Liberty Global plc
Q2 2021 Earnings Call Transcript

Published: 30 Jul 2021

[Operator:]

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global's Second Quarter 2021 Investor Call. This call and the associated webcast are the property of Liberty Global and any redistribution, retransmission or rebroadcast of this call or webcast in any form without the expressed written consent of Liberty Global is strictly prohibited. .

[Michael Fries:]

Thanks, operator, and hello, everyone. As always, we appreciate you joining us today for the Q2 results call. Now we've got a lot of ground to cover, so I'll begin with some operating results and a deep dive into a couple of topics that I'm sure will be of interest to you all. And after Charlie covers the financials, we'll get right to your questions. I'll kick it off on Slide 4 with 5 key headlines that should capture the broader narrative of the quarter and our value creation opportunity. First of all, our goal of creating FMC champions in our core markets is working. We made a very conscious and deliberate shift in our strategy 4 to 5 years ago, which saw us exit subscale markets at premium multiples and concentrate our resources into really 4 key countries where we've become fixed-mobile champions. I'm going to illustrate this more fully on the next slide. But despite reducing our geographic reach by 40%, we increased aggregate revenue by 40% and now serve a larger base of 85 million fixed and mobile subs. And those FMC champions are driving scale and growth, supported by unrealized synergies of $12.6 billion from our last 2 deals in the U.K. and Switzerland, that's on an NPV basis. And by the way, given our ownership, over $8 billion of that will accrue to our shareholders.

[Charles Bracken:]

Thanks, Mike. I'm starting by highlighting our strong performance in Q2, where we achieved revenue growth across all markets and consolidated revenue growth of 3.4%. Now whilst there's an element of COVID recovery in areas like sports and broadcasting, there has been very limited recovery in areas like roaming, and we're seeing positive underlying growth across all our businesses. The U.K. grew 4.4%, which includes a roughly 2% benefit from premium sports with continued strong convergence volumes and B2B performance driving growth. Telenet also realized strong underlying growth in Q2, but only a 4% growth rate does benefit from a EUR 30 million year-over-year improvement in broadcast revenues. And as we guided earlier, Switzerland has returned to revenue growth, fueled by continued strong mobile volumes, B2B performance and a consumer business that continues to stabilize through positive broadband sub momentum. Whilst VodafoneZiggo continues on the trend of strong financial growth, posting a 3% year-on-year increase versus the prior year, which marks a milestone of 9 consecutive quarters of positive growth. Q2 saw growth across all segments, including mobile on both the consumer and B2B sides of the business as COVID drags abated. On the next slide, we provide details of our adjusted EBITDA, where costs to capture synergies continued to weigh on results in the U.K. and Switzerland. Relatively, they performed in line with the prior year despite $8 million of premerger cost to capture. And it's worth noting that the recovery in premium sports revenues is offset by increased programming spend year-on-year given the credits that we received in Q2 of 2020. The Swiss performance continues to improve and a 3.1% decline is explained by $9 million of cost to capture and high growth in related investments in marketing and B2B. Synergy benefits are limited in the quarter despite the recent MVNO migration back to our own network as those savings will become apparent in half 2. Telenet's growth rate was suppressed due to the acceleration of programming rights in the prior year period as live sporting events were paused in the second quarter of 2020, the benefit of which was seen in the Q1 results. But taken together, Telenet achieved nearly 2% first half year EBITDA growth. And in the Netherlands, a 2% EBITDA decline is expected given the estimated EUR 21 million impacts of COVID-related temporary broadcast suspension, a nonrecurring settlement in Q2 of 2020. VodafoneZiggo remains on track for full year guidance. Focusing now on OFCF. We presented a year-to-date view of our performance, illustrating the significant OFCF generation of our core businesses. Despite a headwind of $58 million of cost to capture, the consolidated group delivered 2.1% growth in the first half. U.K. OFCF grew 2.3% in the first 5 months of the year, and we reached a milestone of 2.5 million Lightning homes. We continue to build efficiently and our cost per premise continued to trend lower, delivering a cost per home of GBP 576 in the quarter. The Swiss team remained focused on the integration and incurred significant costs in the first half to achieve longer-term synergy realization. The $41 million of half 1 costs to capture helped lay the groundwork for future network migrations, IT integration and the alignment to the product road maps, including B2B. Although OFCF growth in Switzerland would otherwise have been positive. In Belgium, OFCF declined around 1%, whilst in the Netherlands, OFCF grew 1.6% in the first half as we continue to invest in the network and remain on track to have upgraded 80% of our footprint to 1-gig speed by the end of the year. Focusing on our core Liberty Global performance metric of free cash flow, we delivered $717 million of free cash flow in half 1. Our strong first half performance indicates we are on track for our full year guidance of $1.35 billion, which represents 26% year-on-year growth, with growth accelerating on a per share basis as we continue to aggressively retire our stock. As of July, we retired nearly 80 million shares since the year-end 2019. And the next slide illustrates our year-to-date buyback performance. As you can see, as of July, we repurchased $765 million of Liberty Global stock as we approach our initial $1 billion authorization. As Mike announced, we're committed to repurchasing 10% of our market cap a year over the next 3 years, which serves to increase the 2021 buyback to around $1.4 billion, supported by our significant free cash flow and our corporate liquidity, which includes a cash balance of $4.1 billion as of quarter end. Our ventures portfolio is currently valued at $3 billion, which reflects the full color around one like ITV, which we completed in early Q2, and the continued monetization of our Skillz stake where we've realized over $80 million to date. During the quarter, we also announced the creation of our AtlasEdge joint venture with Digital Colony, utilizing our owned real estates to provide cloud providers, streaming services and enterprises with high-performance edge-of-network facilities, through which they can distribute low-latency applications and services such as 5G, gaming, IoT and edge compute. We expect that transaction to close in Q3 of 2021. To conclude, we are executing our FMC strategy across all markets, with positive revenue growth across our markets, synergies validated in the U.K. and upgraded in Switzerland. In the U.K., we're excited to announce a cost-effective upgrade to full fiber by 2028, and we're increasing our buyback program for 2021, whilst committing to repurchasing 10% of our market cap annually over the next 3 years. Finally, we are converting all guidance targets, noting Virgin Media O2 management were not part of the merger clean team, and as such, are in the process of validating the combined business plan. And with that, operator, we'll take questions.

