Liberty Global - Q4 2023

Transcript

Operator (participant)

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global's full-year 2023 results and strategic update Investor Call. This call and the associated webcast are the property of Liberty Global, and any redistribution, retransmission, 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 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 two 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 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.

Mike Fries (Chairman and CEO)

Thanks, operator, and welcome, everyone, to our Q4 results call. As promised, this will be a slightly longer session today with prepared remarks covering first our results and then followed by a brief strategy update that we think you'll find pretty interesting. About 20 or so slides in total, so bear with us. I promise we will leave plenty of time for questions as we've scheduled this call for 90 minutes. Now, as usual, I'm joined by essentially my entire leadership team, so we should be prepared to answer pretty much any question you may have. With that, I'll get started on slide four with three key takeaways from our fourth quarter and fiscal year 2023 results. I mean, message number one is that overall, we feel good about our operating performance despite the macro and competitive headwinds we've been managing through this past year.

Every market was focused on commercial and marketing initiatives that reinvigorated growth in the fourth quarter as we added 80,000 postpaid mobile subs and saw improved broadband performance in Switzerland, Belgium, and Holland. In every market, we continue to focus on the right balance between value and volume, with price adjustments supporting stable to growing revenues. Financially, we saw a strong Q4 with accelerated EBITDA at VMO2 and Sunrise, which reported nearly 8% and 6% growth, respectively. Importantly, this enabled us to deliver on all of our OpCo guidance metrics for the full year and to actually exceed our original distributable cash flow guidance when you exclude the unexpected tax payment in Q4. And then lastly, we remain ahead of plan on synergy execution, with both the U.K. and Switzerland around 2/3 of the way through their respective targets.

More on all of this as we move through the slides, I promise. The last big takeaway is that our balance sheet, liquidity profile, and capital allocation model are strong and intact. Charlie will dive into most of these topics later, but certainly a highlight is our repurchase of 18.5% of our shares through the end of 2024, funded by our distributable cash flow. Now, we'll spend plenty of time on our balance sheet and cash position today, but the punchline is we are extremely well-positioned, with long-dated fixed-rate debt and over $4 billion in cash and liquid securities. Now, slide five provides our usual subscriber trend analysis for each of our four core markets. On the top left, you'll see results for Virgin Media O2, which delivered another positive quarter in both postpaid mobile and broadband net ads, despite a highly competitive market.

On broadband, VMO2 remains the market leader, with customers receiving, on average, five times the average speed relative to competitors, and we're seeing a discernible increase in demand for higher-speed services year-over-year. In mobile, our complementary dual-brand strategy with O2 and giffgaff drove positive postpaid adds for the quarter and the full year. In Switzerland, on the top right of the slide, we see an improvement in Q4 broadband net adds driven by commercial initiatives, including a strong Black Friday campaign. Importantly, we're seeing reduced effects from the UPC migration that impacted net adds throughout most of 2023. Over 50% of the base has been migrated now, with the remaining customers expected to be largely value-neutral. Similar to the U.K., our mobile flanker brand strategy in Switzerland is supporting strong, positive postpaid growth.

In Belgium, on the bottom left, we saw improved commercial momentum in Q4 driven by successful fixed-mobile marketing campaigns and targeted hardware offers. Net subscriber performance, though, continues to be impacted by elevated churn due to the competition and IT migration issues that we experienced last year, but we're stepping up in 2024 our efforts to regain commercial agility across the footprint. In addition, Telenet's advanced digital platform, their footprint expansion into the south of Belgium, as well as the launch of fiber services, will provide critical commercial momentum in this year. Finally, the Dutch broadband market remained highly competitive in Q4, during which VodafoneZiggo remained disciplined on value over volume questions.

This contributed to another quarter of broadband losses, but we did see a good response from our broadband speed increases as well as our smart Wi-Fi offers, which generated higher sales in Q4 versus prior periods and a slightly better broadband result. Meanwhile, mobile postpaid growth in Holland remained strong throughout the year despite the price rise we took in October. Now, the next slide presents our revenue growth for each market by segment. This is an important chart, and it's worth calling out a few numbers on here. If you run your eyes across the top line, you'll see that total revenue in the last two years has been broadly stable, with the pressure we see in fixed offset by our two growth drivers, mobile and B2B. Now, we discuss the dynamics of our consumer fixed business on every quarterly call.

As in the past, we continue to be impacted by declining video and voice subscribers, as well as ARPU and churn pressure as customers optimize their services in these more challenging economic times. Now, we'll get into this a bit more on the next slide, but we are taking action to manage these headwinds, and it's worth noting that our operations in Holland, Belgium, and Switzerland saw improved fixed revenue trends year-over-year. The remaining numbers on this chart are all green, meaning our mobile and B2B businesses are growing consistently year-over-year. Our consumer mobile revenue, which represents between 20% and 40% of total revenue of each OpCo, is supported by postpaid volume growth and pricing actions. And B2B, which generally represents around 20% of total revenue, remains a consistent growth business for us here.

We have an opportunity to gain significant market share, and we're focused on broadening our enterprise offerings beyond connectivity into the cloud, ICT, and managed services. So what are we doing to continue the momentum in our mobile and fixed businesses that we saw in Q4? Well, we outlined some of these commercial initiatives on slide seven. On the mobile front, there are four key drivers of future growth. First, we will continue to underpin mobile service revenue with price rises that are now embedded into all contracts except Belgium. We're also seeing great response to our loyalty programs, especially with our premium brands. There is no shortage of demand for tickets to live sports and music events, and we provide those. Our flanker brands, which are generally digital-first and operating with really lean cost structures, will continue to contribute significant growth.

Finally, our 5G upgrades are making good progress. We're fully 5G in Holland and Switzerland, and between 50% and 66% upgraded in the U.K. and Belgium. On our consumer fixed business, four key drivers are also at work here in 2024 and beyond. First, we have strategies in place to combat the headwinds from a declining video and fixed-voice business. It's important to point out that our customer losses in these two segments are significantly smaller than the U.S. market. Nonetheless, we are bundling streaming services everywhere and putting together significant entertainment packages that differentiate us from competitors. As with mobile, we are well-positioned to execute price rises across the footprint in 2024. If you look at the bottom of the chart, you can see our fixed ARPU trends over the last three years.

Now, while ARPU is declining modestly in the U.K. and Switzerland, we're actually growing fixed ARPU in Belgium, Holland, and Ireland. Then finally, as expected, we'll see continued growth in our fixed business coming from our network upgrade and expansion plans, which is a great segue to my last slide before turning it over to Charlie. Here, we provide an update on our fixed network upgrade and expansion plans. The chart on the left shows our 32 million homes passed today by market. It's important to always lead with the fact that in every country, we are currently able to market a 1 gig speed product to 100% of our footprint, with an easy and inexpensive path to 2.5 gigs when and where we want.

Beyond that, however, we are squarely focused on upgrading our networks to 10-gig speeds and expanding the reach of our networks, either through new build or whole buy access. Now, with respect to network expansion, our nexfibre JV in the U.K. is about to pass 1 million new fiber homes off the Virgin footprint and just announced a GBP 1 billion investment program for 2024. The ultimate goal here is to add an additional 5 million-7 million homes, and in Belgium and Ireland, we will expand our reach through whole buy arrangements. In total, we expect to have increased our footprint by 2026 another 6 million homes to over 38 million homes. Now, fiber is obviously the biggest component of our upgrade plans. In fact, by 2028, 70% of those 38 million homes will be FTTH.

Our biggest program is in the U.K., where we are well underway upgrading our 16 million home HFC network. We are doing the same across our 1 million homes in Ireland, and of course, in Belgium, our new NetCo Wyre is ramping its fiber upgrade plans. So in summary, a strong fourth quarter operationally, which we believe sets us up for continued commercial and strategical momentum in 2024. And with that, I'll turn it over to Charlie to walk through our financial results as well as our guidance for the current fiscal year. Charlie?

Charlie Bracken (EVP & CFO)

Thanks, Mike. Turning to our 2023 key financials. Across our companies, we saw stable to growing revenues across our core markets. In line with their revised guidance, VMO2 delivered stable revenue in 2023 despite continued fixed pressures and weak handset sales. Underlying service revenue trends remain positive. VodafoneZiggo delivered 1% revenue growth in 2023 driven by a strong Q4 performance supported by a 10% mobile price rise in October. Telenet delivered 1% revenue growth in 2023 supported by their price rise in June and a return to growth in Q4. Sunrise delivered stable revenue in 2023 despite the headwinds resulting from the migration of the UPC backbook onto the Sunrise brand. Growth of 2.5% in Q4 was primarily driven by mobile and B2B. Turning to EBITDA, Virgin Media O2 met their full-year guidance here as well, delivering 3.8% rebased in adjusted EBITDA growth for full year 2023.

Adjusted EBITDA growth was primarily supported by strong execution on synergies as the business tracks ahead of their original plan, although this did result in higher costs to capture in the year than we originally projected. VodafoneZiggo met their full-year guidance of low mid-single-digit decline as the business worked through the extraordinary cost inflation impacts that we've been highlighting since the beginning of the year, particularly in energy. Telenet delivered stable EBITDA for the year and achieved guidance despite an IT issue that impacted customer services from Q2. Finally, Sunrise posted strong adjusted EBITDA growth in Q4, and in full year 2023 came in towards the top of their guidance range, supported by good execution of the merger synergies and the in-year price rise. On the next slide is a breakdown of our free cash flow profile for 2023 by operating company.

