Liberty Global, Inc. (NASDAQ:LBTYA)
Q2 2016 Results Earnings Conference Call
August 05, 2016 09:00 AM ET
Mike Fries - President and CEO
Bernie Dvorak - EVP and Co-CFO, Principal Accounting Officer
Tom Mockridge - CEO, Virgin Media
Eric Tveter - CEO, Central Europe Group
Charlie Bracken - EVP and Co-CFO, Principal Financial Officer
Balan Nair - EVP and Chief Technology Officer
Amy Yong - Macquarie
Daniel Morris - Barclays
Jeff Wlodarczak - Pivotal Research Group
Vijay Jayant - Evercore ISI
Frank Knowles - New Street Research
Ben Swinburne - Morgan Stanley
Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global’s Second Quarter 2016 Results Investor Call. This call and the associated webcast are the property of Liberty Global, and any redistribution, retransmission or rebroadcast of this call or webcast in any form without the expressed written consent of Liberty Global is strictly prohibited.
At this time, all participants are in a listen-only mode. Today’s formal presentation can be found under the Investor Relations section of Liberty Global’s website at www.libertyglobal.com. Following today’s formal presentation, instructions will be given for a question-and-answer session. As a reminder, this investor call is being recorded on this date, August 5, 2016.
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 any 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 from time to time in Liberty Global’s filings with the Securities and Exchange Commission, including its most recently filed forms 10-Q and 10-K. 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.
Thank you, operator. And good morning or good afternoon, wherever you may be.
I want to welcome, both our Liberty Global and LiLAC shareholders to our second quarter call. I am joined as usual by my senior leadership team across the globe and I’ll get them involved as needed here in the Q&A.
Our agenda is pretty straight forward for us. I will make some brief remarks about the quarter focusing specifically on products and operations and then Bernie will provide some detail on the numbers and we will get straight to your questions. As usual, we’re speaking from slides and hopefully you can access those on our website or download them. I think it will make the presentation a lot more meaningful for you.
I’m going to start on slide four with some key highlights or takeaways from the quarter. Number one, this is an important inflection point for us. We have always indicated that the first half of 2016 was really an investment period where we’d be laying groundwork for next year and 2018, and that’s reflected in our financial results where the benefits of our Liberty Go initiatives and convergence and product innovations are just now starting to emerge as we head into the second half of the year. That confidence is supported by strong subscriber growth in the quarter. We added nearly 280,000 new RGUs in the three-month period that’s double what we did last year in the second quarter and up 80% from just the first few months of the year. And it brings year-to-date net adds to 430,000 with material improvement across all our products and essentially all our markets too, a bit more detail on that in a second. By far one of the most accretive and the fundamentally sound things we’re doing is expanding the reach of our networks to our new build program. With every meter we trench and every fiber we pull, our confidence in this capital investments grows.
Homes released in June were up 40%, over May and we’ve already activated $0.5 million new homes on our way to 1.5 million for the year and 7 million on cumulative basis between now and the end of ‘18. And these are all high return projects that are going to drive subscriber and cash flow growth in the feature, like we’re beginning to see right now in the UK.
We also made progress in two other key value drivers for us. B2B revenue was up 11% in the quarter that was supported by SOHO in particular, where we are targeting new customers with superior speeds and business class services. And in fact, SOHO revenue was up 40% year-over-year. And our mobile business in my view is really taking shape strategically and operationally. When you include Cable & Wireless, we now serve over 10.5 million mobile subs, we added 100,000 postpaid SIMs in the quarter. We’re marketing 4G services in five European countries with four more pending. And of course, in Belgium, we recently launched our first true converged quad-play bundle on the back of our BASE acquisition.
As you might have read, we also recently got conditional Phase 1 approval of our joint venture with Vodafone in the Dutch market. Now, where I see we’re making really good progress, we’re cooperating exceptionally well with them. There are substantial synergies ahead of us in the field, which I think is going to be a win-win, not just for customers but of course for shareholders.