[Operator:]

. We'll go ahead and take our first question from David Wright with Bank of America.

[David Wright:]

I'm going to begin with something a little bit more curveball, if you don't mind. The equity of your stock has been, I'd say, a disappointment over the last few years. So you guys obviously reflected in some recent buybacks. I know that you and John are very frustrated with the Telenet equity and the valuations given. You've managed to do all these deals recently without equity. And right now, you're having to justify this big CapEx spend in the U.K. to a market that's very focused on short-term cash flows, et cetera, when you are confident in the long-term value creation. And that's exactly the -- I think the frustration that led Iliad's owner, Xavier Niel, this morning to basically say, well, I don't need to deliver those short-term cash flows when I know there is longer value to be created. And he's obviously made the move to buy the stock back in. Do you never find yourself sat around the table, you, Charlie and maybe John saying just, "Why are we bothering with these equity capital markets? Why don't we just buy the lot in. We can lever up and we can invest as we know best to create value." So just turning that out there, Mike. I'd love to know your thoughts.

[Michael Fries:]

Yes. Quite a curveball, but not what we expected to start the conversation with. But thanks, David. I appreciate the question and I understand the question. And surely, every entrepreneur or CEO or Chairman of a company that feels like it's achieving more than the market is recognizing wonders about those sorts of things. Why wouldn't we? On the other hand, I think it's important to point out that we are, in a way, buying out the public, right? When you buy $1.4 billion of stock this year, and you agree to purchase another 10% of the market cap, by the way, not the market cap per share, so if the stock rises, we're still spending whatever it costs to buy 10% of the shares. I saw one analyst say, well, that's only $1.4 billion every year. That assumes the stock doesn't move. It's a number of shares. If stock doubles we're still buying stock, that 10%. So we are, in a sense, doing what you're saying, but perhaps in a more measured way and perhaps in a less expensive way. If you look back, we have repurchased well over half the company at varying prices but generally prices that are less than today's list price. And for those shareholders who believe in what you're doing, it's a way of ensuring that they ride along with you in that slow, go private, if you will. And if there's only one share remaining and when you own it, you've done well. So we are in a sense doing the same thing, which is giving shareholders an opportunity to exit if they're frustrated. And understanding what we do know about our business, we're confident in putting our capital and our free cash flow to work to buy those shares. So -- and that's all I'll say at this point. Are those two businesses, if you look at Altice and if you look at Iliad, they have their own challenges and issues. I don't think our shareholders would be thrilled if we put an offer out at 7x EBITDA, state the company private. I don't think they'd accept it. So those are unique circumstances where perhaps those businesses have their own challenges that warrant those kinds of multiples. I think our business is worth more. I think most shareholders understand that. And those who don't, we're in the market every day buying stock.

