

Charlie is going to take us through 2019 guidance in a moment, but I'll just mention right upfront that we are forecasting an approximate 20% reduction in CapEx this year as we start to monetize the meaningful investments we've made in network expansion, capacity and product development.

So beginning on Slide 5. I'll spend a few minutes on the deal we just announced today to sell 100% of our UPC Switzerland business to Sunrise Communications for CHF6.3 billion in cash. Looking at the industrial logic of this combination is really compelling in our view, Switzerland is one of the more advanced and competitive markets in Europe with quad-play bundles, superfast broadband, and strong video platforms available from multiple providers. And UPC and Sunrise together are going to create the leading converged challenger to Swisscom with scale across all elements of the quad play bundle, something that is surely needed and I think will benefit retail and enterprise customers there.

Obviously, we're pleased with the price, which equates to 10 times this year's operating cash flow for our asset which has been in turnaround mode. And after debt and working capital adjustments, the CHF6.3 billion headline price should net a little over CHF2.6 billion and for reference the Swiss franc and the dollar are just about a parity. On timing, we expect the deal to close by the end of 2019, and as with our Vodafone transaction, will determine the most optimal use of proceeds as we get closer to that point.

Like the other deals we've closed or announced this transaction highlights our ability to buy, build, integrate and grow our cable and broadband businesses as well as our track record of value creation. As we did, we announced the German deal for example in the left hand side of Slide 6, you'll see some operating metrics for Switzerland over the last 13 years. During that time frame, we've increased ARPUs and revenue over 50% or about 3.5% per year. We took OCF margins from the mid 30s to nearly 60% and we grew operating cash flow by 6.5% on average year-over-year.

On the right hand side of that slide, you'll see what we -- when we bought the business, we invested around $1.6 billion of equity and since then we've distributed nearly $4 billion to the parent company, that's after payment of interest and debt expenses and we'll collect another CHF2.6 billion of net proceeds in this deal. So that's 4 times our original investment and a high teens IRR over 13 years. I really couldn't be prouder of our local operating team, they're really, really proud and while it's a bittersweet moment for us, we know that Sunrise and UPC together will be a stronger, more competitive platform.

So after all this activity and what does Liberty Global look like on a pro forma basis. Well Slide 7 is a simple chart showing just that. First, we will continue to be Europe's leading cable operator with the largest pay TV and broadband platforms in six core European markets. That includes the UK, Ireland, Belgium, Poland and Slovakia where we serve over 23 million fixed RGUs, 5.9 million mobile subscribers and generate $10.4 billion (ph) of annual revenue and $4.8 billion of consolidated operating cash, so that's before corporate revenue and costs. Our 50-50 JV with Vodafone which course we don't consolidate adds another 10 million fixed RGUs, and 5 million mobile customers, as well as $4.6 billion of annual revenue and $2 billion of operating cash flow.

Especially in Western Europe, these are scale platforms with high OCF margins, declining CapEx intensity and meaningful free cash flow growth in front of them, and in the cases of Holland and Belgium, we are fully converged with fixed to mobile networks, while Virgin relies on a terrific MVNO with 20% of our broadband base already signed up to a Virgin Mobile service. And the blue box on the far right hand side of the slide, we include, I think for the first time our non-operating asset. So that would be our expected pro forma cash proceeds from the three pending deals of around $15 billion, as well as our existing investment portfolio.

So our stakes in ITV, all three Media, Lionsgate and Formula E along with our Ventures portfolio, all of which we conservatively value at $2 billion and then we show our considerable tax assets, including $20 billion in the UK that should shelter taxable income in that market for a very long time. We believe the net present value of tax attributes in Europe, including the UK to be in excess of $2 billion today. Now, while this is not an official sum of the parts valuation, it, it does form the basis of that work, which apparently, we're not allowed to do for you, but we can lay out two numbers.

And both of which are shown on the chart, the first is the expected cash proceeds from the three pending deals that equals to about $20 per share. And the second is the fair market value of our public shares in Telenet, which equates to about $4 per share. So the punch line here is that these two numbers alone gets you to about our current equity market cap, which means everything else on this page, Virgin Media, the Dutch JV our Ops in Eastern Europe, other corporate assets are not reflected in our stock today at all. Well, that the analysts are fleshing out for everyone as they see fit but the picture from our perspective is pretty clear. It almost doesn't matter what multiple you put on the cash flow, it doesn't matter what discounts you put on the cash or other assets, it's a pretty good valuation story, maybe even better by today's announcement. Now I will just cover two more operating slides and then I'll hand it over to Charlie. On Slide 8, we highlight Virgin Media's results and there are four big takeaways here in my opinion.

The first is that Virgin delivered its fourth straight quarter of strong ARPU growth, up 2% year-over-year and that was underpinned by a number of factors including, of course, the price rise in Q4 of last year and our implementation of that which was a success, a disciplined approach to discounting and promotions with a focus on bundles and getting folks more for more and reduce churn as we rollout V6 boxes and Hub 3 routers and so are now in about 60% and 70% of our homes respectively.

Our analysis and I'll emphasize our analysis indicates and on a percentage basis. We grew revenue, pay TV service, broadband service and our B2B business faster than anyone else in the sector last year, all while building nearly as many new homes as the entire industry combined. The second key takeaway is the hard work we've done to lay the foundation for continued growth in 2019 and beyond. That includes the launch of two gigabit cities in the UK, we are going to raise our top speed, our broadband speeds to 500 megabits per second, that's nearly eight times faster than anybody else in the market. We have improved WiFi apps, and more boosters. We will launch a new Horizon 4 UI, which will be materially better than what we've got there today featuring voice search and better graphics. This is what we rolled out in Switzerland recently, NPS went up 36 points and we're going to make it easier for customers to buy, change and pay for services through our online platform and by my Virgin app.