And Bernie is going to take us through the numbers in a moment, but we have spent considerable energy and resources in the first half of the year putting in place the building box of our future growth, which as I said, should reach an accelerated pace in the second half for the year, driven by new-build, mobile and B2B, and also supported by the realization of some significant scale based efficiencies across our footprint. You may have noticed that indirect costs for example in the second quarter were largely flat year-over-year. And now that we’ve closed the BASE and Cable & Wireless deals, we’ve also updated our guidance, and I’ll take you through that in a minute. The punch line however is that we’re not changing our mid-range of three year guidance of 7% to 9% OCF growth through 2018. And I’ll point out in a that we also see some upside at LiLAC.
As ever, our balance sheet is strong, remains strong with our currencies and interest rates hedged and average maturity is seven years. We also generated just under $0.5 billion of free cash flow on the quarter. And since closing the Cable & Wireless deal in May, we reignited our share repurchase program as we told you we would. In just the last week of June, we bought back $300 million of the stock, bringing total buybacks in the second quarter to $700 million. And that for those who are keeping the math would leave $3 billion on our buyback authorization through the end of 2017.
Slide five provides a bit more detail on our accelerating subscriber growth. It shows you the first and second quarter for this year and last year. I’ll just make a few points here and then I am going to dive into some country deals. But clearly, we’re excelling in broadband. You will see that in the dark part of the bar chart. And net adds in the quarter were 191,000, up 40% over last year and up may nearly 30% on a year-to-date basis. We continue to push our speed advantage over VDSL in every single market. We’re typically twice as fast as the incumbent. We’re offering up to 500 megabits per second. And to complement these speeds, were rapidly rolling out a superfast Wi-Fi router. And we’ve already put a 1.2 of those into the market, realizing how important that is in the home. You’ll also notice that we’re consistently showing improvement in our video subscriber attrition. We lost only 60,000 TV subs in this last quarter compared to a 138,000 in the first quarter and that is driven of course by some customer growth in the UK but also the rapid rollout of advanced TV services. We now have nearly 7 million households or 45% of our digital TV base watching and enjoying our entertainment services on an advanced platform.
We had huge success with Replay TV, now live in five markets with over 60% usage rates and our TV Everywhere services which are available throughout Europe to nearly 15 million eligible households with usage growing every single month. When you add it together, we more than doubled our net add performance year-to-date compared to 2015 with 433,000 net new RGUs through June 30 versus 211,000 for the same period last year. And that trend bodes well. For the second half last year, we added over 660,000 new RGUs in the third and fourth quarter. Obviously we’re shooting to exceed that number in the second half of this year, all of which is great fuel for 2017 growth.
Now on the final two slides, I am just going to summarize some key information, key developments in our top four markets, starting with UK and Germany on slide six. Virgin Media in UK continues to be our engine of growth, not just today but certainly over the next two years. Our product enhancements, strong marketing campaigns, great bundles are driving higher sales and lower churn. In fact Virgin had a record customer additions, so actually new homes connected of 31,000 in the UK and 56,000 RGU adds. That’s the best second quarter since 2008.
While Project Lightening is in full swing, I just want to point out that half of those customers came from our legacy footprint. So, really, the best is yet to come from our new build program. Our ultrafast network remains a speed leader in the market. We’re usually three or four times faster than BT and other competitors and of course we haven’t even launched EuroDocsis 3.1, which will take that speed advantage higher.
Virgin Media is also investing in its TV service. Earlier this week, we initiated the most significant upgrade of our TiVo platform ever. It’s a brand new user interface, beautiful. And later this year, we will launch our EOS set-top box, which is a sleek 4K box and we’re rolling it out across Europe and again another positive step.
Project Lighting, as I mentioned is at full steam ahead. Our 2016 target is connect over 0.5 million homes. So far this year, we’ve built over 140,000 premises. And all the planning has been done to more than double our build out in the second half. So, we really confident in that front. Most importantly though, penetration rates, ARPUs and build costs are all right on track. We just had the whole Board in London about two weeks ago, went through all the details, and it’s looking terrific. So, you should definitely see an acceleration in growth from this point.
Now, I just want to address Brexit quickly. We have been asked many times what it means to us. And while we didn’t support Brexit on a corporate level or do we respect the voters’ decision. And while we favor stability and regulatory certainty, we’re not actually that worried at all about the future here. We’ve seen no slowdown in our sales levels in UK. Consumers are the ones that matter. Actually we’re up year-over-year. Across all of our markets, consumers are looking for fast, reliable, and seamless connectivity, and a wide range of high quality content, UK is no different. Consumers want world-class communications of content and we’re delivering that to them. And then one last point, there is very little risk of currency fluctuations in the UK. Of course our borrowings are all hedged and substantially all of our OpEx and CapEx is in sterling, s, feeling very positive about.