[Operator:]

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

[Robert Grindle:]

I was half expecting some guidance around the dividend from Virgin O2 as a clue to where group free cash flow might be going. But you've taken the different approach by committing to your buyback, which you've just been talking about. Can you give us some background for thinking behind this? Is it because you're not sure yet about the funding for fiber? Supercharged Project Lightning? Whether to go alone or with someone else? Or is there some other rationale behind this approach?

[Michael Fries:]

I think it's pretty straightforward, Robert. We have spent quite a bit of time putting together, we believe, a fixed-mobile group -- a group of fixed-mobile businesses that are strong, have great cash flow prospects and great strategic and competitive positions. We also now have a very good handle on what the next 5 to 10 years of network and technology evolution means to those businesses. And we are increasingly confident about the value of those businesses. And so it seems to us a good time to put a stake in the ground and reinforce our commitment to the stock and the business as we know more and have a better understanding of what our future looks like. So I'd say it's not a defensive move, quite the opposite. It's an offensive decision to take advantage of what we believe is an undervalued stock and to do -- and to show that confidence to investors, of course, by committing to a clear buyback strategy as opposed to an annual one where we let you know every 12 months what we might or might not be doing. Secondly, I think it's helpful for investors when we can demonstrate our willingness to not just use free cash flow but also our cash balance. If our stock appreciates, which we fully expect it should, we'll still buy back 10% of the shares and if that requires us to utilize cash as opposed to just free cash flow to do that, then we'll do that. That's also, I think, a great statement of confidence plus takes a bit of an overhang off as it relates to those investors who feel like we should be deploying cash more quickly. So I can't see anything but good news in the statement. It's not defensive. It's hopefully something most investors appreciate.

[Operator:]

Our next question comes from Akhil Dattani with JPMorgan.

[Akhil Dattani:]

Maybe I can focus on the U.K., please. You mentioned, Mike, that at this stage, the Virgin Media management team were not part of the merger process. Obviously, they've not been in a position to update us on their plans. I just wondered if you could comment on when we might expect that. Do we expect that over the next quarter? Is there going to be a stand-alone event where they'll give us an update? So how do we think about that? And I guess more specifically, when we think about the U.K., there's a lot of moving parts, as you outlined in your introduction. What do you think are the biggest decisions and the strategic things that need to be thought through by the management team? And I guess the one that we think about a lot is the wholesale strategy. So maybe you can give us any sort of color on how you think about wholesale for Liberty, that would be -- sorry, Virgin, sorry, that would be really interesting, too.

[Michael Fries:]

Sure. I'll take the first one, and then Lutz is on. I'll ask him to address how the management team is coming together, the progress he's made in the organization and his commitment to the Board of the joint venture as to he'll feel we've got a really good handle on next year and the years that come because lots of good work is happening there. I think the biggest decisions in the U.K. should be pretty self-evident. And I kind of directly or indirectly mentioned some of those. Of course, if we're -- as we commit to invest in fiber in the balance of our footprint that isn't already fiber, we want to be sure we're focused on those things I listed on the right-hand side of the slide, namely

[Lutz Schüler:]