Thirdly, I want to be sure to highlight some inorganic headwinds that Virgin will encounter in this fiscal year and that will impact 2019 growth rates. That includes some regulated network taxes of GBP32 million, some negative regulatory impacts in the mobile business of about GBP17 million from things like roam-like-home and mobile termination rates and both contractual and potential increases in programing cost between GBP60 million and GBP80 million on an annualized basis. So that together these headwinds add up to about GBP110 million to GBP130 million and that's going to impact the growth rate for Virgin in 2019 on OCF. And then the final point here is that we continue to deliver organic RGU ARPU and OCF growth while reducing capital intensity. From nearly 34% in 2017 to 29% in 2018 on the back of more efficient construction costs, lightning, more targeted rollouts of V6 and Hub 3 CPE and again the ability to monetize our prior spend. That drove operating free cash flow growth or OFCF growth of 48% and we continue to see that in 2019.

And now on Slide 9, we highlight results for our Benelux operations beginning with Telenet on the left. If you recap their earnings call two weeks ago, you know that they ended the year with broadly flat revenue but we're able to fight through regulatory and competitive headwinds to achieve strong operating cash flow growth of 8% and adjusted free cash flow of EUR420 million.The SFR migration was a drag on net adds for sure in '18, but that should be over now. In fact, if you exclude the impact of the SFR customer migration, subscriber trends were actually better in the fourth quarter. Turning to the strong product lineup going into 2019 including the WIGO bundles, which should we talk about a lot. An exclusive partnership with HBO, the rights for the Premier League, Horizon 4 and EOS but I'm particularly excited about Telenet WIGO bundle for Millennials and digital savvy customers is an app based TV experience with 200 megabit fixed broadband connectivity at generous mobile data allowance and zero rating for our video services, so there was no set-top, superior broadband and a great mobile offering.

Now that said, 2019 will be a transition year for Telenet. A fully realized base synergy is a loss of a large MVNO contract and continued regulatory pressure will impact revenue and OCF growth. On adjusted free tax flow, sorry, adjusted free cash flow will remain strong in 2019 at EUR380 million to EUR400 million as 2018 was a peak CapEx year. Now in the Netherlands, VodafoneZiggo reached a positive inflection point on OCF growth in the fourth quarter. Now while Q4 revenue was roughly flat year-over-year, OCF grew 6.5%, setting the stage for solid momentum heading into 2019. On the top line, the fixed business continue to drive steady financial growth and mobile revenue declines began to stabilize.

Looking ahead, VodafoneZiggo's launch plan for Horizon 4 remains on track for the first half of '19 while 5G showcases and one-gig rollouts were set for 2020. The bottom line is the convergence strategy in Holland is working with over 1 million households and half the eligible SIMs taking a converged bundle. Their guidance is for moderate OCF growth to 2019 supported by ongoing synergies and then again the JV returned over EUR700 million to us and Vodafone during 2018 and are guiding to $400 million and to $600 million in shareholder cash returns in 2019. So I'll end with four key priorities for 2019 on Slide 10. Obviously, the first and foremost, we are focused on closing the pending M&A transactions. The Vodafone deal is of course working its way through the European Competition Commission and we feel positive about both approval and timing there and the Swiss transaction we believe will receive a very favorable review from both the telecom and competition authorities in Switzerland and should close by year end.

Second, as a result of these deals and the changing shape of our business, we're in the midst of resetting our operating model to be more efficient, more agile and better positioned for the next phase of growth and opportunity. You might have seen that we already announced some of these changes and we will have more to talk about through the summer.

Third, it bears repeating again that after an incremental 2 billion of CapEx over the last three years, above what would have been our steady state capital intensity, you can expect us to continue scaling back CapEx this year and beyond. As I said, we're guiding to an approximate 20% reduction in CapEx, year-over-year on continuing operations, taking advantage of our recent investments in capacity, products and CPE as result will drive OFCF growth up over 50% this year.

And then finally, as I've discussed on every call, we are in the process of developing plans for our excess cash when these pending deals close with a focus on value creation and we'll have more to say about that of course, as the year unfolds.

So, Charlie, over to you.

Charlie Bracken -- Executive Vice President and Chief Financial Officer

So thanks, Mike. I'll move to the slide titled revenue and OCF growth. Now this is just an overview of the 2018 growth rates of our operations. And as you can see, the UK and Holland grew pretty well from a revenue point of view, aided by split contracts, but because of certain cost items things like compensation received in 2017 for historic breaches and broadband rate increases, the OCF growth rate was slightly lower. Overall, we did have a pretty respectable mid single-digit growth and later in the presentation, I'll give you some insights on how much of that comes from lightning and how much of that comes from the rest of our business in the UK and Ireland.

Belgium performed strongly in the cost-cutting side, but clearly had a negative revenue growth and they talked about that a lot in their results call. So I'm not going to do that today. So in fairness we have been signaling all year had a very tough time on the revenue side, we have translated into OCF losses and that continues to be work in progress as we do improve our video proposition. And then in Central and Eastern Europe, a pretty solid performance with low-single digit revenue and OCF growth. We also got our central costs down year-on-year. And I'm going to address that in more detail shortly. So in the aggregate, for the continuing operations, Q4 was 1.2% revenue and 2.9% OCF growth. And that was clearly impacted by the one-off last year which unrestricted the growth rates and with the revenue and OCF growth rate for the full year of 2.2% and 3.5% respectively.

Turning to CapEx on the page titled P&E additions. We have broken our CapEx both by segment and by driver. A few high-level comments. Capital intensity is coming down, '17 and '18 were levels of investment for us and we look to revert to more normalized levels in the upcoming years. It was 32.9% in 2017, falling to 31% in 2018 and we're targeting a reduction in the region of 20% year-on-year for 2019. The UK has peaked in terms of CapEx. The V6 upgrade is largely behind us and you should see that number coming down pretty dramatically going forward. And similarly Telenets also guided declining CapEx as their network upgrades are completed and they finish their IT integration.