Moving to Germany Unitymedia delivered a great quarter. After taking price increases in the first quarter, we switched our focus to volume growth in the second quarter, and we added over 100,000 new RGUs, up 20% from last year and improving that. There is still lot of volume growth in this market.
Broadband speeds are as important as ever in Germany. We’re still three to four times faster than BT, even where they have advanced vectoring and of course much, much faster in the remaining 80% of market. Our Horizon platform in Germany is adding great momentum. We had 42,000 new Horizon customers in second quarter and bringing that total to over 0.5 million, in fact 527,000; that’s just 8% of our video base. And when you look at markets like Switzerland where Horizon has 26% of the base, we have a lot of potential here. Then of course we’ve also improved Horizon Go. We added HD channels, got a million WiFi home spots, a lot of really positive things happening here. And then, one last kicker, we expect to see some real benefit from our new build activity in Germany as well as a robust SOHO strategy. So, lots of positive things in what is already our most profitable operation with 62% OCF margins.
Slide seven highlights Holland and Belgium, and I’m going to start with Ziggo where investment in our products, content and our functionality actually really paying off here. Year-over-year, our RGU attrition was reduced by 70%. We continue to add broadband subscribers, albeit in small amounts, but we have had four straight quarters of positive broadband growth. Overall customer churn in the second quarter was our lowest in two years, partly supported by our new service programs and our product innovation, but also by Horizon TV base, which is now doubled to over 900,000. We’re seeing Horizon Go usage benefiting from our new marketing campaign. We’re going to put the Olympics on our Replay TV service and Ziggo Sport is now a leading broadcaster in this marketplace, in fact the highest customer satisfaction of all of our products, and we haven’t event launched the English Premier League, which happens in about two weeks. And of course broadband superiority continues. Now, 50% of our internet base in Holland -- of 3 million actually, have migrated from 120-meg to 150-meg product. So, with the Vodafone JV around the corner, we’re feeling very positive.
And finally in Belgium, we’re squarely focused on convergence with our most advanced quad-play offers anywhere. The base mobile integration is on track, and we’re targeting an annual synergy level of about €220 million by 2020 that stays the same. And even more exciting, we recently launched what we call WIGO, which is a first fully integrated quad-play offering in Europe that we know of with the best content and seamless connectivity across fixed and mobile for the entire family and business. After only nine working days, at June 30, we’d already added 13,000 WIGO subs, bringing quad-play penetration at 22% in that market. On top of that Telenet is always focused on customer experiences. We’ve been out to visit almost quarter of a million customers, just to ensure optimal WiFi service that they understand the user apps and all the various services we provide. Interestingly, Telenet had a very successful premier of a TV series called Chaussée d’Amour which they produced and broke records across Flanders with 0.5 million SVOD takes in just the first two weeks. So, lots of good things are happening here. Our top line and OCF growth was partly offset by headwinds from BASE, as we described, but we are well-underway to creating a leading converged player in Belgium, which is a great segue to slide eight where we provide an update on our guidance.
And as you know, in our February earnings call, we issued guidance for each of Europe and LiLAC. Of course most importantly, we issued rebased OCF growth guidance for 2016 and for the next three years. And in that case, we excluded certain assets. So, in the case of Europe, we excluded Ziggo, given the pending JV with Vodafone, and we excluded BASE mobile in Belgium since the dealer just closed and we were not prepared to provide any forecast. And of course, for LiLAC we excluded Cables & Wireless since the transaction had not yet closed. We also provided PP&E guidance as a percent of revenue on largely the same basis, so excluding BASE and Cable & Wireless. And we issued our forecast for free cash flow, which typically include any and all assets we believe contribute to free cash during the year, regardless of when they were acquired or when they might be disposed. So today, we’re going to update and hopefully clarify all of our guidance to include BASE and Cable & Wireless since those operations are obviously squarely in the fold.