Yes. Sure. So we have 4 priorities in VM O2. One is integrate to both companies. Second is keep and accelerate the business momentum. Third, transform the company into digital. And fourth, find the right path to the fixed network extension. On number one, we had really to jump start. So we have the top 100 of the organization announced in the month. We have been just sharing our plan for this year with our Board yesterday. So obviously, the Board has to decide now. And the minute the Board decides, I think you will get your guidance. But I think what I can say is that this was very much in line with expectation from both shareholders. We are working now on a new 3-year plan until October. And after that, we'll get our Board approval and share the outline with you guys. And also, we have already reconfirmed that the team is able to get to the $540 million run rate synergies. Why can we do this already? Because we've spent quite a lot of time on the premerger activities. So we built on a pretty strong foundation here. Business momentum. I think you've seen our momentum, I mean in Q2 numbers, look at our competitors, look at what we are doing. So we are approaching this integration with strong business momentum, both across mobile and fixed. Digital, I think, is -- we shouldn't touch it now. I'm sure we'll find some time. We will transform our business entirely into digital. And network expansion. I mean, it's, right, mike said it, it's a big step. It's an offensive move. It will let business for us in. And now we talk about finding the right solution for these additional 7 million homes, find the right balance, how to invest our capital into 5G and 4G capacity and find the right partnering model. So a lot to do, good start with momentum. Back to you, Mike.

[Michael Fries:]

Okay. Thanks, Lutz.

[Operator:]

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

[Nick Lyall:]

Could I go back to the wholesale strategy, please, Mike, because I mean, there's risks with this as well. So how are you confident you can protect the high ARPU retail subs if you were to do that? Have you thought through that yet? Obviously, you have, but could you share with us some thoughts from the U.K. business on that? And any conversations at all with Ofcom? And could I just clarify, when you're talking about wholesale, you are including the cable HFC network to wholesale as well or is it just the incremental fiber parts of the network?

[Michael Fries:]

Look, those are really good questions, Nick. And I'd love to walk you through the exhaustive amount of analysis that we've done at both the Liberty and the Virgin Media O2 and Telefónica levels around all of this, but I prefer not to. I think it's safe to say that if we were to enter into any sort of wholesale provider arrangements or consider that as a long-term strategy, then we would have thought through the impact on ARPU, the regulatory impact and the best technology solutions to achieve that. Better to not get into too much detail today. The announcement is plenty to digest for investors, and we want to focus on explaining how we got there and how we'll achieve that. But I think it's safe to say we have lots of time to think through how we exploit and monetize that commitment beyond the benefits to our own business. And I would just give us a little time to finish those considerations, and you will certainly have plenty to talk about over the course of the next few quarters. Sorry to be evasive. I just think it's a slippery slope. We could get into a lot of detail, that's probably not helpful here.

[Operator:]

We'll take our next question from Steve Malcolm with Redburn.

[Stephen Malcolm:]

Yes. Just on the U.K. fiber plans. Can you maybe just help us understand what is so unique about the U.K. network. I should know this after 1 million years doing this job, but I honestly don't. That allows you to build at such a low cost relative to the other network selling -- and yes, they was selling those in euros. The fact that it's fully adopted, I presume you don't think there's any construction required at all. Is it you combine the fibers directly into all the ducts for all the customers? And I guess alongside that, the Project Lightning experience hasn't been seamless in the last 6 years. So maybe what lessons have you learned? What confidence can you give us? Do the targets you set out yesterday are going to be the numbers you actually do? That would be great.

[Michael Fries:]

Well, Lutz, you can prepare -- and/or Enrique -- a little bit more color on why the -- we believe the numbers to be, of course, accurate and as you point out, less expensive than our peers. Let me just make a comment on Project Lightning. We have been -- we've built 2.5 million homes at this point. I think the -- your reference to slippage goes back 5 years, maybe, 4 -- quite a while ago. Since that early moment, and I would describe that as a very early moment, it has been a machine, and we have been extremely effective, consistent and predictable in our execution of network expansion in the U.K. Our returns and our penetration rates have been exactly what we said they would be. And our capital costs have come down consistently as we access PIA and we get smarter and better at executing on this large construction project together with suppliers. So I don't think we have any -- I think we are as active and successful and predictable as anybody in the U.K. market, and you can just talk to the suppliers that we work with to confirm that. Our credibility or ability to achieve this, in my opinion, is sound and really not that questionable. But Lutz or Enrique, you're welcome to dive a little bit more into the detail around GBP 100, if you'd like to.