In terms of where the money is being spent. You can see the numbers at the bottom of the page. CPE is 8% of sales, new build and upgrade, which also includes B2B CapEx was reduced from 8% of sales to 6% of sales and then we have investment in the capacity of the network of 4% and the money we spent on products and enablers which again we think has peaked and will come down further from the 6% level in 2018. And that's because we're through the heavy lifting on the entertainment and connectivity programs. And then finally baseline spend represents 8% of revenue and is essential our investments in IT and property platforms and again, we would expect to seem some decrease in that percentage in the upcoming periods.

The last of our three standard slides provides a brief overview of our cash leverage and liquidity. Even without the Vodafone and Swiss sale proceeds, we have $4 billion of liquidity including $1.5 billion of cash and we continue to generate positive free cash flow. We are going to talk a lot in this presentation about free cash flow generation from the continuing operations. So we are going to par that for the time being. But the full company achieved $1.4 billion of free cash flow which of the original guidance exchange rates we provided is in line with our $1.6 billion guidance number.

On leverage, we continue to do operator in the top end of our 4 times to 5 times range. We actually ended the year at a five times gross and a little less on the net side. I would highlight the impact that seasonality has on our leverage ratios which have calculated on the basis of our last quarter annualized OCF. We expect similar phasing in the first half of 2019 with higher ratios in Q1. And then finally, we executed $2 billion of share repurchases in 2018. Again, in line with what we told you.

I'm now going to turn to three special topics that investors have asked for more details on. The first one is entitled understanding Lightning but in many ways is about understanding Virgin. What we've done here is present Virgin as two distinct businesses, which is actually how we look at it from an internal performance monitoring basis. The first business, legacy business will be called here rest of business is very similar to our Benelux operations. In fact, we would argue this is a business with actually superior, long-term revenue growth prospects. As you can see, in this year, we estimate our revenue growth was around 2%. But why do we say that? Because we think it has opportunities to grow, it's penetration of the SOHO market where it is relatively low versus the Benelux and also is fixed mobile convergence.

We altered in the UK is a very rational pricing environment subject obviously to what goes on with Brexit. And historically, this has been a market where we have been able to hold volume constant on the footprint and drive pricing up around that 1.5% to 2%. The other business we have in the UK is Lightning. And we would describe this as potentially the fastest growing cable company at scale in the world and we've broken out for you here are the key KPIs to assess performance and returns.

So I'm just going to go down the Lightning column. To date, we build 1.6 million Lightning homes, with 339,000 customers. So around that low 20% penetration, and that translates into around GBP161 million of revenue. And as we signaled previously, we actually think that with introductory discounts roll off, the Lightning customers are broadly in line in terms of ARPU with the legacy base and we currently estimate that the OCF margin is 56% because illegal to scale on your fixed cost things like finance.

If you look at the construction CapEx. The key number is the cumulative cost per home and we're running 6 to 90 pounds per home since inception, we've started to come down as we get more sophisticated and efficient on the build, but currently that translates into a total spend in 2018 of GBP328 million, which also includes work in progress of the uncompleted homes and of course the CPE and installation cost which included in the other CapEx bucket.

So the total CapEx in Lightning was around GBP400 million in 2018 and we estimate the cumulatively, we spent GBP1.4 billion on CapEx Lightning since inception. Another key point of this slide is the free cash flow. If you look at the operating free cash flow Lightning. We estimate that it's a negative GBP313 million to the extent to which you see that we debt financed that 1.4 billion of CapEx, which I think is a reasonable assumption at the Virgin blended cost of debt of around 4.8% that translates into something like GBP100 million negative free cash flow impact including interest.

So, by contrast if you look at the core Belgium business actually going pretty well. As I discussed earlier it's a 2% revenue growth, but slightly lower on the OCF side I might mentioned many of the headwinds in 2018 that we talked about, which contributed to that. It's also probably true that as we started our planning a really focused on in this growth phase, we probably didn't put as much focus on the marketing for the core operations as we did on the growing operations and may also contribute to a slightly lower growth rate.

In terms of that competition (ph), it's also a reasonable free cash flow conversion assets, on these numbers, our management account is converting 22P in every pound at the OCF level and we expect that number to go up as capital intensity declines. Because as you may recall in 2018, we spent a lot of money on the V6 box upgrade. We also benefit from substantial tax assets in the UK, as Mike highlighted earlier. So when you look at the free cash flow of Virgin, it's misleading to say that we are not making a loss of free cash flow, because you got two very different profiles.

Now if you look at the right hand side of this page, we got some thoughts about how we would go from here. Well we think we are able to consistently build 400,000 to 500,000 homes a year. We do think MDUs are an area of opportunity, we are getting better understanding how we are going to market to these. And I think looks in particular pleased with this significant upside potential. Overall, in Lightning, we feel we're broadly in line with the original business case. The early cohorts are achieving long-term penetrations in excess of 30% and you can see that in the chart on the bottom right. These type of infrastructure investments are currently very much in vogue in the UK, but we believe Lightning is the most successful altnets building at scale and if you look at the valuations that infrastructure assets and fiber builds are attracting, clearly a very valuable asset in our minds for our shareholders.

The second key question investors have asked us about is central costs. And we got a slide called changes to the operating model. But really the question is what are the central costs? What we did back in the day is triggered a series of activities out of our OpCos and perform them centrally because we thought we could drive scale, best practice and efficiency. And I think largely we would say that has worked. In terms of the types of spend, I really broke into two key buckets. And as you can see the numbers on the right hand side of the page, the first is technology and innovation, which is essentially all the stuff we do on behalf of the companies, so they get economies of scale and share product development costs. And that adds up to around $900 million OpEx and CapEx spend covering product development, technology strategy and shared platforms.

Now, a lot of our spend will continue, but it would be funded by transition services agreements and you can see that already happening with the VodafoneZiggo payments to us. As well as payments from Liberty Latin America, Deutsche Telekom and obviously Vodafone and Sunrise when the transactions close. And in any case we believe that the $900 million has probably hit peak investment because we put a lot of money into the video and connectivity platforms during the Liberty GO phase, so you should see those numbers start to drift down over the upcoming years.