We ended the full year 2023 modestly ahead of our original $1.6 billion distributable cash flow guidance, excluding an unanticipated U.S. tax payment of $315 million related to a historic 2010 disposal in Japan that was paid very late on in Q4. On a reported basis, we generated $1.4 billion of distributable cash flow. To call out a few items on the central adjusted free cash flow, the central net spend for the year was at the low end of our annual $200 million-$250 million target. On tax, as we've highlighted before, there was a $60 million outflow related to our ongoing U.S. mandatory repatriation tax that was deferred in 2017. We expect 2024 outflows for this tax to be around $80 million and $100 million in 2025, with the transition tax falling away in 2026.

Positively, given our substantial cash balance through the year, we generated interest income on our cash balance, and we also received around $55 million of dividends from our ventures portfolio. Lastly, we delivered on our capital intensity targets across our operating companies for the year, managing significant investments in 5G and fixed network capacity. Turning to guidance for 2024, we're providing guidance by operating companies, including their free cash flow. As part of the pivot to net asset value, which Mike will discuss, we will not be providing distributable cash flow guidance to the parent going forward, though clearly the distributions of our key subsidiaries will continue to support a healthy cash flow to the parent.

The pivot from distributable cash flow guidance to free cash flow guidance by operating companies has been driven primarily by investor demand for additional focus on free cash flow generation of our four core assets. For VMO2, we expect stable to declining revenues, excluding nexfibre construction revenues, driven by continued pressures in B2B fixed and handset segments. A low to mid-single-digit adjusted EBITDA decline, excluding nexfibre and cost to capture, driven by investments into future growth drivers, and I'll dive into this a bit more on the next slide. Property and equipment additions of around GBP 2 billion-GBP 2.2 billion. This is excluding ROU additions, which can be lumpy depending on lease renewals. Adjusted free cash flow of around GBP 500 million for the year. Cash distributions to shareholders are targeted to be around GBP 850 million, supported by the proceeds from the stake sale of the CTIL towers.

Turning to Sunrise, we expect stable revenue and stable to low single-digit adjusted EBITDA growth, as we expect to see continued support from the July price rise and reduced impact from the UPC brand migration in 2024. Property and equipment additions as a percentage of sales of 16%-18%, including cost to capture. Cost to capture spend will drop this year, falling to around CHF 15 million, which is mainly CapEx related. Adjusted free cash flow of CHF 360 million-CHF 400 million for the year, a strong step up versus 2023. For VodafoneZiggo, we expect continued revenue growth supported by pricing actions. Low single-digit adjusted EBITDA growth driven by an improved OpEx profile from lower energy costs. Property and equipment additions to remain stable year-on-year at 21%-23% of sales.

Adjusted free cash flow of around EUR 300 million, and cash distributions up to this amount. Finally, on Telenet, we expect broadly stable revenues supported by pricing actions. A mid-single-digit rebased adjusted EBITDA declined due to OpEx investments such as increased marketing associated with a new converged bundle offering in Wallonia, leveraging the Telenet products and brand across third-party networks. Property and equipment additions of around 32% of revenue driven by the accelerated rollout of fiber homes on our footprint in Flanders and parts of Brussels through the Wyre NetCo. Despite the heavy network investments, still positive free cash flow for the year of EUR 50 million-EUR 75 million. Turning to the last slide before I hand back to Mike, I wanted to detail some of the investment initiatives and drivers for VMO2 in 2024 to support future growth.

Since the JV was established, revenue excluding nexfibre has been broadly flat, not least due to the headwinds from declining video and voice customers, as well as weaker handset sales than in the past. However, despite these headwinds, we've delivered strong mid-single-digit EBITDA growth supported by primarily accelerated synergy execution. At the end of 2023, we delivered GBP 359 million of the total synergy run rate target of GBP 540 million, or roughly 66% of the target. However, in 2023 alone, we spent one-off cost to capture of GBP 185 million, depressing the net contribution to free cash flow. As cost to capture fall away with the completion of the synergy program, we expect to see the full impact of the GBP 540 million of synergies reflected in the company's free cash flows, which should underpin long-term free cash flow generation.

And alongside this, over the last few years, we've also been investing in excess of GBP 500 million per year on 5G and fiber upgrade, and prior to that, on Project Lightning. We anticipate our fiber upgrade program to be completed in 2028, and we continue to invest in rolling out 5G nationwide. As these programs are completed in the next few years, we expect the capital intensity to reduce substantially. And together with the strong tax assets that these investment programs generate, this should lead to a strong free cash flow conversion and profile in the longer term. 2024 is a key transition year in this journey, as we are accelerating investments not just in mobile and fixed networks, but also in initiatives to underpin long-term revenue growth.

In particular, in 2024, we are increasing investment in IT efficiency programs, transforming the customer experience, marketing initiatives to support new product launches, and also operating expenses associated with selling into the rapidly expanding nexfibre network. The foundations of these investments that we are laying in 2024 should create a strong platform for growth in the subsequent years. Now, with that, I'll pass over to Mike to start the strategy update.

Mike Fries (Chairman and CEO)

Thanks, Charlie, and nice job. So that concludes our prepared remarks on our Q4 and 2023 results, which means we're going to transition now to our strategy update. Hopefully, you've got a copy of these slides in front of you as well because there's quite a bit of information to cover. I'm on the first slide, slide 14, I believe, which summarizes pretty much everything we're going to talk about today, beginning at the top with a statement that I believe captures our main message to you here clearly and concisely, which is, moving forward, our strategy will be focused on maximizing the inherent value of our core assets, which we believe is substantial, and importantly, delivering that value to shareholders over time. So how does that differ from what we've been doing?

The clear pivot here is in the commitment to take the financial and strategic steps necessary to deliver that value to you, which will come in three ways. First, we will continue to focus on shrinking our equities so long as our stock trades at a sizable discount. But second, in certain circumstances, we intend to actually put that value in your hands through dividends, spinoffs, tracking stocks. And third, as we execute on this plan, we also expect to deliver that value in the form of a higher share price. Now, you might be asking, why now? Well, we've been working towards this moment for some time. For starters, we've completely repositioned our portfolio of operating businesses over the last six or seven years.

We were among the first to see the importance of fixed mobile convergence in Europe, which led us to sell more than $25 billion in cable assets over that time frame at an average of 11x EBITDA, and acquire or merge with the best mobile companies in our remaining markets. Now, you would also know that we put nearly all of those net proceeds, around $14 billion, back into our stock by purchasing over 60% of our shares since January 2017 at what we believe are attractive prices. And then lastly, with your support as shareholders, we successfully redomiciled our company to Bermuda, which has created significantly more corporate flexibility to do some of the things we will talk about today. So all of the pieces of the puzzle are in place, and we intend to take advantage of this moment.

In the middle of the slide, you'll see five announcements we're making today, each of which brings this strategy to life. I'll run through these quickly because there's a slide on each of them coming up. First, we have started the process of listing our Swiss subsidiary Sunrise in anticipation of spinning off 100% of those shares to Liberty Global shareholders in the second half of the year. Second, we have created a new holding company called Liberty Global Benelux to own and manage our interests in both Telenet and VodafoneZiggo. Third, we have agreed with our partner Telefónica to begin the process of creating a separate NetCo comprising our 16 million home HFC and fiber footprint in the U.K. today.

Fourth, we are announcing an agreement to sell one of our content assets in the venture portfolio, All3Media, for 12x EBITDA, or roughly $400 million of net proceeds to us. Then finally, we're also announcing today our intention to buy up to 10% of our shares in calendar 2024. Now, these announcements, each in their own way, reinforce our commitment to delivering value to shareholders. In the next 20 minutes or so, we'll talk about each of these, as well as our view on the positioning and valuation of our underlying assets and how we see generating and allocating capital moving forward.

So before getting into each of these transactions, I thought it would be useful to step back and highlight some of the financial, structural, and strategic advantages that define who we are, that make us unique relative to our peer group, and provide the critical tools we need to execute on this plan. Six of them are listed here on slide 15. The first of those is our strong track record of capital allocation. Charlie's going to show you a slide in a moment which outlines how we've generated and invested over $23 billion of net M&A proceeds and free cash flow over the last six to seven years. There's three points to make here. First, we believe we are outstanding buyers, builders, and sellers of businesses in this sector. Full stop. I think that's evidenced by the deals I just referenced.

A few operators, if any, have a 30-year track record like ours in this space. In Germany, for example, which we sold to Vodafone in 2019, we invested EUR 2 billion of equity over seven years and took out over EUR 13 billion in dividends and net sale proceeds. You can do that math. Second, we are committed to value creation for shareholders. All the steps we've taken, exiting markets at a premium, our buyback program, and our announcements today demonstrate that we are not empire builders. We are value creators. And third, we have ongoing sources of capital that will fuel these and future opportunities to deliver that value to you. Now, the next three tools listed on this slide are structural advantages that are also critical. Our balance sheet is built for value creation. We have no corporate debt.

Rather, all our debt is siloed into our operating businesses, totally portable in terms of transaction flexibility with no change of control restrictions, and de-risked from a point of view of interest rates, currencies, and maturities. This is a major strategic asset and point of differentiation for us. Now, most of you are aware that we go to great lengths to ensure that we're optimizing our tax position for the benefit of shareholders throughout our business, always within the rules and regulations, of course, but with a focus and capability that is second to none. And to already mention Bermuda and the benefits that brings, we could not be happier with our current corporate structure. Number five on this slide references our unwavering commitment to shareholder remuneration. I've given you the historical numbers.