[Lutz Schüler:]

Sure. I'll just make a couple of comments. First of all, the number is obviously an average over quite a few different scenarios. But in the case of this upgrade, this project, the majority of the process actually uses our existing ducts. And our existing fiber-deep DOCSIS network allows us to really focus the upgrade capital basically on a significant portion of the passive part of the network. There are construction, you're asking your question, is it because there's no construction costs? There are construction costs, but it's significantly lower than when you're building a brand-new territory like we are today doing in Lightning. And then the final point I would make is that the significant commonality between both the technology as well as the construction mechanisms between Lightning and what we'll be doing in this upgrade. So we're pretty confident that we understand the process and that we will hit those targets.

[Stephen Malcolm:]

A follow-up, Mike. I think you said that Openreach is now passing like 10% to 15% of your network with fiber. Can you maybe just update us on what you're seeing? Where they have passed with fiber, are you seeing any particular change in the sort of customer onboarding and offboarding dynamics in those areas?

[Michael Fries:]

Lutz, you can address that.

[Lutz Schüler:]

Yes. So I mean, you've also seen, Steve, that these new wholesale prices, right, are announced and will kick in. And for 1 gig, that is then GBP 22. Today, right, the fiber prices are very, very high. And we watch it very carefully, but look at our net adds. So we don't see an impact at all at the moment. Will that stay the same? No, because we think that, right, if prices for higher speeds will go down a bit, we would see a bit more competition here. But on the other hand side, right, we have now more than 40% of our fixed customers having also mobile with us, and that will help us also protect our customers from churn.

[Michael Fries:]

The other point I'd make is we are already 1 gig pretty much and will be at the end of this year, 1-gig capable across 100% of our subscriber base. Is it as if BT or any Openreach customer will be providing a superior product to us? It's really a me-too product. And we're going to have the advantage of being there first across the entirety of our footprint, and we'll be marketing aggressively both fixed-mobile products as well as 1 gig products well ahead of the vast majority of these operators because we're already there. This is what I meant when I said it's not a fair fight because if BT is building to get to 1 gig, we're already 1 gig. And we're just basically further supercharging our networks for the next 10 years by ensuring that we'll have symmetrical 10-gig when and if that market requires it. So hard to see us not being able to compete with any activity from BT or Openreach, given the fact that we're so far ahead of them as we sit here today, the 1 gig product.

[Operator:]

We'll take our next question from Matthew Harrigan with Benchmark.

[Matthew Harrigan:]

Another angle on fiber. One of your large U.S. peers is taking much more of a parallel network to policy approach. It sounds like what you're doing is a little bit more complicated. So using another Olympic analogy, I hope Enrique doesn't get the Simone Biles twisties on the execution because it sounds a little involved. But the other thing that is really interesting on your U.S. peer was even though they have 1 million homes passed, I mean they didn't even call out the cost of operating simultaneously with over 1 million homes passed because the cost of fiber were so low, albeit less than -- they're at less than 5% capacity. Can you talk about the cost savings on fiber? I know sort of the dictum with some people is you're going to get about 30% reductions in consumer touch costs and related CapEx. And then secondly, on the ventures portfolio, you've got a couple of things that -- I think the valuation you're carrying is probably pretty safe in saying you got a couple of things that would probably have a lot of sort of Cathie Wood-type of deal if there was a flotation, something like Formula E as well as the edge computing. Could you talk specifically about some of the possibilities around Formula E and whether it's a complement or a displacement to Formula 1?

[Michael Fries:]

Sure, Matt. I think Enrique would echo the comment that the fiber network could easily and should reduce operating costs over the long haul. I think it's important to point out though in the U.K., we're not decommissioning the cable network. We're going to continue to utilize the DOCSIS 3.1 plant that take us all the way to 2.2 gigabytes. So we'll be at 2 gig pretty shortly here on the DOCSIS plant, and we'll continue to utilize that plant wherever and whenever necessary, with the fiber really being an overlay as opposed to a replacement of the coax network or the HFC component of the network anyway. They'll share tons of fiber to the cabinet, if you will. But beyond that, we'll keep the HFC network viable. So the cost will be there. So there'll be cost savings long term and CapEx savings long term. But I think you have to remember that those annual costs may not be quite as significant. On the ventures side, there's lots of assets within ventures that could easily find their way into the hands of other strategic owners, IPOs, et cetera. We have at least 8 to 10 unicorns in the tech portfolio, which is about $800 million of $3 billion. And we have some relatively large businesses in the content portfolio. You mentioned one in Formula E, but we have a stake in ITV, which we have a relatively low basis in, all 3 media and some other assets. And so each of those have their own sort of storyline and opportunity. The Formula E is doing terrific. It's in its seventh season, coming back strong from COVID with some really exciting things happening with the car and the technology next year. We've got Mercedes, Porsche, all the right manufacturers getting behind it. and the product just gets better and better with -- I think we've got another 18 years of exclusivity with FIA on electric car racing. So it's going to be terrific to see how that platform evolves over the long haul. And we're always looking at ways to help our portfolio of companies achieve their goals, whether that's through flotations or mergers or whatever, fundraising. So stay tuned, we'll give you more information on those assets as they evolve.