The other bucket of cost is our corporate costs, which is $260 million of OpEx. This does the traditional corporate functions management, finance, legal, people actually includes procurement and that's where we've been really targeting the majority of our reductions as part of the broader reorganization. We're estimating that you should see a reduction of around 20% or more as part of that by the time we get to 2020 and that's been done by reducing layers, rationalizing functions and giving more responsibility to the country level as you can see it from the left hand side of the page. The last special topic is what is our pro forma free cash flow, so this is the free cash flow generated from the assets we retain. Now I've learnt a lot more about this over the past month. And I would like to learn and it's not a simple topic. And that the detailed technical explanation of how we calculated this and the adjustments we have made in the appendix. So if you want to get into the detail, I suggest you look at that.

On this slide, if you go from the OCF down, you get to an OFCF for the 2018 continuing operations of $1.6 billion but that includes the estimated $420 million of negative OFCF contribution from Lightning. So you could actually argue the OFCF is higher. Then we have the interest, which is just over $1 billion. And then when you turn to tax, we paid $300 million and that's predominantly the Telenet and the US mandatory repatriation tax payments that we make. In terms of tax, the number will be broadly flat in 2019 as will the interest. And then we have the contribution from VodafoneZiggo. Actually the $294 million referenced here doesn't include another important contribution to us which we get from the asset and that's the repayment of EUR100 million shareholder loan and we expect to get the last of those payments next year as in the form of shareholder remuneration. So that gets you to a free cash flow before working capital items of $557 million. Now as there are lot of focus around working capital. And just to be clear, we think about it in three buckets. Ordinary working capital, operational finance and restructuring, and broadly speaking, we try and hold this within a range of plus or minus $100 million across the portfolio, which actually is what we did for the combined company in 2018, but what you'll see from the slide is that for the pro forma company, it's actually $168 million negative in 2018.

So let me explain how that breaks down. Within our ordinary working capital, there is a few headwinds that we've detailed on the slide. For example, split contracts was a drag of around $100 million in 2018. Now, generally we don't choose to factor receivables at the mobile companies. So that's a tool we could use to reduce that working capital drag. In operational finance, we actually focus on vendor financing, where we are financing around 40% to 50% of the addressable spend. And to remind everybody, we do vendor financing if we believe we can get better terms from a price point of view and a better return on capital as compared to just trying to extend the payment terms to 90 days, and then the last bucket is restructuring, which will be impacted in 2019 by the changes in the operating model I discussed earlier. So all of that gets you to the pro forma free cash flow number of $389 million for 2018.

Moving to the last slide, let me just round up. In terms of the 2019 outlook, we've given these numbers excluding Switzerland. Now what ultimately we think Swisscom will become discontinued operations under our accounting treatment. It will be dependent upon the shareholder vote, which means they may not be the case immediately. So I wanted to make sure that was clear to investors, as they think about our performance monitoring. The first guidance metric is rebased OCF which we are guiding as flat to down. Now, that might sound a little disappointing to investors. And I just wanted to give some color.

Mike talked a lot about what's going on in the UK and we actually think if you take things like broadband rates and the programming headwinds, the UK is growing very nicely and I talked a lot about how happy we are with Lightning. But one of the reasons why we are being quite cautious about the UK is because of the possible effects of Brexit. None of us know what that's going to mean to the economic environment and we want to make sure that our investors have a range of possibilities. In terms of the other key driver of our OCF guidance, you know about Telenet, which has guided to its own investors to a negative OCF growth. There will be a significant reduction in our property and equipment additions. We are guiding you to $2.7 billion of current FX targeting roughly a 20% year-on-year reduction on 2018 Actuals.

In our mind, that translates into the adjusted free cash flow of around $550 million to $600 million for the pro forma company, again excluding Switzerland. But just to emphasize, three key points. The first is that the number excludes any cash flow that we get out of the discontinued operations before closing, now how much that will be, will vary. For example, if we close the Vodafone transaction in July, we will have the semi-annual interest payments relating to Germany, if we close in June, we won't. But we think, assuming a mid year close, there should be around $250 million to $300 million cash flow contribution from those discontinued operations.

Secondly, it also excludes the shareholder loan repayment from VodafoneZiggo which I talked about earlier, it's the EUR100 million. And finally, it includes the negative OFCF contribution from Lightning. Now if you do allocate the interest, I'd made the case, that's a $400 million to $500 million negative free cash flow hit and then getting to that is a very high growth, high return business. We'll update you more on the buybacks when we close the transactions, but for the time being, we are guiding to a $500 million buyback through the first half of this year.

And with that, I'll turn it over to the operator for questions.


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Questions and Answers:

Operator

A question-and-answer session will be conducted electronically. (Operator Instructions). And we'll take our first question from Nick Lyall with SocGen.

Nick Lyall -- Societe Generale -- Analyst

Morning, guys. This is Nick at SocGen. Could I just ask two very quick ones please. Just -- you mentioned buybacks at the end there, Charlie, could you just mention things you're thinking about in terms of the mechanics and efficient sizes. What were you thinking about large buybacks and what might actually limit the size of the buyback, what should we be thinking about there.

And secondly, could you just give us a rough idea as well of the cash contribution to the free cash flow to Switzerland, it may just be -- not the time to work out, but could you maybe just give us an update on that so we can -- so to do a like-for-like between the guidance and this year's number, please, thank you.

Michael Fries -- Chief Executive Officer

Nick, it's Mike. I will take the buyback question. Charlie, you can work up the Swiss cash question. I mean, as we've said on most every call so far, we're not in a position today to describe either quantum or structure of buybacks with use of proceed. So you could easily determine those on your own. It's not that complicated. But I think at this stage, it's just premature to get into that kind of detail, but we're certainly working on alternatives.

And as we have more information, we will absolutely let the market know, you want to talk about the Swiss cash, Charlie ?