Our announcements today would result in the largest shareholder return in our history when you include the buyback commitment, the spinoff of Sunrise, and the investment we plan to make pre-spin to deliver that business. More on that in a moment. Then finally, we're sitting on some of the best operating businesses in Europe, as well as some scaled assets and strategic platforms that you may not be familiar with, all of which create a pipeline of opportunity for value creation and value delivery moving forward. That's a good segue to the next slide because the most important source of both future value creation and future value distribution is our FMC operating companies.

Here on slide 16, we provide a framework for evaluating each of these businesses on the basis of market structure, convergence, synergy execution, network investment, infrastructure monetization, and the opportunity to pursue equity capital markets transactions. There's a lot of information on this chart. I'd encourage you to go through it after the call. I'm just going to hit the highlights for you. First, it should be clear that Sunrise is best positioned today to pursue an equity capital markets transaction, and not surprisingly, that's why we're announcing the spinoff. The Swiss market is highly rational. Sunrise has fully converged and nearly done with synergies. The transition to 5G is complete. We have access to nationwide HFC and fiber with very efficient CapEx profiles. And these factors and more support a strong free cash flow profile.

Now, moving to our other markets, the operations under Liberty Global Benelux are also well positioned. These are rational market structures and fully converged operations with synergies complete. While we're at different stages of 5G and fiber in each country, the infrastructure opportunity in both markets is substantial. The Dutch business has yet to monetize towers, for example, and our NetCo in Belgium, which we call Wyre, is one of the most penetrated and profitable fixed infrastructures in Europe. I'll talk about all of this more in a moment. Our joint venture with Telefónica, Virgin Media O2, is also in a unique position. We're still in the early stages of our 5G and fiber investment cycle, and synergies are still being implemented, but the infrastructure opportunity is substantial with both towers and our announced U.K. NetCo providing a source of monetization, financing optionality, and value creation.

Overall, this is our largest business and one that we remain extremely excited about. Now, I've referenced value and value creation several times already. One of our goals today is to discuss valuation with you, in particular how we view our stock relative to our peers and the strategies we're pursuing. This is perhaps the most important slide we'll present. Analysts and investors alike are aware of the significant discount in our stock, which we've been taking advantage of, of course, with our own buyback program. But as we've indicated today, the time has come to bridge that gap. And here we quantify that gap for you with our own sum-of-the-parts analysis. Now, I'll start by acknowledging that there are many ways to approach valuation and that reasonable people can disagree on assumptions and methodology.

But we believe that the numbers we are presenting here on this slide are the clearest and most defensible. Let me walk you through it. We begin on the top left with our current share price of $20. If you subtract our cash balance, which is equivalent to $10 per share, and you subtract our listed equity stakes, these are listed equity stakes, which are worth $2 per share, you're left with two things: the value of our ventures portfolio and our interest in our FMC champions. Now, Charlie will talk about ventures in a moment, but you should know that we have these assets valued regularly by an independent third party, and we've demonstrated to you a willingness and an ability to turn these investments into cash over time. We think together they represent $6 per share.

So where does that leave the value of our proportionate interest in our core FMC operations, which total in the aggregate, I remind you, $25 billion of revenue, 85 million connections, and $9.3 billion of EBITDA? In our analysis, about $2 per share, or $800 million. Clearly viewed through this lens, there is a major disconnect. So what do we think our proportionate interest in Sunrise, Liberty Global Benelux, VMO2 are worth? There's many ways to arrive at that figure, but one of the simplest and perhaps least subjective ways is to look at our peer group. If you simply apply the public trading multiples for operating free cash flow of our incumbent competitors in the U.K., Holland, and Switzerland, along with the transaction value for our recent delisting of Telenet, you arrive at around $30 per share. Now, that's not $30 per share for Liberty Global.

That's $30 per share just for the FMC component of our sum-of-the-parts valuation. In fact, the implied value for Liberty Global would be closer to $48 per share. Now, we're not suggesting that the stock will or should trade there immediately, but we believe there is significant embedded value in our operating companies. Even if you apply a discount to cash and a discount to our listed stakes and a discount to ventures, you're still going to arrive at a number for the implied value of our FMC operations significantly below $30. Have a go. When the call is over, you can see what I mean. And this is the reason for listing and spinning off Switzerland, which we describe in a bit more detail in a second. We're going to hand that value, that fully distributed value, to investors.

Turning to slide 18, we're really excited about the Sunrise transaction. On the left-hand side here, we highlight the basic elements of the deal, which will see us list and spin 100% of the shares to Liberty shareholders. Prior to that, and this is important, we are committed to investing up to $1.7 billion to de-lever Sunrise, which will optimize the fully distributed value of the stock and therefore the value of the dividend to you. Now, the rationale for this deal is clear. In addition to helping us demonstrate the underlying value of our assets, Sunrise is a compelling equity story. The Swiss market is one of the strongest in Europe with very attractive macro characteristics and a rational telecom sector. As one of the most advanced operators in Europe, Sunrise generates significant free cash flow, and the management team has a great track record.

André Krause, for example, was the CEO of Sunrise when we took the company private and is highly respected in the Swiss financial market. Some other considerations worth pointing out: we will fund the $1.7 billion from three sources: the sale of All3Media, the free cash flow generated by Sunrise this year, and less than $1 billion of our corporate cash. It's worth repeating that we do not require any third-party investment or financing to achieve this transaction. Look, if somebody wants to approach us on a strategic or financial basis and they want to participate on terms that are acceptable to us, we may listen to that. But this deal is happening either way. A couple of other points: the actual listing will be on the Swiss exchange with a similar voting structure to Liberty Global today. JPMorgan and UBS have been appointed as advisors.

The goal is to make the transaction tax-free to U.S. shareholders and possibly other jurisdictions to be determined. Stay tuned for more information and also for the announced timing of Sunrise's Capital Markets Day where André and the team will walk through the entire story. It's a good one. Now, turning to the Benelux, we're announcing today the creation of Liberty Global Benelux, a holding company which owns our interest in Belgium and Holland. The rationale for this move is also clear. Together, these two operations will create one of the largest FMC platforms in Europe with $7 billion of pro forma combined revenue and $3 billion of EBITDA. That would make Liberty Global Benelux, on an aggregate basis, comparable in size to KPN or Swisscom. Also, strategic growth plans for both of these operations have a lot of similarities.

I mean, specifically a focus on entertainment differentiation, fixed network development, and digital and AI initiatives. In addition, we think a single operational focus should help drive best practices across these programs, as well as cross-border efficiencies and, importantly, financial synergies. Perhaps most importantly, we see multiple avenues for value creation going forward. For example, both operations have significant infrastructure assets. The Dutch operation has yet to monetize towers and, of course, Telenet's sitting, as I said, on one of the more sophisticated and profitable infrastructures in Europe. The new holding company provides an optimal tax and governance structure, and it gives us a vehicle to be opportunistic as we explore market consolidation and potentially other inorganic opportunities.

We also believe that as a scale player in the region, Liberty Global Benelux will be attractive to strategic and financial investors and could be an ideal candidate for equity capital markets transactions when the timing is right. So we'll have a lot more to say about this platform as plans develop. Now, the next slide summarizes our intention to create a U.K. NetCo comprising all of our Virgin Media O2 fixed network assets in the U.K. This is a significant milestone for VMO2 and one of the most important announcements we're making today. As you know, we've invested considerable time and capital developing our fixed network strategy in the U.K. Specifically, we've made substantial progress on two core initiatives. First, expanding our network reach through our JV with InfraVia called nexfibre, which will have built around 1 million fiber-to-the-home premises by the end of Q1.

It's fully financed, by the way, and just announced that they will spend GBP 1 billion this year growing the fiber footprint. Then secondly, we've begun the process of upgrading VMO2's HFC network to fiber, with over 3 million of our 16 million homes already fiber today. And it's this second program that would be folded into the U.K. NetCo, which will result, I think, in multiple benefits. First, it underpins our commitment to fiber in this market by consolidating these 16 million homes under one dedicated team, strategy, and balance sheet. This should provide greater focus on the pace and efficiency of the upgrade and the opportunity to generate wholesale revenue. Second, it creates considerable optionality around financing and monetization of VMO2's fixed network. Day one, this will be among the largest and most profitable fixed network infrastructures in Europe.

And third, it creates an ideal vehicle for potential consolidation of what is today a very fragmented alt-net market in the U.K. This is a particularly important element of the plan. And we in Telefónica are quite excited about this development. The timing is right, the market is ready, and the opportunities it will create are significant. Now, moving to slide 21, thrilled to announce today the sale of All3Media to RedBird IMI. You might have seen the press releases. As a reminder, this is our 50/50 content production venture with Warner Bros. Discovery. The price of GBP 1.15 billion, or about 12x EBITDA, represents a premium for what we believe is one of the best independent producers in Europe.

The transaction should close in the second or third quarter of this year and would result in total proceeds to us of around $400 million when you include the repayment of an attractive piece of mezzanine debt we provided to the company some time ago. Now, as I mentioned, our goal is to use this cash to support a portion of the investment into Sunrise pre-spin. This is a great example, by the way, of us rotating our capital into accretive transactions. Now, while we're happy with this outcome, I have to say it's a bittersweet moment for us at Liberty. Jane Turton and her team have done an outstanding job building one of the most important content platforms today. We know that she's going to continue to be a driving force in this industry, and we're super proud of everything they've accomplished.