And I’ll start at the top of this slide where we’ve outlined guidance for Europe. So, previously we were targeting 5% to 7% rebased OCF growth for 2016, again excluding BASE and Ziggo. And after layering in BASE, which was underperforming when we closed the deal, and as I just described is in full integration mode, we’re revising that rebase associated growth figure to 4% to 5% for 2016. Similarly, we’ve updated the PP&E and free cash flow guidance to include BASE, and those moved just slightly. So now, we’re forecasting 26% to 28% PP&E as a percent of revenue, which is 100 bps and $1.8 billion of free cash flow versus the $2 billion which reflects mostly one-time investments in BASE this year as well as some FX adjustments.
So, just a reminder, this is largely a timing issue in Belgium, right? Synergies between Telenet and BASE are still forecasted, as I said to be €220 million and Telenet is forecasting robust OCF growth, beginning next year and especially in 2018. And that’s just one reason why we are not changing our three-year outlook on OCF growth in Europe, which we continue to forecast at 7% to 9% for the three years ending 2018.
Now, I’ll finish off my remarks on slide nine with a brief update on LiLAC. We’re now coming up on about 80 days since we closed the Cable & Wireless deal, which has added significant strategic relevance, scale and diversified growth opportunity for LiLAC across the board. Annualized revenue for LiLAC is now $3.6 billion and that’s spread across multiple regions of businesses which we show here on this slide. Despite a relatively large geographic reach, 80% of that $3.6 billion revenue comes from rally six markets. Chile, represents a quarter of LiLAC’s revenue; followed by Panama at about 18%, and Puerto Rico at 12%, and then you can get another quarter or 24% o that revenue comes from three large island markets, Jamaica, Bahamas and Barbados. And so, these are really the markets that are going to move the needle for LiLAC today and tomorrow.
From a business line point of view, B2B and the undersea fiber business represent about 30% of revenue for LiLAC now, and mobile is about 20% of LiLAC revenue with consumer and fixed line services, video, voice and data making that balance. On the commercial front, growth was strong in the second quarter with over 45,000 subscribers added, bringing LiLAC to 5.4 million fixed RGUs. In fact VTR delivered its best ever customer growth with 24,000 new households connected and its best RGU performance in three years with 37,000 net adds. Cable & Wireless contributed 7,000 RGUs and during the six weeks that we actually owned it and included it in the quarter, and then Puerto Rico again about 2,000 RGUs in a tough macro environment.
Beyond fixed line, Cable & Wireless brings a significant mobile presence at LiLAC. The total mobile base is now a combined 3.8 million subs in the region and Cable & Wireless gained about 150,000 mobile subs just in the last year, fuelled largely by mobile data. That mobile data penetration at Cable & Wireless is up seven points to 53% and that’s an increase of over 300,000 data customers in mobile. And then, VTR added 7,000 mobile subs, which is a great return to growth for them.
In just these first 11 weeks or so, since we’ve closed Cable & Wireless, you might expect there has been a lot that has gone on here. We’ve really, I think created a seamless management integration including the appointment of John Reid, as interim CEO who has done a great job. We were able to consolidate Cable & Wireless into our financial results, not an easy task. We aligned key functions and technology roadmaps. We’ve launched a full strategic review across geographies and business units. And we’re undergoing a detailed synergy assessment of course which we expect to complete in the third quarter. We’re already benefitting on the CapEx side. You can imagine we’re bringing our scale to bear immediately with key vendors. In the meantime, Cable & Wireless remains on track with their previously quantified synergies with Columbus which are very, very important.
From an operational point of view, across the region, we’re focused on a few key strategies, number one, targeting investments to enhance our network superiority and expand our footprint. At Cable & Wireless it is critical that we strengthen our network position with investments in 4G and various fixed line topologies depending on the market. Recently, for example, we launched LTE-Advance in the Caymans, we rolled out fiber to the home in Bahamas and we had a significant upgrade program across Panama. In Chile and Puerto Rico also, we’re on track to collectively deliver new build upgrade of about 150,000 homes in 2016. And we’re continuing our 1 gig upgrade in Puerto Rico as well.