Charlie Bracken -- Executive Vice President and Chief Financial Officer

Yes, sure. Actually, it's tethered to the different years. In 2018, Swisscom was a very strong cash flow generator for us. And again, you get into this question, how you allocate the central costs by country. But I would characterize it as having a relatively low CapEx to sales ratios versus the other assets. Actually in 2019, there is a big shift. We are planning to and we'll continue to plan to rollout the EOS next generation boxes. And we'll also continue to push in a -- an upgrade at the 1G network, so I think you're going to see the free cash flow contribution in 2019 much lower and our numbers around $50 million. And I think, we'll compare it around $200 million, $250 million in 2018.

And I want to emphasize, how you allocate the internal costs in 2018. Reasonable men (ph) could disagree with us, certainly how we look at it internally ?

Operator

And we'll take our next question from Vijay Jayant with Evercore.

Michael Fries -- Chief Executive Officer

Hi Vijay.

Operator

Vijay, your line is open, you may begin. Vijay, please press *1 on your phone again.

Vijay Jayant -- Evercore -- Analyst

Can you hear us?

Michael Fries -- Chief Executive Officer

Hear you now. Vijay, I think, they can hear us.

Vijay Jayant -- Evercore -- Analyst

Hi, sorry about that. I think you called out about GBP120 million of inorganic headwinds in 2019, which is about, I think about 600 basis points of headwinds. Can you just talk about how that sort of rolls off past 2019 for Virgin. And then, broadly speaking, obviously you don't want to talk about how much buyback you would probably consider at some point, but just want to understand now having sort of a single country play obviously Telenet has its own capital structure, Ziggo has its own but with the UK, Ireland, sort of play, what's the right amount of debt leverage for that entity ?

Michael Fries -- Chief Executive Officer

So the question on, just whether the question is correct, Vijay. The question on debt is specifically around Virgin?

Vijay Jayant -- Evercore -- Analyst

Yeah.

Michael Fries -- Chief Executive Officer

Okay. Yeah, I mean, I think, Charlie, can work up an answer to that. I think we're about where we want to be on that. Inorganic headwinds, Tom, you can jump in here. Obviously, the programing costs would annualize it to the extent that we have additional contractual cost that would hit. But remember, this year our costs are up about 5%, next year, it's more like 8% or 9%. So we don't -- we expect that to be a positive in the 2020 period, should not be a comparable hit.

The broadband taxes, it's a big jump this year, I think it's doubling, something like that. It might, you can comment Tom, more specifically what it goes up next year, but it won't be as material. So without being specific, many of those inorganic headwinds will not be as impactful on a one-off basis in 2020.

So we do expect in the longer term, picture here to return to more normalized growth in the UK and Ireland. Just to probably give you that benchmark, Charlie, you want to answer the second question on leverage ?

Charlie Bracken -- Executive Vice President and Chief Financial Officer

Yeah, just clearly on the broadband range, because one more year and the (inaudible) keeps giving from the British government. But it does end in 2020. So 2021, we will be back on a normalized state on the rates. Look on the leverage, I think we've always said that 4% to 5% is up that range. Be at the bottom of the range if there was a hard component of mobile and also there will be some lower growth. So I think, we've articulated that UK looks pretty high growth assets. So I think we are very pretty comfortable where we are today at 5 times. Against that to the extent to which as you already pointed out, UK becomes a -- particularly major part of our portfolio. We don't have the diversity and the ability to shelter that. So we will have to take view on it. But I think, I am very comfortable at the 5 times where Virgin is today and there is no imperative to delever full (ph) for the transactions.

Vijay Jayant -- Evercore -- Analyst

All right. Thanks so much.

Operator

And we'll take our next question from James Ratzer with New Street Research.

James Ratzer -- New Street Research -- Analyst

Yes, thank you very much. Good evening, guys. Two questions, please. One on Switzerland with the Sunrise deal. I mean looks like fantastic terms for you. I mean to the extent that so good, what happens if Sunrise shareholders fail to approve the transaction terms, so I think that has to go to a shareholder vote on their side, what kind of security do you have or ability to potentially renegotiate or accept different terms if that has to be the case.

And secondly on the UK business, could you just talk us through what happened on TV net adds, looked a bit weak in the fourth quarter, is that something one-off or more structural? Thank you.

Michael Fries -- Chief Executive Officer

Hey, Tom, why don't you work up an answer or Lutz on the TV net adds. On the Swiss transaction. Yes, it is a good transaction and good terms for us, we would concur. On the other hand, it's also a good deal for them. I mean, it does provide scale in all the core products, it does give them network reach, high quality network reach, it does represent pretty material synergies and it gives them the clear number two position across the entire scope of the telecom market there.

So I think their shareholders would all agree. Their shareholders will see this deal as being transformational for them and that will be something that we expect shareholders to approve. There is the small break fee, I'm not sure we're disclosing that. But it's in Swiss market is precedent, that's not a usually very large number.

I think we are relying on their underwriters, who underwrite the rights offering. And we've been relying on their ability to make a very strong argument, which I think, Olaf will do convincingly that this is a transformational deal for that business, so we're pretty encouraged by it. But there is no mechanism as such to say, well if deal doesn't go our way, this is plan B, but we expect it to go the right way and we will -- that we will know that pretty quickly here. Tom, alluded to on net adds.

Thomas Mockridge -- Chief Executive Officer, Virgin Media

I think on -- yes on TV net adds, I think, in the entire 2018 we have made 36,000 net adds, positive. It was weaker in Q4, the reason for that is two fold, one is, right, we did our price rise in Q4. And the other one was a deliberate decision to focus more on Full House and VIP customers using our V6 boxes and not too much to focus on Slayer (ph) in terms of acquisition. And you see that in higher free cash flow numbers.

Operator

All right, and we'll move on to David Wright with Bank of America.