And then finally, one of the main messages here today is our commitment to shareholder remuneration. By this, of course, we mean both buybacks and distributions like the spinoff of Sunrise. The left-hand side of this slide just repeats what we've said a couple of times already. We've already repurchased around 60% of the shares since 2017, spending $14 billion, and we currently sit at 378 million shares today, down from $900 million in January of 2017. On the right-hand side, though, we show you our 2024 shareholder remuneration plans. Here now, there are three components this year. The familiar one, of course, is our intention to buy back up to 10% of the shares. This could total as much as $800 million based on our current market cap and funded in part from distributions we expect to receive from our FMC OpCos.

The second component is the spin-off of Sunrise, and I'm not going to put a dollar figure on that dividend today. There's a lot of work to do to finalize that number, obviously. Whatever value you or the analysts assign to our equity in Sunrise today, you would need to increase that value by the third component, which is the $1.7 billion of cash we are contributing to the company pre-closing to reduce leverage. In other words, we're essentially distributing the $1.7 billion in cash to you, the investors. When you add all three of those up, it's going to be a record year for shareholder remuneration, I believe, all of that on a market cap of under $8 billion. A lot to digest in these announcements. I think it's all very good news in our view.

I'll now turn it over to Charlie, who's going to run through a few more key points on capital allocation, on our balance sheet, and on ventures. Charlie, over to you.

Charlie Bracken (EVP & CFO)

Thanks, Mike. Turning to the next slide on capital allocation, firstly, I wanted to start with a high-level view of our historic capital allocation, which has been focused on driving shareholder value through buybacks, M&A, and modest investments into ventures. Taking the period 2017 to the end of 2023, which started with the sale of Germany and Central Eastern Europe to Vodafone, we generated around $14 billion in net after-tax proceeds from asset sales. And alongside that, primarily from distributable cash flow at our FMC champions, we distributed to the parent company over $9 billion of distributable cash flow.

As you can see in the bottom half, we have put this capital to work by spending $14 billion buying back our stock, reducing the number of shares outstanding by around 60% since January 2017. $4 billion in M&A transactions, primarily invested in the acquisition of Sunrise. $2 billion in our ventures portfolio, in particular fast-growing sectors such as infrastructure where we hope to create new unicorn assets. And retaining around $4 billion in cash. In addition to our current cash balance of $3.7 billion, we also have $900 million of listed equity securities, as well as $2.3 billion of venture assets, where we're on track to make disposals to support our $500 million-$1 billion target of non-core asset disposals by the end of this year, which give us potential liquidity to allocate of just under $7 billion.

Despite investing in the transition of our mobile networks to 5G and fiber capacity in many of our markets, each of our key FMCs continue to generate upstreamable cash flow, which will provide us with further capital to allocate. Now, in allocating this capital, in addition to using up to $1.7 billion to facilitate the spin of Sunrise, we are targeting to purchase another 10% of our shares outstanding during calendar 2024. We will consider investing capital to assist strategically leveraging into other transactions with our FMC OpCos. We will remain opportunistic on M&A opportunities in our core markets. We will selectively invest in our ventures portfolio assets such as nexfibre, AtlasEdge, and other growth opportunities in our key ventures thematics of tech, content, and infra. We also consider opportunities to grow our tech and services platform through partnerships and/or infra acquisitions.

This is particularly true in our central and corporate operations, where we're increasingly unlocking further value such as Liberty Financial Services, which has already built out a number of third-party relationships. Moving to the next slide, all our cash and liquidity remains at the parent company, which has virtually no debt. Our debt stacks are siloed at the key FMC assets. Now, this means that each debt stack operates independently of the other and means that there is no risk of financial distress in one of them impacting any of the others. Within each FMC debt stack, we remain committed to maintaining target leverage of 4x-5x through the cycle, which has served us well over the past 20 years. In managing that debt, our treasury principles have not changed during the various financing cycles.

And we remain committed to proactive financing of debt to ensure a long average maturity and fully fixing the interest rates on our debt, and also to swap all our non-functional currency debt back into the functional currency of the debt silo. Our debt silos currently have an average life of six years at fixed interest rates, with no material maturities until 2028. We also have significant undrawn revolving credit facilities in each of the FMCs locked in until 2029, totaling $4.4 billion of additional liquidity should we need it. And so to conclude, we feel very good about the balance sheets of our various OpCos and retain significant cash and liquid investments at our unlevered parent.

We will remain proactive in pushing out the average life of our debt and, as is the case at Sunrise, could opportunistically delever in strategic moves, for example, to highlight the equity value better for our shareholders. Moving to my last slide on ventures, our ventures portfolio is split into four pillars. The year-end fair market value closed at $3.3 billion. Now, it's important to reiterate that while we present the fair market value each quarter to help our investors value the portfolio, it's also regularly reviewed and aligned with a third-party valuation report. The fluctuation in value quarter-to-quarter reflects not just that, but also new invested capital, disposals, and changes in that fair market value.

Before I dive into the strategy of each pillar, the aim today is to provide some more color beyond the usual disclosure on the key investments in each pillar, and also to give some more concrete data around our total returns for shareholders. To be clear upfront, when we are referring to net invested capital in each pillar against the current fair market value, that is reflecting firstly the money we've invested, secondly the proceeds from any divestments, and thirdly also reflects the dividends and interest over the relevant period. Starting with tech, which is the longest running vertical, like many of our peers, Comcast, Deutsche Telekom, we selectively make relatively small investments into tech companies that provide benefits to our core FMC champions, including early visibility and access to new tech platforms and revenue streams.

This has proven to be a successful strategy, with the tech portfolio on today's fair market value worth $700 million against net invested capital now of only around $100 million, given that we've realized over $500 million in disposals, often when there is a natural liquidity event, and it delivered a cumulative mid-teens IRR, including the strategic benefits to our OpCos. As a result, our tech pillar is largely self-funding, with profits being reinvested into innovative new technologies and platforms that provide benefits to our core FMC champions, such as smart broadband AI and digital security.

Moving to content, which is worth $1.5 billion compared to net invested capital since inception of $1.4 billion, much of this original invested capital actually came from the sale of our original content investment, Chellomedia, which we sold in 2014 for over $1 billion, having grown that from a small initial investment in 2004. With the content pillar, we hold strategic stakes in legacy and new investments within the media, content, and sports sectors. The emphasis here is on harvesting legacy investments, but also supporting future unicorn assets such as Formula E, which is performing well. Moving on to our infrastructure pillar, this is focused on creating unicorns within the data center, last-mile fiber, and emerging energy markets by leveraging our infrastructure track record and scale. This is a recent vertical and perhaps the one we're most excited about.

As you can see, there's been a significant uplift in fair market value of around $600 million, underpinned as we were able to seed our original investments into AtlasEdge, for example, by using technical property assets from the FMCs. To date, our net cash investment in this vertical has been relatively small, but we see good opportunities to invest capital in high-return, success-based CapEx, particularly in the data center space, which is seeing explosive growth from accelerating shift to cloud and the additional demand resulting from AI rollouts. I want to emphasize that we think about investing in infra as a core competency where we have a clear right to play. Firstly, we can often use our own assets to seed and grow them. Secondly, we can often partner here with strong strategic partners such as DigitalBridge, which complement our own access to capital.

Importantly, there is a clear growth, particularly in the data center segment, which commands high multiples, both public and private. One asset that we are excited about is AtlasEdge. To give some headline color on it today, and we will expand on this in future sessions, AtlasEdge has expanded to over 100 sites across Europe, making it one of the largest edge colocation footprints in Europe. We raised standalone financing in 2023 of around EUR 750 million to fund growth. The financing was led by our best-in-class LG Treasury team, who will also support future growth and acquisitions. We have an industry-leading management team in place alongside the support from Liberty Global and DigitalBridge. Growth has been supported by acquisitions such as DC1 in February 2023, which has just announced the opening of a brand new data center in Hamburg.

Finally, our financial pillar contains opportunistic positions in public debt or equity that provide yield and/or strategic optionality that we also include in the liquidity that I discussed earlier. The yield on these strategic investments is typically higher than our return on cash, while allowing us near-term liquidity if we want it. We will look at ways not just to return value to shareholders through selective cash disposals, but also opportunities over time to highlight the value of these growth assets by contributing them to or crystallizing them with listed vehicles, including potentially tracking stocks. With that, Mike, I'll just turn it over to you to conclude.

Mike Fries (Chairman and CEO)

Thanks, Charlie. Now that concludes our prepared remarks for this brief strategy update. I'm just going to close with five key takeaways. These are the things you want to focus on as you digest this information, I think. First of all, this is a clear pivot in our strategy. That is clear. We realize that the time is right to not only create value, but to distribute that value to shareholders if and when we can. By the way, this is not a new strategy. John and the Liberty companies have been practicing this for decades. Liberty Global itself was spun off from Liberty Media. This is a well-known path, and we're excited to pursue it. Second, the spin-off of Sunrise, together with our buyback commitment, reflects a significant commitment to investor returns.

As I mentioned just a moment ago in my remarks, this will be a record year for shareholder remuneration at a time when our share price reflects perhaps its largest discount. We expect to see that discount shrink. Third, this is unlikely to be our last equity capital markets transaction or unique value creation event. Each of our FMC operations are positioned well for growth, for strategic moves, asset monetizations, and at the right time for potential equity market or financing transactions that would be value accretive. The pipeline is full. That's the main point. Fourth, our ventures portfolio is not a hobby. Many of these assets are significant in their own right and are already there or on their way to becoming billion or multi-billion dollar unicorns themselves.

