First Read: Liberty Global plc "Q2 - VMO2: weak trends" (Neutral) Tang

Research evidence excerpt

First Read: Liberty Global plc "Q2 - VMO2: weak trends" (Neutral) Tang

dds (ex wholesale) were -63k 12/26E

(cons -28k after -165k/-62k in Q3/Q4) with post-paid ARPU +0.2% (after -0.2% in Q1) – UBS Cons.

improvement in post-paid losses is encouraging after increased churn in recent quarters. Q1E 1.01 -

The UK market remains highly competitive. While broadband pricing has seen some Q2E (0.86) -

improvement in July, we are wary that lower wholesale pricing from new proposed Q3E (0.16) -

discounts at Openreach will ultimately put pressure on retail pricing. Separately, there is Q4E (0.50) -

rising fintech MVNO competition but there may be some offset given Monzo is utilising 12/26E (0.50) -

the VMO2 network – see our latest UK pricing note for a discussion on competitive 12/27E (0.96) -

dynamics (link). We see the UK market as one of the most susceptible to satellite 12/28E (0.86) -

competition in mobile given regulated mobile wholesale access – see our deep-dive on Polo Tang

satellite impact across the sector for more details (link). For VMO2 data points and a Analyst

detailed discussion of the key issues in the UK market, see our deep dive (link). polo.tang@ubs.com

+44-20-7568 1286

Guidance reiterated Dhruva Kusa Shah

Guidance for -3-5% decline in service revenue (cons -2.7%) and -3-5% decline in adj Analyst

EBITDA (cons -3.9%) were reiterated. Roughly one third of the decline is driven by B2B dhruva-kusa.shah@ubs.com

rationalisation with the remainder reflecting subscriber losses in both broadband and +44-20-7568 3395

mobile from last year and competition in the mobile market. Guidance does not include Christina Michael

the impact of the nexfibre/Netomnia deal. Associate Analyst

christina.michael@ubs.com

Valuation: PT based on SOTP +44-20-7567 2376