[Matthew Harrigan:]

Over time, are you more likely to have the mobile traffic on the HFC network as some of the American system, new technologies, some Cisco and others? Or is that going to be on the fiber network, if you don't mind my asking?

[Michael Fries:]

Well, we do backhaul today, and Lutz can speak about that. We provide quite a bit of backhaul services to almost all the mobile operators in the U.K., including we'll do so for O2, typically utilizing fiber. But I don't know if there's some other element to that, Enrique or Lutz, you want to -- you can do it over both. But generally speaking, these circuits are fiber.

[Enrique Rodriguez:]

Yes. The mobile traffic is mostly on the fiber network, and we'll continue to grow in that direction. There may be opportunistic cases in which we use a portion of the HFC network, but it's really the F of HFC that is being leveraged here.

[Operator:]

Our next question comes from Andrew Beale with Arete Research.

[Andrew Beale:]

I just wonder if we can develop the discussion about longer-term fiber cost savings in Virgin. I mean as you blow or pull the fiber alongside the existing HFC network or coax, I guess you can choose whether you serve each existing or new customer via DOCSIS or fiber. And then longer term, you've got this OpEx saving when you switch the DOCSIS off. So what is your thinking at the moment? Will you put all the new customers or upgrade them on fiber? Or do you just do it for customers seeking a certain high speed tier or symmetrical or other services? And then how many years off are you thinking it is that you actually switch off DOCSIS in an area that you've previously passed with fiber? I guess I'm just really asking about the pacing of variable CapEx by replacing the coax drops with fiber versus the long-term OpEx savings opportunity and what your thinking is there.

[Michael Fries:]

No. It's the right question, and I think it's a little early for us to provide any guidance around what percent of customers will require or want a fiber connection and the cost implications of that. But you should assume we're working that through. We have worked that through. But in terms of disclosing that, I think it's a little premature. I don't -- Enrique and Lutz can chime in here. I think the cable network will exist for quite some time and will provide us with a seamless ability to serve customers who don't require either the benefits of a fiber network or the speed and capacity of the fiber network. That's a nice luxury to have, but we can get people up to 2 gigabytes on the existing plant. So that's the basic strategy. As we move forward here and the idea of a sort of further disclosure on Virgin Media O2's plan when it's developed, maybe we'll do that. We'll take some time on one of our future quarterly calls and really dive deep. A little early to do that for the public today, but I think you're on the right point in terms of what percent of customers will require a drop and a new CPE, how quickly will that happen. You can make your own assumptions about that. We certainly have, but I think it's too early for us to put that in the public.

[Lutz Schüler:]

So first of all, we are in the luxury position, right, that we can plan the migration predominantly customer demand-driven. And that means the customer then wants to have higher speed than 2.2 gigabits per second, right? I mean, Mike said at the beginning, today, a Virgin Media customer is using 200 mbit per second, then it's 2.2 gigabits per second, right? So that will take some time. That's number one. Number two, we have the luxury to have where in one area, we can have on home then on fiber and the next home, we can have on DOCSIS 3.1, right? So we are not forced to really migrate entire regions on to fiber. And I think number three, obviously, over time, we want to have a balanced approach to really use the capacity of the fiber network in balance with the 3.1 DOCSIS network, right? So these are the factors. And as Mike said earlier, right, the biggest driver for us is not the cost savings with switching off the network, right? When you sit on a copper network and end of story is 80 meg, then you have to think about switch off. When you sit on a DOCSIS network and today, we see -- easily we get to 2.2 gigabit per second, then you absolutely want to leverage both networks. What's driving it is the business opportunities across consumer. Each of the huge growth opportunity when you think about our market share is below 10%. We have now a 5G network and the fiber network. Lots of things are possible and then the wholesale opportunity. So I think stay tuned on that.