These investments support our strategic and technology plans and could themselves be assets that we consider distributing or sharing with investors. And then finally, we have significant cash and liquidity to implement the strategic roadmap we've just outlined. And just as importantly, we have the ability to replenish that liquidity through both upstream free cash flow from our operating companies and asset sales as and when needed. Needless to say, we are extremely excited about the future. I want to thank you for your patience today. I know it's been a long call, and I know we covered a lot of ground. But we really look forward to your questions. And, operator, we are ready to go.

Operator (participant)

The question and answer session will be conducted electronically. If you would like to ask a question, please do so by pressing the star or asterisk key, followed by the digit one on your phone. In order to accommodate everyone, we request that you ask only one question. 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 join the queue. The first question comes from the line of Steve Malcolm with Redburn Atlantic. Your line is now open.

Steve Malcolm (Partner)

Yeah. Good afternoon, guys. Thanks for letting me ask the question. It's hard to just ask one, so it'll probably be one of about 17 parts. Let's have a go to the U.K. Obviously, sort of hinging on the NetCo, ServCo separation is your fiber trajectory. You're up to 4 million homes in the U.K. Can you just sort of give us a sense of what the mix of that between nexfibre and the business-as-usual footprint is? And looking forward, just help us understand the moving parts of your CapEx guidance. Looks a little higher than I'd thought this year, $2.2 billion for 2024. You talked about it falling off in future years. How do we think about the fiber upgrade, the 5G investment?

And also maybe just touch on cost of capture because it looks like you'll have sort of got to the GBP 700 million by the end of this year, whether that disappears from 2025. So a few sort of questions wrapped into U.K. CapEx and cost of capture there in fiber. Hopefully, you can help us out. Thanks.

Mike Fries (Chairman and CEO)

Yeah. I think it's pretty straightforward, but I don't know whether we've disclosed this much detail. But I'll go ahead and do it. I mean, if you look at the 4 million homes, our Fibre Up or our upgrade program represents about 1.5 million of those at this point. Nexfibre, about 800,000. And the balance are homes that we built through our Lightning program, a slightly different technology, fiber technology, but nonetheless, fiber, about 1.9 million. And of course, that program going into 2024, the Lightning program, ceases. So there will be no more upgrades via Lightning as such. But the nexfibre plan, which has I think been publicized, should build a million-plus. And Fibre Up itself, which probably hasn't publicized, will build more than it built last year. So 4 million will go to, who knows, 6 million-6.5 million.

The breakdown is, as I just described it, hopefully that helps, the vast majority of that is in nexfibre, which, of course, is off footprint. The CapEx that you referenced includes only the CapEx to upgrade out of roughly GBP 100 a home, the homes that we would be continuing to upgrade on the 16 million home footprint. Is that clear?

Steve Malcolm (Partner)

Can you tell me what run rate are you at on Project Mustang, though, Mike? I mean, are you in terms of 100,000 premises per quarter, and you know?

Mike Fries (Chairman and CEO)

Yeah. Well, I think we did roughly 8— Yeah. We did 800,000 or 900,000, I believe, in 2023. We should do more than that in 2024.

Steve Malcolm (Partner)

Okay. Thanks. Just on the sort of overall CapEx picture in the U.K., you've got lots of things going on. Help us understand how we think about 2024, 2025, and 2026, 5G, fiber, [crosstalk]

Mike Fries (Chairman and CEO)

Yeah. Lutz is on, so I'll let him dive into it. But I think 2024 includes, obviously, what I just described, as well as a fair amount of mobile CapEx to advance our 5G plans. And our sense is well, I'll let Lutz handle it in terms of where we are on peak CapEx intensity. Lutz, are you on?

Lutz Schüler (CEO)

Yeah. I'm on. Hi, Mike. Hi, Steve. Can you hear me?

Charlie Bracken (EVP & CFO)

Yeah. We hear you fine. [crosstalk] question?

Lutz Schüler (CEO)

[crosstalk] Sorry. Sorry. I've got the question. Okay. Sorry for that. So I mean, obviously, we don't give guidance on CapEx longer than the year 2024. But Steve, broadly, you don't see any material difference in the upcoming year, right? So we are ramping Fibre Up, as Mike said. I think we have done close to 1 million in 2023, and we will do a bit more this year. And I think the number is about GBP 100 per home. And then we keep investing into 5G. But this is getting cheaper because we have the shared rural networks with Vodafone and Three. So don't expect a massive peak in the CapEx going forward. Hope that helps.

Steve Malcolm (Partner)

Okay. Thanks.

Mike Fries (Chairman and CEO)

Thanks, Steve.

Operator (participant)

Thank you. The next question comes from the line of Maurice Patrick with Barclays. Your line is now open.

Maurice Patrick (Managing Director)

Yeah. Thanks for taking the question and the presentation earlier. Just one question, really, on the U.K. NetCo side. I mean, in the slides, you talk about the U.K. NetCo being a vehicle for M&A, I think, of altnets. In the past, Mike, you've talked, I think, about the acquisition of altnets being more outside the current footprint rather than inside the legacy footprint. So just curious your thoughts in terms of, is it NetCo buying altnets? Is it nexfibre doing it? And is nexfibre actually overtly overbuilding altnets at the moment? Thank you.

Mike Fries (Chairman and CEO)

Yeah. So nexfibre has its own program and is building on a priority basis where it sees the best opportunities off the Virgin footprint. So that program will continue as is. It won't be impacted at all by the creation of this U.K. NetCo. And nexfibre itself might look at altnet acquisitions as it did recently in 2023, as would the U.K. NetCo. And so I think you're correct to say that on footprint, altnets have less value to us, but they don't have zero value. And we're not clear on where exactly the altnet market will go. Nobody is. But it's nice to have two vehicles for potential consolidation, a very sizable and substantial one that has a significant amount of EBITDA day one in terms of having customers from VMO2 on the U.K. NetCo day one and has financing capability day one.

That's a nice thing to have, as well as the nexfibre, fully financed nexfibre JV. So now we think we're just increasing our opportunities to be a consolidator if and when appropriate versus confusing or reducing those opportunities. We're actually getting better. I hope that's clear.

Maurice Patrick (Managing Director)

Great. And the extent to which nexfibre is actually overtly overbuilding altnets currently?

Mike Fries (Chairman and CEO)

I don't know that we've been public. Andrea, I may have a view here as the nexfibre board of where exactly we're building. But I think you should assume, since there's quite a bit of altnet activity, that in some instances, we are, in fact, overbuilding altnets if they're in the path that we've chosen. But I don't know that we're giving anybody an exact number on that.

Maurice Patrick (Managing Director)

Okay. Thank you.

Lutz Schüler (CEO)

I mean, I can help. It's very, very minor. Yeah. I mean, we are doing the rollout for nexfibre. And obviously, the plan is to overbuild as less as possible. And so far, we have very, very little overbuilt. I don't want to tell the number, but it's really more immaterial.

Maurice Patrick (Managing Director)

Okay. Great. Thank you.

Mike Fries (Chairman and CEO)

You got it.

Operator (participant)

Thank you. The next question comes from the line of Robert Grindle with Deutsche Bank. Your line is now open.

Robert Grindle (Managing Director and Head of European TMT Reseach)

Yep. Thank you. Congratulations on all the initiatives. My question would be around the Benelux holdco that you left a lot of cash in Telenet, the best part of $1 billion, and raised new finance to repay the holdco debt for the minorities rather than dividend up the money. Is the cash left in there to buy the bit of VodZiggo you don't own or even the bit you do own from the parent company? And related to that is, in a nutshell, within what you've announced today, what's easier because you're now in Bermuda? Is it more on the approval side of things or something else? Thanks.

Mike Fries (Chairman and CEO)

Yeah. Thanks. Charlie can chime in here. But the cash that was residing in Telenet has been upstreamed for all intents and purposes. So it can easily be downstreamed again. It's a 100% entity. But today, that cash is upstream. So the cash and I think we've been clear about the current leverage and net debt position of Telenet. So of course, we can do what we want with that over time. [crosstalk]

Charlie Bracken (EVP & CFO)

Yeah. Just to clarify that, sorry, Mike, as Mike's quite right, it's now part of the corporate cash. But there is still some cash in Belgium for the time being, just waiting on a tax ruling. But Mike is absolutely right that it's essentially corporate cash, but it may be located in a Belgian bank account and therefore contributes to the net debt position of Telenet. Sorry, Mike. I didn't mean to interrupt.

No. It's fine. No. That's good clarification. And then, what was the second question, Robert?

Robert Grindle (Managing Director and Head of European TMT Reseach)

Bermuda. A lot of these things you've announced today might be you could have done anyway. But I'm just wondering if Bermuda really helps with this and other things you might be considering?

Mike Fries (Chairman and CEO)

Sure. The implementation of the Sunrise spinoff will require a shareholder vote. As such, the shareholder vote will be conducted consistent with Bermuda governance, not U.K. governance. We think that makes it a simpler, more appropriately run process. So there's one big example. I think that's probably the biggest example. And so without getting into detail because we've gone through the exhaustive benefits, that's just one example of where we think we can achieve an important and strategic transaction for shareholders in a straightforward and predictable way.

Robert Grindle (Managing Director and Head of European TMT Reseach)

Got it. Thank you.

Operator (participant)

Thank you. The next question comes from the line of David Wright with Bank of America Merrill Lynch. Your line is now open.