David Wright -- Bank of America -- Analyst

Yeah, good, hello guys. Thank you for the -- taking the questions. On the UK again, please. We've obviously seen BT commit to a different pricing structure, which means there will be no price rise until April 2020. So effectively nothing through 2019 and then moving to structurally lower price rise of CPE, which is give or take 2%. In the UK, you guys have historically driven prices around 4% to 5% every 12 months and that's been a core driver of OCF. Do we think that another price rise to lap in sort of November '19 is perhaps now less likely given what we know BT comparative and do you see about 4% to 5% run rate dropping down to the sort of 2% levels that BT is now committed to? Thank you.

Michael Fries -- Chief Executive Officer

I'll take that one. We're not going to provide today, David, any detail on pricing proposals this year or in the following years, we haven't announced that or even worked that out in any great detail. So we can't give you that headline. On the other hand I would point out that BT has been taking pretty regular price increases every nine months. I think this pause makes sense. You know and for them, to be honest with you, it's still at CPI, and there's -- certainly, there is no indication that I have received and Philippe or anyone else that this is the long-term plan. I'm not suggesting. I know that it's a temporary plan either just for this year but, as you probably know, we can't give you any guidance on future price increases before we talk to our customers about it except to say that at this point the status quo seems reasonable for us.

Thomas Mockridge -- Chief Executive Officer, Virgin Media

I think, to add to that Mike, I think, two things, one thing is that if I haven't read it wrong. I think these no price rise in 2019 applies only for new customers, not necessarily for existing customer. And I think second thing is that Sky recently has announced then on the price rise. And I think third thing, you have to put also innovation potential in context with price rise, right. So and as Mike has said, before we get our Horizon 4 UI, we get full fixed mobile convergence. We get higher speeds. So I think we have a lot of innovations to satisfy our customers with -- which might give us some pricing power.

Operator

And we'll take our next question from Polo Tang with UBS.

Polo Tang -- UBS -- Analyst

Hi, I have actually got two questions. So just in terms of the Swiss deal, there have been on off talks, the past one is two years. Do you maybe talk to why the deal came together now. Was there any particular catalyst, and also did you insist on an all-cash deal or you open to taking equity in the merged entity. And my second question is really just about central costs. So you made a very helpful slide in terms of Slide 16. But I just want to clarify in terms of the numbers that you laid out there, was this net of the recharge benefits that you receive from VodafoneZiggo and can you also clarify the recharge benefits that you will get assuming the German and Swiss deals go ahead and when you talked about the reduction in terms of the central costs. Did I hear you correctly in terms of the hearing that you're looking to reduce these total central costs by 20% going forward. Thanks.

Michael Fries -- Chief Executive Officer

Charlie, you can respond to that -- the central cost point, providing the short answer is those -- that $900 million does not include the quantum of revenue received. I'm not sure we're disclosing all those details, guys, so you work up that.

On the Swiss deal, listen, it's actually been about a year that we've been in discussions with them, to be honest with you, that when in terms of substantive conversations around different ideas and structures, all transactions have a beginning and an end and there's no particular reason why this one took this amount of time or less or more. So there's not much drama to reveal to be honest with you.

And the structures that have been discussed vary across multiple outcomes. As you might imagine, this one was the best for them and the best for us and I think, we think they have a great business. The fact that we're not taking shares in the business is not a reflection at all of our view of the business, we think it's going to be a powerful platform and a very successful company long term, just felt for us that this was the better outcome and the price we were able to realize, an all-cash deal was certainly more attractive to us than other alternatives. I don't know, do you want -- any more Charlie to the central cost question.

Charlie Bracken -- Executive Vice President and Chief Financial Officer

Yeah, so just to confirm that's the gross cost. There is no revenues for example for VodafoneZiggo and Austria. Those numbers were about $150 million. The gross cost also actually included business are now place down which is a zero marginal -- low margin handset business about $100 million of costs.

So that's one consideration. I think the other thing is that the TSA is going forward really with $400 million. We would estimate or that that could obviously move around. But it's not quite comparing apples with apples. So for example, in the $900 million, we're spending money on products for Germany that aren't required under the TSA. So we would actually reduce that spend accordingly becasue most of the spend is flexible, third-party contractor spend with very little internal waiver. And so I think it's quite hard to do an apples to apples but it's certainly true to say that the majority of the spend is going to forgo will be actually on behalf of the TSAs.

Virgin and Lightning will remain a core anchor tenant as well as Eastern Europe. In terms of the reduction, we are registering a bigger costs. And I wouldn't want to characterize that as restructuring that's as much about efficiency, but also about the fact that there are certain items we are not going to spend. So in that or spend in the T&I area are only about $130 million, it's --- so most of it's just stuff that you can scale down or scale up. And the restructuring, the 20%. We talked about is totally focused on that $260 million and I think we said what we had to say about that, it's in certain activities.

Operator

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

Jeff Wlodarczak -- Pivotal Research -- Analyst

Hey guys, first, congrats on the attractive price you're able to get to the Swiss assets. Between the VOD sale, Austrian and the Swiss deals, your existing cash balance, you're going to have about roughly $17.5 billion in cash, should we still think sort of 50-50 between buybacks alternatives and then I've got a follow-up?

Michael Fries -- Chief Executive Officer

I know you're going to ask that question, Jeff. And I think, yeah, and it's fair, but I think I'm going to have to say what I've said in the past, which was, it depends on a lot of different factors. The timing of completion, where the market is at that point, where we think the market is headed at that point, inorganic and financial opportunities which is -- will be one -- the one you're referencing, of course would be one. So I really can't give you any more color on that, but certainly as we get closer to these deals completing and they're still months and months away here, we will nail that down, but I appreciate the question. I can't really provide much more color than that.

Jeff Wlodarczak -- Pivotal Research -- Analyst

And then in terms of that VOD deal and I'm sure you are actively talking to regulators, do you still feeling very comfortable with the mid 2019 close of the deal.