[Operator:]

We'll take our next question from James Ratcliffe with Evercore ISI.

[James Ratcliffe:]

Two, if I could. First of all, I know you boosted the synergy expectations in Switzerland and there's also some additional costs to achieve. How does that affect the time frame for seeing the cost to achieve versus energy split positive in that market? And secondly, just going back to the buyback, can you talk about the thought process around doing this as a percentage of market cap rather than, say, a fixed dollar amount or free cash flow plus a given dollar amount because this has the effect of -- the more stock goes up, the more you'd be buying back.

[Michael Fries:]

Yes, I'll take the buyback question, obviously. And André, if you want to prepare some thoughts around the Swiss question. I want to make sure I'm following what you're saying, James, we're -- let me clarify what we're committing to, which is to repurchase 10% of the shares outstanding at the beginning of the year regardless of price over these next 24 months. So the amount of the buyback or the dollar amount of that spend will vary depending upon the price. That doesn't mean we couldn't accelerate that if the price were lower to perhaps take -- anticipate one of your follow-up questions, but we would continue to commit to that if the price were higher. And therefore, it seems to us that we're -- investors now will be able to incorporate into their thinking around stock price and growth at a minimum of a 10% improvement in the share price, we hope, based upon the buyback commitment we've made. So it seems to us to be an easier and more predictable and more beneficial approach to buy back, meaning that we're committing to that 10% number. And if it were a dollar figure, hard to know what that impact would be, right?

[James Ratcliffe:]

Got it.

[Michael Fries:]

Yes. André?

[André Krause:]

Yes. Well, on your question, does the higher synergy expectation have an impact on the time scale of the realization? No, it doesn't. So we actually have seen that some of the assumption that we have taken on the realization of moving customers over to own infrastructure from whole buy infrastructure, we're more conservative than what we think is now realistic to achieve. And that does not really change the time frame. In fact, we have seen some synergies coming in even a bit earlier. You've seen in the presentation that we were alluding to the MVNO migration being executed ahead of schedule. And overall, I would say we are rather ahead of schedule than behind. So no real change to the timescale.

[Operator:]

We'll go ahead and take our next question from Ulrich Rathe with Jefferies.

[Ulrich Rathe:]

I have a question then probably to Lutz. Does the fiber upgrade plan require in-footprint share gains in the consumer market? I understand there are opportunities beyond that. But in terms of literally the consumer market, is there an element here that you think you can up the share with the market share?

[Lutz Schüler:]

Well, I mean we are currently winning market share, right, with the speed advantage. And we have not made any planning yet what kind of market share we are planning to win over the next 10 years. And we haven't justified the plan by a win of market share in consumer, right? I said earlier on, we have just started now after committing the budget for '21 to come up with a 3-year plan and beyond, and then we are working on that. But it's definitely an opportunity to keep our customers and also to increase our share of wallet, so ARPU per home with our customers. If we keep winning market share as we do today, give us some time to figure that out.

[Operator:]

I'd like to now pass the call back to Mike Fries.

[Michael Fries:]

Okay. Thanks. Listen, I appreciate you staying out with us. I know there's other calls happening today, and so you're probably already on your way. But look, at in my point of view, growth continues in our FMC champions and synergies are just now starting to show up. So that's going to be a positive tailwind here in the medium term. We're excited to start providing greater transparency around our network strategies with the U.K. being the first of those announcements. And I can assure you, we're looking at these things through an offensive and accretive lens, and we have the luxury of doing that because we have such a fiber-rich network to begin with and a strong broadband base as we sit here today. Pay attention to the ventures portfolio. It's growing in value and significance and we'll keep you posted on the Polish deal, which is just another reaffirmation of the private market value of our businesses. And lastly, we're excited about the buyback commitment. It's a strong statement from us. I think that's something you can take to the bank, if you will, a year, in the next -- this year and for the next 2 years, and that's got to be useful for investors who want to see us deploy capital in one of the most obvious places, and that's our own share. So I appreciate you joining. We'll speak to you soon. Have a great August. Bye-bye.

[Operator:]

Ladies and gentlemen, this concludes Liberty Global's Second Quarter 2021 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.