David Wright (Managing Director and Head of Telecoms Equity Research)

Thank you very much. Hi, guys. Yeah. A lot to digest here. My question, if I'm allowed, just one, is on, again, the Benelux holdco. There could potentially be synergies. I think when we've discussed in the past this potential option, there was always a fiscal synergy potential with the quite significant cash tax now paid at Telenet, maybe some opportunity to migrate knowledge against that. I guess my question is, if there is fiscal synergy, how does that feed up to Vodafone as the joint venture or the half? How would they benefit from that fiscal synergy that could potentially be given from a sort of VodafoneZiggo to a Telenet? Or maybe I've misunderstood that. That would be great. Thank you so much.

Mike Fries (Chairman and CEO)

Yeah. I'll let Charlie speak to the synergies more specifically. But I'll say, from the Vodafone perspective, you could argue this is a non-event, meaning we're entitled to move our 50% interest into any 100% owned company we choose. And rather than own our stake directly in VodafoneZiggo, we will own it through this holding company, Liberty Global Benelux. In fact, we can even raise capital in this company to a limited degree without their authority or approval, to a limited degree. And what happens upstairs, if you will, in this holding company is a non-event for them. It's irrelevant. If we discover synergies between the entities, it would have to be synergies that are realized without a consolidation of the two entities, but rather just one that we're generating through our single focus on management or some other financial benefits we can derive.

I think you could argue that from Vodafone's perspective, this is a non-event. They are aware of it. They certainly are looking at what it might mean to them strategically or inorganically. But at this point, it's really what we're doing with our interests and the opportunities we think it creates for us to do the things I described from the point of view of either synergies or financings or capital raising or other things. Charlie, you want to talk about synergies?

Charlie Bracken (EVP & CFO)

Yeah. Sure. And I think there were just two broad points. One is clearly, for the Telenet JV financing synergy, it's clear that the Telenet group would now benefit from the equity value that is now being contributed from that 50% stake. I think the other issue is that it does give you an opportunity to do additional tax optimization, which would allow us to increase basis, as they call it. But it's probably something which we can go into offline on the more specifics, which is too there are opportunities for incremental tax funding.

David Wright (Managing Director and Head of Telecoms Equity Research)

Can I just ask, have you discussed with Vodafone whether they would consider sort of blending their stake into a merged entity? Or is that even something that we could think about if those synergies start to really accrue?

Mike Fries (Chairman and CEO)

Well, I'm not going to comment on what we have or haven't discussed with them, but it's certainly theoretically possible, right?

David Wright (Managing Director and Head of Telecoms Equity Research)

Yeah. Yeah. Cool. All right. Thanks, guys.

Charlie Bracken (EVP & CFO)

You got it.

Operator (participant)

Thank you. The next question comes from the line of Carl Murdock-Smith with Berenberg. Your line is now open.

Carl Murdock-Smith (Co-Head of Telecoms and Media Equity Research)

Hi, that's great. Thank you. I wanted to ask about price increases in the U.K. On slide seven, you mentioned that price rises are embedded into contracts. One thing you'll have to navigate this year in the U.K. is Ofcom's proposed ban on inflation-linked pricing. I wanted to ask how you're thinking about that. Obviously, BT has signaled its planned approach. Are you likely to follow suit with a contractualized absolute price increase? Or would you consider reverting to your old approach of ad hoc price increases? And how do the customer service issues you've been facing in the U.K. play into your thoughts on pricing going forwards? Thank you.

Mike Fries (Chairman and CEO)

Yeah. Good question. I'll let Lutz handle both of them. But I'll simply say that on the price increases, we can and expect to take price increases in a manner similar to 2023 given the timing of when our price increases are expected to occur. So we don't believe the Ofcom issue impacts 2024 price increases as it currently stands. But Lutz, you want to talk any further about that? And I'll let you deal into customer service.

Lutz Schüler (CEO)

Yeah. Good afternoon, Carl. So first of all, Ofcom, right, is currently reviewing the price increase process. And they have shared their idea. And this idea will only be applied for new customers, not for existing customers, right? So I think that is also important to understand. And it might come into effect in whatever form in summer, Carl. So therefore, as you know, we just went ahead with our price increase. And this is in contract price increases. And to what opinion Ofcom finally gets, we don't know yet. And yes, we have also noted BT's thoughts, how to deal with it in the future. And we will take everything into account and make up our mind what we will be doing going forward. But nothing to get revealed yet. Customer service, I mean, definitely an area where we have to get better. No doubt about that.

Customer is not interested that we have integrated a lot of our systems and stuff. But we have improved significantly. We will be improving our customer service. So it's top of our agenda. Actually, we are investing a lot of money into systems and into also care resources in 2024, which is part of our OpEx increase. So therefore, we are not considering the impact of customer service in our pricing strategy going forward, Carl. Hope that helped.

Carl Murdock-Smith (Co-Head of Telecoms and Media Equity Research)

That's great. Thanks very much.

Mike Fries (Chairman and CEO)

I think it's also worth pointing out that the complaint numbers to Ofcom are important to us. We take it seriously, but quite small. I mean, the broadband complaints, for example, represent 0.03% of our customers. 0.03% of our customers have filed a complaint with Ofcom. That information doesn't generally find it into the press releases or the news stories. That doesn't mean we don't take it seriously. We do. Lutz is correct. He's all over it. It's a relatively small number.

Carl Murdock-Smith (Co-Head of Telecoms and Media Equity Research)

That's great. Thank you.

Operator (participant)

Thank you. Our next question comes from the line of Ulrich Rathe with Société Générale. Your line is now open.

Ulrich Rathe (Director)

Hello, yeah. Thank you very much. So on the five initiatives that you highlighted for sort of crystallizing value, obviously, the All3Media, the divestment, and the Sunrise spin are the most tangible ones. And they make perfect sense, if I may say so. But the U.K. NetCo and the Benelux holdco creation, they're just internal rejigging, right? So any tangible value creation would come from the optionalities that arise from these moves. So what I'm wondering about is what do you have in mind there? Is this now a stream of corporate action that's unfolding? Or is there going to be a bit of a pause into next year or even the year after before we see more moves? I'd just like to sort of see what your views are. And if I may just sneak in one, please, if it's too cheeky, refer it to IR.

But in the 10-K, there is a statement that says the P&E additions in 2024 would be broadly stable. That seems a bit difficult to construct with the divisional guidance, especially because Telenet CapEx is due to step up quite a bit. What goes down when Telenet goes up and the group P&E consolidated would remain stable? Thank you.

Mike Fries (Chairman and CEO)

Yeah. I'll let Charlie or Rick and Michael work on the second question. On the first question, listen, it's the beginning. It's certainly going to take time for all of these things to be implemented. Don't confuse that. I mean, Sunrise is clear. We are moving this direction. It is happening. We will advance the transaction as rapidly as we can within reason. And shareholders will have two shares of stock before the year's out. That's for sure. And that we think will be a big moment for our stock, given where we think the value of that dividend will end up and given the fact that we're investing into Sunrise to de-lever in advance of that. So that's a big moment along with the buyback. So to me, those things are tangible. You can bank on them.

And they should have real value to shareholders, of course, with all three. The U.K., in my opinion, opens up a lot of optionality, not just in terms of consolidation, in terms of financing. But I think it sends a message and a signal to the market that we are serious, that this is going to be a big strategic reorientation of our investment focus in the marketplace. And I think you'll see things happen throughout the year based on that announcement. And it will take time to implement. It doesn't happen overnight. It'll take time to implement. But I think that's the direction we're going. And I see lots of positive things following from that even before we actually go through a functional separation of the businesses. So I think watch that space. And Benelux, we'll see. I mean, I think this is step one. Just occurred.

I think people, certain investors, might see it as an interesting platform to be part of. I think we'll make some announcements around management structure during the year. Who knows? Maybe we'll have things to discuss with Vodafone. So I do think each of these announcements. We're only in February here. Each of these announcements will be things we talk about through the course of this year. And so I would be prepared.

Charlie Bracken (EVP & CFO)

I think just on the CapEx side, sorry. I'm just going to jump in here.

Yeah. Go ahead, Charlie. Sorry.

[crosstalk] Sorry, I was just going to say, look, I think it's something we've just taken offline. But I don't think we're giving formal guidance for 2025 and 2026 on CapEx. Clearly, things change and move along. But I think the point was is that we believe we are at a reasonably elevated point in the CapEx cycle based on what we know today. And we are heavily investing. I might make this point in 5G and in fiber, particularly actually in the U.K., but also across our footprint. So I think that was the point of the disclosure.

Ulrich Rathe (Director)

Thank you very much.

Operator (participant)

Thank you. The next question comes from the line of Georgios Ierodiaconou with Citigroup. Your line is now open.

Georgios Ierodiaconou (Director)

Yes. Good afternoon. And thanks for taking my question. Maybe in two parts, please, around the U.K. NetCo separation. Firstly, I'm curious as to why the U.K. and not Belgium, given that there's a much higher penetration, already a wholesale business, much more expensive rollout that requires more funding that you consolidate. Curious why not that for the time being and just the U.K.? And just to understand the rationale around the financing options in the U.K., is it fair to assume higher leverage at NetCo where the proceeds of that can be used to strengthen the ServCo balance sheet or whether it's just a vehicle mostly for acquisitions and investment and therefore dramatic difference in terms of the leverage ratios of what's left of agreement? Thank you.

Mike Fries (Chairman and CEO)

Yeah. On the first question, we have created a NetCo in Belgium. Perhaps you meant the Netherlands. In Belgium, we have a NetCo. It's called Wyre. It's already working on building out 80% of the country. It has 60% utilization and significant EBITDA. So we are well underway, even farther along, fully and functionally and legally separated out in the Belgian market. So there, we are well underway. And that's sort of the model to some extent, a similar model that we're trying to pursue in the U.K. I mean, did you mean Belgium or did you mean Holland?