Commercially, broadband and converged offers are the key competitive tools for LiLAC with a bundle ratio of about 1.8. There is no doubt we have substantial opportunities to sell incremental services to our customer base. In the Cable & Wireless, we see tremendous potential in broadband. And certainly as we refine our go to market strategy in each country, broadband superiority will underpin that approach. We are also strengthening the video proposition across the region. We have launched new advanced video platforms in Panama, the Bahamas; see Cable & Wireless is delivering in Flow Sports ad Flow Sports Premier, which is a great service across the Caribbean. And we’ll the carry the Olympics and then English Premier League service starting this month. And we’re expecting to complete the rollout of next gen video services in Chile using an advanced interface there as well.
So, in on line, LiLAC is off to a very busy start. The M&A pipeline is filling up, as you might imagine with some interesting opportunities. And I think most importantly, we’re confirming our 2016 guidance today at 5% to 7% rebased OCF growth, now including Cable & Wireless. And we’re also confirming our mid range guidance of 7% to 9% rebased OCF growth, which looks solid to us. In fact, we think there could be some upside to that as we finish refining and improving the LRP for an integrated Cable & Wireless in LiLAC, so, a lot of very positive developments here across our business. We’re really, really encouraged and excited about the second half of the year. And I look forward to your questions.
And now, I will turn it over to Bernie.
Thanks Mike. On following slides, I will take you through the financial results for the Liberty Global Group, which consists of our European operations including BASE since February 11, followed by an overview of the performance of the LiLAC Group, which consists of our operations in Chile and Puerto Rico, and since May 16th, Cable & Wireless.
On slide 11, we present financial results for the Liberty Global Group.
When adjusting for FX and the impacts of acquisitions, we grew our rebased revenue by 3% year-over-year in the first half of 2016, in line with our top line growth from the first half last year. Our rebased OCF increased 2% during the first six months. Our first half property and equipment additions in Europe were 23% of revenue above the 22% of revenue that we reported in the prior year period. The increase in absolute P&E additions on the year-to-date period especially due to increased line extension and scalable infrastructure spend related to new build upgrade activities across our footprint. In terms of the breakdown of our first half P&E additions, 46% pertain to line extensions, upgrade and rebuild and scalable infrastructure, 30% was related to CPE and 24% was related to support capital. And as shown earlier in my slides, we’re updating our full year P&E guidance now including BASE and excluding the Netherlands to range from 26% to 28% of revenue. Consistent with this guidance, our spend on new build is expected to accelerate materially in the second half of the year.
From a free cash flow perspective, Liberty Global Group reported free cash flow of $412 million year-to-date. The decline in our free cash flow in the first half of 2016 as compared to the first half of 2015 is largely attributed to lower benefits from vendor financing activities. For full year 2016, we expect to deliver, $1.8 billion free cash flow, including Netherlands and BASE and adjusting for latest FX rates.
Slide 12 shows the Q2 financial performance of our operations in Western Europe, which represent over 90% of Liberty Global Group’s revenues and OCF. Virgin Media comprising our businesses in the UK and Ireland posted rebased revenue of 3% and OCF growth of 1% in Q2. Virgin Media’s top line continued to be supported by higher cable subscription revenue partly driven by increases in broadband volumes and higher mobile revenue including handset sales. Virgin Media posted 1% rebased OCF growth in Q2 as the aforementioned revenue growth drivers were partially offset by higher programming costs and the negative impact on our current year growth of an $11 million non-recurring impact of reduced network infrastructure charges in Q2 2015. Looking ahead, we anticipate rebased segment OCF growth in the second half of 2016 to be higher than the first half of the year as we expect to benefit from continued volume growth increasingly driven by Project Lightning and ARPU improvements.
Unitymedia increased rebased revenue by 7%, up from 6% growth in Q2 2015, driven by an increase in both ARPU per RGU and subscribers. Rebased OCF growth in Germany was also 7%, mainly following the revenue growth and supported by strong cost controls. In Belgium, Telenet delivered Q2 rebased revenue growth of 3.5% as strong growth in Telenet cable business was partly offset by rebased decline in revenue at BASE, recently acquired mobile business. Rebased OCF growth at Telenet was 1%, similar to the revenue result; Telenet’s OCF growth was adversely impacted by an OCF contraction of BASE. Ziggo in the Netherland reported a 3% rebased revenue decline in Q2, while OCF declined 4%. Ziggo’s rebased revenue was consistent with the past three quarters, reflecting the impact of RGU losses over the last 12 months and lower ARPU per RGU.
