Executive Summary / Key Takeaways

• Liberty Global is actively executing a multi-faceted strategic pivot focused on unlocking and delivering shareholder value by managing its assets across three distinct platforms: Liberty Telecom, Liberty Growth, and Liberty Services.
• A core element of the strategy involves monetizing network infrastructure, exemplified by NetCo initiatives in Belgium and the UK, and a decisive shift to DOCSIS 4 technology in the Netherlands, which management believes avoids the need for costly fiber builds while delivering competitive speeds.
• Recent financial performance in Q1 2025 showed consolidated revenue growth driven by acquisitions and services to spun-off entities, though organic revenue saw a slight decline, reflecting ongoing competitive pressures, particularly in residential mobile and fixed customer bases in certain markets.
• The company is actively managing its portfolio, achieving $900 million in asset sales in 2024 and targeting a further $500 million to $750 million in 2025, with proceeds earmarked for strategic investments and significant share repurchases (targeting up to 10% in 2025).
• Despite facing competitive headwinds and adjusting guidance for VodafoneZiggo in the near term to reflect a strategic reset, management is positioning the business for a return to growth around 2027, emphasizing long-term free cash flow generation and addressing perceived undervaluation through strategic transactions and operational improvements.

A Strategic Pivot to Crystallize Value

Liberty Global Ltd. (NASDAQ:LBTYK) stands as an international telecommunications and investment powerhouse, strategically repositioning itself to unlock inherent value for shareholders. With a history marked by significant portfolio management, including major dispositions like the Vodafone Disposal Group in 2019 and the recent spin-off of its Swiss subsidiary, Sunrise, in November 2024, the company has sharpened its focus. It now operates through three core platforms: Liberty Telecom, Liberty Growth, and Liberty Services, alongside centralized corporate functions. This structure is designed not merely for operational efficiency but as a deliberate mechanism to create transparency and facilitate the crystallization of value.

The Liberty Telecom platform, comprising consolidated operations in Belgium (Telenet) and Ireland (VM Ireland), alongside 50% joint venture interests in the UK (VMO2 JV) and the Netherlands (VodafoneZiggo JV), remains the bedrock. Collectively, these assets represent a substantial footprint, serving tens of millions of connections across Europe. Management contends that the market currently assigns little to no equity value to these core telecom assets, a perception the strategic pivot aims to fundamentally alter.

Competitive Arenas and Strategic Responses

Operating in dynamic European markets, Liberty Global faces intense competition from established incumbents like Vodafone (VOD), BT Group (BT.A), Orange (ORAN), and Swisscom (SCMN), as well as aggressive AltNets and mobile virtual network operators (MVNOs). This competitive landscape is characterized by promotional intensity, particularly in broadband and mobile no-frills segments, and is increasingly influenced by regulatory developments like the UK's One Touch Switch policy and anticipated market entries such as DIGI in Belgium.

In response, Liberty Global employs a multi-brand strategy across its markets, utilizing flanker brands like BASE in Belgium and giffgaff in the UK to target different customer segments and compete effectively at various price points. Emphasis is placed on base management and retention, leveraging loyalty programs and advanced digital tools, including AI-powered campaigns, to proactively address churn and support cross-sell opportunities. While direct quantitative comparisons across all competitors' financial performance are not uniformly available, Liberty Global's strategic focus on value over volume in certain markets, coupled with efforts to enhance customer experience, aims to differentiate its offerings beyond price alone. The company's scale across multiple European markets provides certain economies of scale, particularly in procurement and technology development, which can offer a cost advantage compared to smaller, single-market players.

Technological Edge and Network Evolution

A critical component of Liberty Global's strategy and competitive positioning lies in its approach to network technology and infrastructure. The company operates extensive hybrid fiber-coaxial (HFC) and fiber networks, complemented by mobile capabilities. The strategic decision-making regarding network upgrades is driven by a pragmatic assessment of cost, market needs, and competitive dynamics.

A notable technological differentiator is the commitment to DOCSIS 4 technology in the Netherlands for the VodafoneZiggo JV. Management explicitly states this decision resolves the need to build costly fiber-to-the-home (FTTH) across the entire footprint, as DOCSIS 4 is expected to deliver speeds up to 8 gigabits per second by the end of 2026, with interim steps to 4 gigabits per second accelerating. This upgrade is planned to occur largely within VodafoneZiggo's historic €900 million annual CapEx envelope, representing a fraction of the cost estimated for a full fiber overlay in that market. This approach leverages the existing HFC infrastructure, minimizing disruption to customers and capitalizing on alignment with DOCSIS 4 deployments by major US operators like Charter (CHTR) and Comcast (CMCSA).

In other markets, fiber build-out and upgrades are progressing. VM Ireland's fiber upgrade is expected to reach 80% of its footprint by the end of 2025, enhancing competitiveness and enabling wholesale arrangements with partners like Sky and Vodafone. In Belgium, the NetCo "Wyre" is undertaking fiber deployment, complemented by strategic discussions with Proximus (PROX) on network sharing to maximize utilization rates, potentially reaching over 80% in certain areas.