Georgios Ierodiaconou (Director)

No. No. I meant Belgium. But I meant more the next step of monetizing and deconsolidating the CapEx that Telenet is incurring to Wyre.

Mike Fries (Chairman and CEO)

Sure. Well, we haven't announced that in either U.K. or Belgium. We may do that in Belgium. It's too soon to know how we'll approach that. What was your second question? Or maybe, Charlie, you caught that.

Charlie Bracken (EVP & CFO)

Yeah. It was financing. Well, first of all, I think we'll be the same structure as we used with Wyre. NetCo is a subsidiary of Virgin Media O2. And I think it's a good news story for the bondholders because to the extent to which additional equity comes into that business, their bond equity, that obviously enhances the value of their debt stack. There are no plans at this stage to refinance the entire Virgin Media debt stack so that we would end up with two separate capital structures. That may come over time. Let's see. But it's certainly not the right time now with the credit markets. We've got some very cheap debt in Virgin. So now is not the time to give that up. But I do think long-term, you're probably right that a ServCo probably has lower leverage than a NetCo.

I think NetCo's predictability, asset backing lends itself to higher leverage. Certainly, as we pursue not just these infrastructure initiatives but other infrastructure initiatives like our data center initiatives, I think you should expect to see us use leverage as we always do to try and optimize returns for shareholders.

Georgios Ierodiaconou (Director)

Yes. Thank you.

Operator (participant)

Thank you. The next question comes from the line of Matthew Harrigan with The Benchmark Company. Your line is now open.

Matthew Harrigan (Equity Research Analyst of Communications Services and Media)

Thank you. Two wonky valuation points, if you would. One thing that's interesting with Switzerland that I know you and Charlie have spoken about, just the general credit and equity market conditions, the government bond rates. You look at the PE, you're in the low 20s versus low teens in the U.K. So you've got a really favorable, just kind of generic valuation, headwind. And if you strip out Switzerland at a decent price, I mean, obviously, the other assets are going to look even more compelling in terms of the underlying multiple. But what sort of benign tailwind do you think just by giving people another Swiss telecom pure play? And then secondly, when you look at your capital structure to your credit, I mean, you've got five-year bond duration. It's three-handle on the fully swap borrowing cost. It's remarkable.

But we just had another hot inflation number a few minutes ago. Is your attitude toward leverage over the next five years really going to change if we're in this persistent, somewhat higher-rate environment? Because surely, if you refinanced everything, you'd be materially higher on your debt costs. Thanks. And congratulations on the transaction.

Mike Fries (Chairman and CEO)

Yeah. Thanks, Matt. Look, Charlie can work up an answer to the capital structure and leverage point. On the valuation, listen, it's our view that this announcement should create a tailwind for sure because this will be a transaction that occurs in 2024 at, we think, a sizable dividend to investors and something that they will that's certainly not valued in our stock today. No question about it. And the tailwind it should create is I think it is the first example of a pivot in our approach to distributing value. And it could be followed up by many similar type structures or transactions. And you have to start somewhere. And I think we're starting in the right place with the right asset at the right time.

I think what's most important for people to understand about these announcements today is what it means about the broader strategic roadmap we're pursuing and how the lens that we're putting on value creation and value distribution going forward is slightly different. We'll keep you posted as things start to develop. But yes, I think that should create a tailwind if people are looking at it correctly. I appreciate that there's some frustration about our guidance in one particular market. We'll address that. It seems to me shortsighted to be focused on that. But nonetheless, we'll address it. I think the bigger message here today is the way we're going to create value for you.

Charlie Bracken (EVP & CFO)

Matt, on the leverage side, we've been around a lot of time together, you and I. But it's 4x-5x leverage through the cycle. It's been pretty successful for us. And rates were a lot higher for much of that period. So I think that we obviously recognize that we've been benefiting in the last five, 10 years from some very low rates. But I do also think that these businesses have proven to be able to drive an optimal cost of capital even with higher interest rates. And I think the question of whether we'd be at the bottom end or the top end of that range, we'll have to make a decision when we come off these fixed-rate deals.

Just to remind you, I mean, that is a decision that's coming up the back end of the decade because most of our average life of debt, as you rightly point out, is going to come off fixed rates 2027, 2028, 2029, 2030, 2031. And what's the good view? I think we'll see at that point whether we think it's more prudent to be at the lower end of the range, higher end of the range. It'll depend on the underlying growth of the assets. I mean, by then, we'll be through the investment cycle, particularly on 5G and most of the fiber builds. We'll be in a position where we will hopefully have much more rational markets. I just think that it's too early to call it out. But you're 100% right.

If we had to refinance our capital structure today, the underlying base rates we have locked in are significantly lower than the market rates. But let's see where rates are back end of the decade. We can make some judgments on where we would be in that 4-5 range.

Matthew Harrigan (Equity Research Analyst of Communications Services and Media)

You would probably [crosstalk] valuation halo on a Swiss asset.

Charlie Bracken (EVP & CFO)

Sorry. I didn't hear that.

Matthew Harrigan (Equity Research Analyst of Communications Services and Media)

No. I'm sorry. You would probably agree that there's a material valuation halo multiple-wise on a Swiss asset?

Charlie Bracken (EVP & CFO)

Yeah. I agree with that. Well, the free cash flow listen, I mean, clearly, the free cash flow yields in Switzerland for distributed listed stocks, all things being equal, are lower than for euro or pound stocks. And the reason is, of course, with the low cost of debt, low cost of capital, if you like, in Switzerland. Swiss government bonds are among the cheapest in Europe. So clearly, this spin is going to unlock that part of the conglomerate discount. And I think that it's obviously a very attractive market for other reasons. So I think I'm personally going to hold all my shares. So I'm very excited about seeing how André and team progress over the next few years.

Matthew Harrigan (Equity Research Analyst of Communications Services and Media)

Beautiful. Thanks, Charlie.

Operator (participant)

Thank you. The next question comes from the line of Polo Tang with UBS. Your line is now open.

Polo Tang (Managing Director and Head of European Telecoms Research)

Hi. Thanks very much for the presentation. Just two very quick questions. The first one is on U.K. cable ARPU. It was near stable in Q4. But how should we think about the trajectory of U.K. cable ARPU going forward? So are there still legacy voice and video declines as well as maybe backbook repricing in the U.K.? Or are you through a lot of these headwinds? And the second question is just on Switzerland. Can you comment in terms of what you're seeing on competitive dynamics? And specifically, what are you seeing in terms of promotional activity in Switzerland? Thanks.

Mike Fries (Chairman and CEO)

Sure. Lutz, we'll get you involved. You want to address the cable ARPU point?

Lutz Schüler (CEO)

Yeah. Sure. [crosstalk] So yes. So I think, as you might have seen it, the good news is that we have managed to stabilize the cable fixed ARPU in the U.K. year-over-year when you compare the number with Q4 2022. And going forward, unfortunately, right, there's still the cost of living crisis in U.K. There are still customers calling in for saving cost, which leads to eliminating the landline or mid-tier Pay-TV products. On the other hand side, we are able to monetize speed and sell customers more. So I mean, we are not giving an ARPU guidance for 2024, as you know. But I would say the macro hasn't changed. But we take some positivity out of the stabilization of the fixed ARPU out of last quarter compared to a year ago. Hope that helps.

Mike Fries (Chairman and CEO)

Yeah. Thanks. André, you want to address the Swiss question?

André Krause (CEO)

Yeah. Sure. So I would say it's pretty stable. So no real acceleration or growth of promotions, I would say. We have seen, of course, lots of liquidity in Q4, which was driven by Black Friday driving a lot of consumers onto the market again. We have been more active than in previous quarters just because we had the price rise behind us. And that actually paid off in the numbers that you saw in terms of net adds in the quarter. And still, we have some delayed activations only coming through in Q1. So we're quite happy with our return to the market, if you want, in particular on the main brand. We have seen Swisscom not being aggressive, really, with their main brand in the Black Friday period. Essentially, they have not taken any promotions in that period of time.

So we think that the market is actually trading quite constant compared to what we have seen previously. We also don't see a lot of more aggressive price points coming in. So it feels like that the main brand, flanker brand setup, and the promotional games in those two segments is pretty stable at this moment in time. And after the price rise, we have come back being more active and taking our share in the market. And I think that's a pretty good outcome for Q4. And Q1 is starting in the same way.

Polo Tang (Managing Director and Head of European Telecoms Research)

Thanks.

Operator (participant)

Thank you. The next question comes from the line of James Ratzer with New Street Research. Your line is now open.

James Ratzer (Partner)

Yes. Hello. Thank you very much, indeed. So I have some questions on the Sunrise part of the announcement today, specifically. So Mike, you were saying at the beginning you'd kind of never seen as wide a discount between your asset values and the share price. So with that in mind, I was wondering why you'd decided, therefore, to push cash from the TopCo down into Sunrise and spin it out to shareholders rather than actually use it for share buybacks, which presumably would actually create more value. And then on the Sunrise transaction itself, just from what's going to be left with Liberty Global, can you just run through what it's going to mean for your central costs? I think those have been $200 million-$250 million dollar outflow a year. What does that now come down to? And also your shareholder oh, sorry, your share compensation costs.

Those that were running at about $230 million last year, I think, in the 10-K. As you become a smaller company with the spin-off of Sunrise, what happens to your share-based compensation payments for the group? Thank you.