Looking ahead, we expect to benefit from the July 1, 2016 price increase but due to subscriber losses over the last 12 months and the current competitive environment, we foresee continued top line pressure throughout the remainder of 2016. Our weaker rebased OCF result at Ziggo was driven by lower revenue and higher programming costs that were only partially offset by lower indirect expenses.
And finally, Switzerland and Austria delivered rebased revenue growth of 2% and rebased OCF growth of 4% in Q2, while improvements in mobile revenue and higher ARPU per RGU more than offset the effects of subscriber attrition. Our OCF margin expansion was helped by lower staff and network related expenses that were partly attributed to the integration of our Swiss and Austrian organizations.
The next few slides are focused on our balance sheet to highlight what we are doing to manage our capital structure. I am on slide 13 now. At June 30, 2016, total third-party debt attributed to the Liberty Global Group was $46 billion and cash totaled $786 million. We remain very focused by keeping our tenure extended. And in Q2 our average maturity was approximately seven years with over 90% due in or beyond 2021. Our blended fully swapped borrowing cost of debt improved to 4.7% as compared to 5.2% one year ago. As we took advantage of recent market conditions to re-strike portions of derivative portfolio.
To manage risk, our debt structure is organized around ring-fenced borrowing groups that include no cross default provisions or parent guarantees that extend outside of the borrowing silos. Finally, our debt remains hedged as we have swapped all of our non-functional currency exposures to match the local currency cash flows. And we have fixed substantially all of our floating rate debt. Whenever we issue U.S. dollar or other debt that does not match to the underlying cash flows of the operating business, we immediately swap it into the functional currency. Also in terms of OpEx and CapEx, our non-functional currency expenditures are limited and we look to hedge this risk through the use of forward contracts.
On slide 14, we show Liberty Global Group’s leverage, share repurchase activity and our liquidity position. Our gross to net leverage ratios at the end of Q2 stood at 5 times and 4.9 times respectively. Excluding $2.3 billion of debt backed by the underlying shares that we hold on ITV, Sumitomo, and Lions Gate. The decrease in these ratios from the end of Q1 2016 were due to a sequential increase in reported quarterly OCF and a lower debt balance due to the weakening of all of our borrowing currencies against the U.S. dollar.
Liberty Global Group’s liquidity position at June 30, 2016 was approximately $4.6 billion comprising nearly $800 million of cash and $3.8 billion of unused borrowing capacity. Regarding our buyback program, in Q2 we repurchased nearly 700 million of our shares including 300 million in late June following the Brexit vote in UK. By the end of 2017, we’re committed to purchase an additional 3 billion of stocks to complete our current 4 billion repurchase authorization.
On slide 15, we present the first-half results of the LiLAC Group, which includes Cable & Wireless from May 16, 2016. When adjusting to neutralize the impact of acquisitions and FX, our operations attributed to LiLAC Group generated rebased revenue growth of 3% and rebased OCF growth of 6% for the first half. I will provide more color on our Q2 results on the next slide. P&E additions for the LiLAC Group increased from $126 million in the first half of ‘15 to $205 million in this first half of the year, primarily as a result of the recent acquisition of Cable & Wireless, and to a lesser extent the Choice acquisition in Puerto Rico.
In terms of CapEx, as a percent of revenue, the first half this year stood at 23% as compared to 21% in the prior year period with the higher percentage, primarily attributed to the inclusion of Cable & Wireless for part of Q2 2016. Looking forward, we are updating LiLAC’s 2016 guidance range for property and equipment additions to include CWC. The new range is 19% to 21% of revenue, a decrease from our original guidance of 21% to 23%.
In terms of free cash flow, LiLAC posted a free cash flow contraction of $15 million year-to-date as compared to free generation of $28 million in the prior year period. The year-over-year first half decline was primarily the result of negative impacts of higher income tax payments in Chile and the inclusion in Q2 2016 of Cable & Wireless’ negative free cash flow of $22 million partially offset by organic OCF growth and the positive impacts from vendor financing activities this year. We continue to expect limited free cash flow for full year 2016 with our guidance now including Cable & Wireless.