Michael Fries -- Chief Executive Officer

I am. Yeah, I mean that could mean June, July and with it we have, we're back working with them. The stop the clock is over. There is a milestone in March around the statement of injections that may or may not occur, but you can expect that we are in regular contact and certainly Vodafone leading the charge in regular contact with the Commission and by all accounts, and having been through many, many of these at this point, we have no reason to believe it wouldn't be a mid 2019 close.

Jeff Wlodarczak -- Pivotal Research -- Analyst

Thanks, Mike.

Operator

And we will take our next question from Carl Murdock-Smith with Berenberg.

Carl Murdock-Smith -- Berenberg -- Analyst

Thank you. Two questions from me, please. First, just understanding the multiple on the Swiss transaction, 10 times OCF means you are expecting $630 million or $662 million if I add back in the TSA that you note on Slide 5 in the footnotes. That implies a 12% drop from the figure you've just reported for 2018. Quite a deterioration from the minus 8% you've reported this year, consensus was expected -- expecting an improvement. So what was causing the deterioration in trading in Switzerland, that you were expecting. And then secondly, just on the UK growth, on Slide 15, just to confirm, I think, two-thirds of the rest of business 2% growth is from mobile handsets this year. I was just wondering if you could comment, what the underlying cable growth is for the rest of the business. Thank you.

Michael Fries -- Chief Executive Officer

On the Swiss math, it's not correct. And we're not going to provide independent guidance for Switzerland at this point, except to say that we also -- our budgeted number also assumed an improvement year-over-year in the growth outcome, so I am not sure, how you are getting to your math, it's certainly one way of getting there, but it's not accurate.

On the UK growth, Tom, are you trying to respond to that?

Thomas Mockridge -- Chief Executive Officer, Virgin Media

So I am just trying to identify Q4 table number, I think (Multiple Speakers)

Charlie Bracken -- Executive Vice President and Chief Financial Officer

Yeah, I think the confusion I've got is that we would perhaps the version you're using including Lighting in it. I think the fact is that we believe that if you take out Lighting, the consumer business is still great. But you're quite right not growing at quite the 2% rate because that's -- a big part of that is there just the handsets and we also bring to this underlying growth the B2B business, so we don't believe that the growth in consumer business excluding Lightning is a negative growing business, but it's a growth business but not as much as 2% which is the blended average of the mobile B2B and Virgin cable.

Michael Fries -- Chief Executive Officer

Well we know B2B growth is approximately 3%, mobile growth plus-minus 10%. And the other two are blended, that's another way to possibly answer the question.

Carl Murdock-Smith -- Berenberg -- Analyst

Helpful.

Operator

All right. Moving on to Steve Malcolm with Redburn.

Steve Malcolm -- Redburn -- Analyst

Yeah, hi guys. I'm going to dig into the UK little bit and then ask a quick question on the Sunrise deal if I can. Just -- you mentioned Brexit. I guess calling it out a bit more than you have in the past. Are there any particular size in the business that you're worrying about on -- particularly of your B2B business, you have quite a lot of local government exposure in there. You managed to sort of growing that low single-digit growth for a bit and also on the handset side, I mean, you've obviously moved everyone to 3-year EIP deals, are you going to have a bit of an air pocket this year. We've read a lot about the extension of handset lifetimes, is that hitting that revenue line quite hard this year?

And then just on the Swiss deal, do you happen to know if what Freenet's position is here because as I understand that they have a blocking minority here that I presume that the shareholder vote will require 75% approval. They have 24.5% on the basis don't know everyone turns up if they don't approve the deal, it's hard to see it going through. So any clarity you can give us on what Freenet position here would be -- would be very useful. Thanks.

Michael Fries -- Chief Executive Officer

Yeah, I'm glad you asked that question. It's not a 75% approval, it's a 51% approval. So they do not have blocking position. And their position isn't necessarily known to us. I am not sure what Swisscom has disclosed or not about that, it shouldn't. The Board has approved the deal and Freenet might have its own views that the note they made clear to us, they have been made clear to Swisscom, I'm sorry to Sunrise. You might ask that question on their call tomorrow. Sunrise on their call tomorrow, but it doesn't require 75% approval, so I am glad you asked that question. On Brexit, we've done a lot of work, although Charlie chime in here, as every UK-based company has done to determine what -- where the vulnerabilities might be.

I think, it's important to point out that we don't see meaningful vulnerabilities either in supply or people or the things that make programming contract or things that make the business tick. But at any UK-based business would be doing, we're evaluating the impact on consumers, as I've said consistently for a very long time now ever since Brexit would occurred. That the biggest concern we have is anybody would have in our position is how will consumers be impacted.

So it's principally a revenue view of and there's lots of different variations on that. As you can imagine, different point of view of what will happen to GDP and what will happen to inflation and what will happen to unemployment. But our business is sound and solid, no matter what happens. These are sort of marginal deviations, if they occur at all, but no real material contractual or any sort of supply related challenges, I don't know Charlie if you want to add anything to that.

Charlie Bracken -- Executive Vice President and Chief Financial Officer

No, I mean, it's well said. I think, look, as you rightly pointed out, none of us really know what's going to happen and will for instance going to occur. We are seeing little bit of softness actually in handset sales as you mentioned it, but remember that's really significant margin at first. I think it's too early to say, what's going to have the impact on local government. I think when we gave our guidance, it certainly show that there's a range of possibilities, becasue -- I think none of us know what the economics environment is going to be later in the year, but everyone is seeing material hit, what we're seeing and Lutz would comment on this, but I see more consumers waiting and seeing rather than diving into -- to new deals. So let's see how that -- end of March goes, and hope for the best.

Michael Fries -- Chief Executive Officer

And Andrea, just confirm that the way I've described the Swiss Sunrise transaction is accurate. I know it is but chime in if you want.

Andrea Salvato -- Senior Vice President and Chief Development Officer

No -- yes. Absolutely, Mike. Hi, it's Andrea here. It is a 50% vote of the shareholders that are representative of meeting and we don't have any official news as to how Freenet is going to vote their shares at our meeting. It's obviously -- there's obviously RegG period that needs to be gone through before we get to that. So it's not suspect, we'll see how they play it, and they do that. As Mike said, they are putting their results tomorrow, so I am sure there will be chance to ask them.