Mike Fries (Chairman and CEO)

Yeah. All good questions. I'll let Charlie work up an answer to the central cost point. Listen, on your first question, why would we invest the capital into Sunrise pre-spin versus increasing the buyback? Look it, I'm really proud of what we've done in terms of buybacks. Owning 60% of this business has been the right move, especially given where we're going. And we continue to see buybacks as an important part of the strategy. But they're not mutually exclusive. It's not one or the other. And what buybacks do is, obviously, they shrink the equity. They demonstrate our commitment to the business.

Over time, they reduce the denominator to the point where when these things occur, they occur at a greater multiple, a greater valuation. That's all well and good. But we also know that something like this, a spin-off of Sunrise with an injection of cash, which we are doing principally to maximize the fully distributed value of Sunrise, knowing that listing it is going to be difficult at its current leverage. So we would reduce leverage. In essence, what we're doing is giving that money to investors and saying, "Whatever you think Sunrise has worked for share in our stock today, pick a number.

You're going to have to increase that by $5 or whatever the number is because we're essentially increasing the equity value of the business with this cash injection, $4.50 a share." And so at a minimum, there's a $4.50 share dividend tax-efficient distribution happening, which I think many investors, maybe most investors, perhaps not analysts, but most investors will see as extremely positive because buybacks take time to impact. They have to be followed up by events or moments where that denominator matters. So that's the answer to that question. On the share compensation, we'll see how it unfolds. I mean, this transaction will happen second half of the year. We hope it does. There will be most of the current employees who have shares in Liberty Global will end up with shares in Sunrise.

The comp committee will determine how best to manage that, probably in 2025 and beyond. 2024, I don't know that it's going to change anything because this transaction's second half of the year. It's hard to know what impact it will have. 2025 and beyond, we'll let the comp committee figure that out. Charlie, you want to talk about central costs?

Charlie Bracken (EVP & CFO)

Yeah. Sure. And as you've already pointed out, yeah, we've been running at about $200 million-$250 million, much lower this time around. And we'll see how the years go on. That's a pretty established number. Just to remind you, there are two additional central costs, which are, I believe, assets. One is our Liberty Tech, which Enrique has done an amazing job of creating market-leading connectivity and entertainment platforms that are very attractive. And you all heard about that Infosys transaction. I'd point out that it has a massive order book and is already, through Infosys, exploring third-party opportunities. So one could argue that that is a potential unicorn. And we've also aggregated all our back-office services. And we've created a company which itself is also profitable, very attractive. We've actually had reverse inquiry about buying it. But essentially, the same principle. We have scale. We have best practice.

We can invest, front-load the investment in technology. We think we provide a very, very competitive product to our FMCs. That's underpinned by some pretty long-term contracts. What you're really talking about is a central cost, which it broadly breaks down into three buckets. One is the cost of maintaining the current listing. Secondly, the cost of developing the next wave of growth, investing in things like AtlasEdge and what we hope to be very successful unicorns and potential trackers over time. Then thirdly, a series of real shared service, high expertise activities. Treasury would be a good example. Tax would be a good example. I think one of the lessons that we learned from the LiLAC spin was that we actually lost economies of scale. We lost expertise. We should have preserved it.

So we would be proposing to continue to provide many of these specialist services on arms-length agreements. But there'll be multi-year agreements, probably broadly in line with what we use for internal transfer pricing purposes, I think, called GSA, which is often embedded deep in these indentures. So you should assume that with Sunrise, there will be some long-term contract for them to provide what we hope will be real value-added expertise. And I really do think it's value-added. And I think what [Nim Marchand] does as a treasurer will be very hard to recreate on each of these OpCos. And they're very happy to take those services. So I would say the $200 million will come down over time on a net basis. And hopefully, we're going to create the next wave of multi-billion-dollar companies from this ventures portfolio.

James Ratzer (Partner)

So Charlie, does that mean given the size of Sunrise, of your consolidated operations there, I mean, can that $200 million-$250 million, does that halve because of the GSA revenues you'll get from Sunrise?

Charlie Bracken (EVP & CFO)

No. No. No. No. It doesn't mean that. Remember, that $200 million, $250 million, about I mean, I don't want to give precise numbers. But as I said, there are three buckets. Our public listing, the costs of developing these new ventures. But the proportion that is allocated to that, we will allocate, as we see fit, over time to these four big companies. Remember, we'll still continue to and Ireland, of course. We still continue to provide significant services to companies like VMO2 and the Benelux, way beyond the spin of Switzerland. But there'll be some net income. And we'll disclose that at the right time as the spin documents unfold.

James Ratzer (Partner)

Great. Thank you.

Operator (participant)

Thank you. The next question comes from the line of Joshua Mills with BNP Paribas. Your line is now open.

Joshua Mills (Executive Director and Sector Head of Telecoms Research)

Hi there. Thanks for taking the question. Mine was on the Virgin Media O2 guidance on slide 12. In the press release, you did comment that there was some anticipation of B2B revenue weakness in 2024, which underpins the guidance for stable, declining revenue. It'd be great if you could just give a bit more color on that given that you remain positive on this basis in 2023. Is it contract losses? Is it something you're seeing on that side? Or is it just a reflection of the macro situation?

Then secondly, on the EBITDA guides for low- to mid-single-digit declines, if I were to estimate that was around, say, $200 million of EBITDA, can you give us a bit of a breakdown, perhaps, on how much is being spent on IT efficiencies versus marketing expenses just so we can build a picture for all of your one-off investments, which may be reversed in 2025 and beyond, and which of these higher investment levels are more structural? Thanks very much.

Mike Fries (Chairman and CEO)

Yeah. Lutz, why don't you handle the B2B point straightaway?

Lutz Schüler (CEO)

Yeah. Sure. So we have done a lot of sales-type lease deals, so meaning we are selling dark fiber or Ethernet, a lot of mobile backhauls, so to link base stations to other mobile network operators. And the nature of these deals are that you can identify the revenue and the EBITDA right away at the beginning. Now, we see at the moment less of these types of deals happening in 2024, which is a bigger driver for less revenue on the B2B side. The other factor we take into account in our revenue guidance is still on the consumer side, the cost of living crisis. And the mobile handset market is materially down. I think you've seen it also from competitors, so something in the region of 20% or more year-on-year. So therefore, we are simply cautious on that one.

Do you want to answer the EBITDA question, Mike? Or should I do that?

Mike Fries (Chairman and CEO)

Well, I mean, you can address that. I mean, we're not providing where in that range we'll be, whether it's low or mid.

Lutz Schüler (CEO)

No. No. No. No.

Mike Fries (Chairman and CEO)

But looking at the budget, I know where it's going to be. I'm not sure how much detail we can provide. But the other point to make on the growth rate is quite a few one-offs in 2023. Those are also impacting the ability to generate a higher result on a percentage basis because of the pretty big one-offs in the fourth quarter that are not a great comparable. So I don't know how much detail you want to provide, Lutz. But I think the question was, when you look at IT, do you look at marketing? You look at things that we're doing in the year to drive growth. So maybe provide a little color on that.

Lutz Schüler (CEO)

I think for what I would provide without giving a number is, I mean, if you add right, also, nexfibre has announced a number today what they are going to spend on network rollout. So that means, right, nexfibre has 800,000 homes. Right? It's easy to understand that the additional fiber homes will be more than a million. So if you think about what typical penetrations are from Virgin Media in these new fiber homes, right, it's easy to understand that this already leads to material cost, yeah, in EBITDA. Yeah? And for that, you also need marketing and stuff. So I don't give numbers. We don't give numbers. But I think this is a big driver. And it's therefore also easy to understand that when we have these customers, they will help us then with additional growth in 2025. Yeah?

Our IT costs, and they're not immaterial. But I think the biggest part to mention is the customer growth.

Joshua Mills (Executive Director and Sector Head of Telecoms Research)

Great. Thank you.

Operator (participant)

Thank you.

Charlie Bracken (EVP & CFO)

I think we're at the bottom of the hour here. Yeah.

Operator (participant)

Yes. This will conclude our QA session. So I will hand the call back to Mr. Mike Fries for closing remarks.

Mike Fries (Chairman and CEO)

Great. Yeah. Thanks, everybody. Appreciate you staying on so long. I know it's been a busy morning. 90 minutes is a big ask. So thank you for that. Slightly tough day to announce these results with market conditions. But clearly, there's a lot of anticipation for what we had to say. And maybe that's been part of the buildup. Obviously, I sense, and we all sense, the disappointment in the VMO2 guidance. I will simply say, whether it's investment or one-offs, this business will return to growth. And in our view, it's a blip, not a major issue whatsoever. And we're excited about Lutz and what he and the team are doing for sure. Our excitement hasn't changed one bit. And I also think the announcements we made today are substantial. The gap in our stock is real.

Whether you think the FMCs are valued at $2, $5, or $6, they're not valued at 30. We will show you with the spin-off of Switzerland what that business will be worth. That'll be a big moment. And I'm confident that that will be a positive event for investors. And I think we have a pipeline of opportunities very, very similar to that. So shareholder remuneration is multi-pronged going forward. It's not simply buybacks. It's finding ways to put value in the hands of shareholders. And that will be how we approach things going forward. Thank you for your continued support and patience. And as always, you know where to find us if you have follow-up questions. Thanks, everybody.

Operator (participant)

Ladies and gentlemen, this concludes Liberty Global's full year 2023 results and strategic update 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. You may now disconnect your lines.