Beyond core network speeds, Liberty Global is investing in technological innovation to enhance operational efficiency and customer experience. This includes the use of AI tools for dynamic customer retention offers and prevention campaigns, as well as investments in service delivery platforms and IT infrastructure. The Liberty Tech segment, part of Liberty Services, focuses on commercializing these technology platforms, including entertainment and connectivity solutions, and is investing in new areas like AI and cybersecurity.

The strategic rationale behind separating network infrastructure into NetCos (like Wyre in Belgium and planned in the UK) is to create platforms that can attract capital at higher multiples (recent European fiber deals median ~18x EBITDA vs. integrated telco mid-single digits), accelerate network upgrades, and facilitate consolidation. These NetCos are envisioned to generate stable, high-margin cash flow from wholesale arrangements, while the remaining ServCos become asset-light, digitally-focused businesses prioritizing customer experience and innovation.

Performance, Outlook, and Value Delivery

Recent financial performance provides insight into the operational execution of this strategy. In Q1 2025, consolidated revenue increased by 7.3% year-over-year to $1,171.2 million, primarily driven by the consolidation of Formula E ($84.2 million impact) and revenue from services provided to the spun-off Sunrise ($49.6 million impact). On an organic basis, consolidated revenue saw a slight decrease of 1.2%, reflecting competitive pressures impacting residential customer growth, particularly in mobile non-subscription revenue at Telenet and fixed subscription revenue across consolidated segments. However, organic B2B non-subscription revenue saw growth, mainly at Telenet.

Consolidated Adjusted EBITDA in Q1 2025 was $324.6 million, an increase of 14.7% year-over-year, benefiting from the Formula E consolidation. Organically, consolidated Adjusted EBITDA saw a 5.1% increase, demonstrating underlying operational improvements despite the slight organic revenue decline. This was influenced by factors such as lower CPE sales costs to JVs and cost control measures, partially offset by higher programming costs and personnel expenses.

Looking ahead, management has provided specific guidance reflecting the strategic initiatives and market dynamics. For VodafoneZiggo, the 2025 revenue guidance has been lowered from broadly stable to a low single-digit decline, and Adjusted EBITDA is expected to be down mid to high single digits. This adjustment is a direct consequence of the new strategic plan under the recently appointed CEO, involving pricing realignments and increased retention efforts necessary to stabilize the business in a highly competitive environment. These actions are expected to impact trends through 2026, with a return to growth targeted around 2027, while aiming for broadly stable free cash flow during the transition. Leverage at VodafoneZiggo is anticipated to peak in 2026 before reducing.

Other segments have reiterated guidance for 2025. VMO2 expects growing revenues (excluding handsets/nexfibre construction) and Adjusted EBITDA (excluding nexfibre construction), supported by pricing benefits and nexfibre penetration, with Adjusted Free Cash Flow and cash distributions targeted at £350-£400 million. Telenet expects broadly stable revenues and a low to mid-single-digit rebased Adjusted EBITDA decline, with CapEx peaking in 2025 (around 38% of revenue) due to network investments, resulting in negative Adjusted Free Cash Flow (€150-€180 million). VM Ireland's fiber build is expected to be largely complete by the end of 2025/early 2026, positioning it for meaningful free cash flow generation thereafter. Liberty Services and Corporate are targeting EBITDA of no more than negative $200 million, reflecting efforts to reduce central costs and grow service revenue.

Capital allocation remains a key focus. Liberty Global ended Q1 2025 with a consolidated cash balance of $1,982.6 million. The company is targeting significant asset sales of $500 million to $750 million in 2025, building on the $900 million achieved in 2024. These proceeds, along with free cash flow and potential distributions from subsidiaries/JVs, are intended to fund strategic investments and shareholder returns. The share repurchase program is a central element, targeting the repurchase of up to 10% of outstanding shares in 2025, following a similar target in 2024. In Q1 2025, $38.8 million was used for share repurchases.

Risks and Considerations

Despite the clear strategic direction, investors should consider several risks. The competitive intensity across European markets could continue to pressure subscriber numbers and ARPU, potentially impacting revenue and EBITDA growth. Macroeconomic factors, including inflation, could increase operating costs faster than revenue and affect consumer spending. Regulatory developments could impose restrictions or increase costs. The execution of complex network strategies, including DOCSIS 4 upgrades and fiber builds, carries operational risk. While debt is siloed, the ability of subsidiary borrowing groups to service or refinance debt depends on their Adjusted EBITDA, and unfavorable market conditions could impact refinancing efforts. Litigation and tax contingencies, while generally not expected to have a material impact based on current assessments, carry inherent uncertainty.

Conclusion

Liberty Global is undergoing a significant strategic transformation, pivoting towards a model designed to unlock and deliver value from its diverse portfolio. The core investment thesis rests on the successful execution of this strategy, particularly the monetization of network infrastructure through NetCo structures and targeted technology upgrades like DOCSIS 4, alongside driving commercial momentum in its operating companies and actively managing its Liberty Growth and Services platforms. While facing persistent competitive pressures and navigating a near-term reset in the Netherlands, the company's focus on long-term free cash flow generation, disciplined capital allocation including substantial share repurchases, and a clear path towards potentially crystallizing value through future transactions position it for potential upside. The ability to demonstrate sustained operational improvements and realize value from its infrastructure assets will be key indicators for investors evaluating the company's trajectory against its perceived intrinsic value.