Operator

And we will take our next question from Ulrich Rathe with Jefferies.

Ulrich Rathe -- Jefferies -- Analyst

Yeah, hi. One question is that I have left is on the free cash flow, Charlie. I'm not entirely sure I can connect the new pro forma free cash flow easily to the continuing operations. Is there sort of an easy conceptual way to connect what you're highlighting for the 2018 pro forma to the $1.1 billion reported and continuing operations, particular, I'm wondering, is there a change in definitions here or is this the old free cash flow just in a different parameter. And if it is a change in definition, could you sort of just highlight motivations for what you have done and why you are introducing this in this particular way. And if I, if I may, a follow-up. I think, and Steve sort of asked this question about the handset life extension in the UK. Overall, about the sort of, I mean and a very easier way to ask this, I suppose is would you actually expect give and take for the development of this a big boost to the top line that you experienced in 2008 in VMED (ph), how you expect that to unfold in 2019. Thank you.

Charlie Bracken -- Executive Vice President and Chief Financial Officer

Well on the free cash flow. We haven't changed our definition at all. This is the same definition we have been reporting to for the last couple of quarters. I got to be honest -- are we damn pleased when these transactions are placed becasue the concept of the pro forma adjusted free cash flow, as underlined with my Accountants is something that many, many can dispute an idea about. What this is really trying to do is, and I am very happy to take you through and all the guys, can take you through it offline.

This is our best guess of how we would report the Company pro forma of the sales of the assets, the free cash flow of those assets and there is a series of footnotes that I can go through it offline but just to reiterate, there is no change in methodology. This is completely consistent with the, how we've done it in the previous quarters and indeed how 2018 is being compared to 2019 albeit 2019, it doesn't include Switzerland but yeah --

Thomas Mockridge -- Chief Executive Officer, Virgin Media

Yeah on the handset question. On the handset question, I think you're right, I mean, we've sold in a lot of handset into our customer base and that -- this has slowed down now a bit. Number two, as Charlie said, before customer demand especially on hardware and handset has slowed down, entire market is down 10% to 15% since December.

But having said that, the SIM free market in UK is only 15%. As for instance the SIM free market in Germany is 50%. So huge opportunity to grow. And if you take that together with fixed mobile convergence. I would not think that we keep doing what we are doing.

Michael Fries -- Chief Executive Officer

One more question, operator.

Operator

Yes. We'll take our final question from Christian Fangmann with HSBC.

Christian Fangmann -- HSBC -- Analyst

Yeah, hi, it's Christian. Hope you're fine. Just wanted to ask about the Swiss transaction, the transfer of the UPC debt, how does it technically work? I mean the debt is not specifically debt at the Swiss entity. So just wanted to understand is only the Swiss bonds are being transferred or how does it work? Just to understand it technically. Thanks.

Michael Fries -- Chief Executive Officer

Andre or Charlie -- yeah go ahead. Yeah.

Charlie Bracken -- Executive Vice President and Chief Financial Officer

Yeah we are going to keep it as you probably -- are we going to address Roger (ph) but remember that we call this funny names around orphan and succession about. So I don't really want to get into the implications of that because there are lot more detail. But sufficing to say, that we are allocating and assigning with transactions some of the debt and UPC to the assets. And Andrea, you want to give more detail.

Andrea Salvato -- Senior Vice President and Chief Development Officer

Yeah, I think unless (Technical Difficulty) put around this, but I think the number, the numbers being displayed in the print or press releases and is basically a question of portfolio of bond and derivative securities that have been in the UPC credit pool that have been transferred over. Does that answer your question?

Michael Fries -- Chief Executive Officer

All right. I will take that yes. Listen, we appreciate everybody joining the call especially folks in Europe, it's late, but we did want to be sure to get this announcement out as soon as we sign, which was just an hour or so ago before the call, so appreciate you joining. We're excited about this transaction in Switzerland. I will tell you, as I said in my remarks, it's a bitter sweet moment. Eric and more recently Severina have done a great job. The whole management team there over a decade or more has really done a great job building this Company. It's been a proud and incredible achievement for all of us to operate in this market and, but we do know that Sunrise is going to do tremendously well with these two businesses put together, it's going to be an terrific competitor, particularly in Swisscom, and it's the right thing for this market.

So it's a win-win. It's certainly a win-win transaction. And a great time for us to build cash. As you've obviously noticed. We think at these multiples. We're doing the right thing here in terms of rebalancing the business and we're excited about how we could use that cash to create shareholder value. We always appreciate your support and trust in the Company in this team and we'll speak to you soon. Thanks very much.

Operator

Ladies and gentlemen, this concludes Liberty Global's Full Year 2018 Results Investor Call. As a reminder, a replay of the call will be available in the Investor Relations section of Liberty Global's website. There you can also find a copy of today's presentation materials.

Thank you. Again, ladies and gentlemen. This concludes today's teleconference. You may now disconnect.

Duration: 62 minutes

Call participants:

Michael Fries -- Chief Executive Officer

Charlie Bracken -- Executive Vice President and Chief Financial Officer

Nick Lyall -- Societe Generale -- Analyst

Vijay Jayant -- Evercore -- Analyst

James Ratzer -- New Street Research -- Analyst

Thomas Mockridge -- Chief Executive Officer, Virgin Media

David Wright -- Bank of America -- Analyst

Polo Tang -- UBS -- Analyst

Jeff Wlodarczak -- Pivotal Research -- Analyst

Carl Murdock-Smith -- Berenberg -- Analyst

Steve Malcolm -- Redburn -- Analyst

Andrea Salvato -- Senior Vice President and Chief Development Officer

Ulrich Rathe -- Jefferies -- Analyst

Christian Fangmann -- HSBC -- Analyst

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