Slide 16 provides more detail from a geographic perspective. Cable & Wireless experienced a 1% rebased revenue contraction from May 2016 through June 30, as our revenue growth in Jamaica and Panama was more than offset by declines in Barbados, the Bahamas and Trinidad and Tobago. Cable & Wireless OCF increased 4% on a rebased basis during the post acquisition period. This OCF growth includes the benefits of staff and network related synergies from CWC’s integration with Columbus partially offset by among other factors, higher integration costs.
Our Chilean operation VTR reported rebased revenue growth of 4.5% in Q2 2016 driven by both subscribers and ARPU per RGU and growth in our mobile subscription revenue. Meanwhile, VTR’s rebased OCF growth for Q2 was 2%. This growth rate reflects the impacts of increases in programming, copyright and other costs due in part to the impact on U.S. dollar programming costs of a weakening Chilean peso. In Puerto Rico, we posted a 1% year-over-year rebased revenue growth during the second quarter led by growth in B2B. Disciplined cost control supported our 5% OCF growth at Liberty Puerto Rico. With respect to leverage, the LiLAC Group ended Q2 2016 with adjusted gross and net leverage ratios of 4.5 and 4.1 times respectively after giving pro forma effects to include the OCF of Cable & Wireless.
At June 30, 2016, the LiLAC Group’s average tenure of attributed third party debt was just under six years with less than 10% of maturities due prior to 2022 and our blended fully swapped borrowing cost was 6.5%. The LiLAC Group’s liquidity position at the end of Q2 2016 was approximately $1 billion including $500 million of cash and the aggregate unused borrowing capacity under our credit facilities of just over $540 million.
To wrap up, we have updated our 2016 guidance to include both BASE and Cable & Wireless. Our new build program is picking up steam and we’re on track to hit our target of 1.5 million new homes for the full year. The accelerated new build activity in the second half is expected to lead to continued improvement in our overall RGU performance for the rest of the year. In addition, our OCF growth in Europe and the UK in particular is expected to ramp in the second half as we benefit from where we go including the new build activities. At LiLAC, we have kicked off the integration of Cable & Wireless and continue to expect 5% to 7% rebased OCF growth for the full year. And finally, we remain aggressive buyers of our stock at current levels.
And with that operator, please open the call for questions.
[Operator Instructions] And we’ll take our first question from Amy Yong with Macquarie.
Thanks and good morning. I was wondering if you could talk a little bit about some of the content investments you’ve made recently. You spent some time talking about how important the video bundle is to you in terms of Horizon and TiVo, but what about some of the investments that you are making, whether it’s All3Media and I guess Lionsgate ITV? And then my second question is on LiLAC. What changed the initial expectations of the $125 million synergies that Cable & Wireless laid out, and how quickly do you think you can talk about the synergies to the market? Thank you.
Thanks Amy. I think, let me start with the LiLAC question. As I think Bernie mentioned, we are on track with 125 million synergies that they represented. We don’t see any issue with those between Columbus and Cable & Wireless and thus for I think tracking exactly as planned. We have not yet disclosed the synergies, and that’s what we’re working on between Cable & Wireless, LiLAC and Liberty Global. Those numbers we think will also be substantial. But remember, during the acquisition process, we were not able to get a lot of information, because of UK takeover code. So, we didn’t really have the ability to project clear synergies between Cable & Wireless and us; that we expect to do in this quarter. And to me that’s going to have a material impact on the overall expected synergies in the next three-year timeframe. But as soon as we have that, we’ll let you know. Main point is tracking on the disclosed synergies of 125 million.
I’ll also point out because I probably should have more clearly that the -- some people have noted that the EBITDA or OCF number four Cable & Wireless in the June quarter looked meaningfully different than what consensus was. We could have and should have done a slightly better job of explaining that. There were number of issues between the March quarter and the June quarter, including some definitional and policy-related matters, when we went from IFRS to GAAP, which we do provide complete detail on things related to integration costs and how GAAP requires you attribute integration costs, and revenue recognition issues , which we think is cleanup. There were some accrual releases in the March quarter, may be to be expected perhaps, when you’re anticipating closing a transaction, but no question there were some things that you wouldn’t see repeating, and then obviously some seasonality in the business. And we expect the LiLAC second half -- sorry the Cable & Wireless second half to be closer to the trend that people are expecting, certainly mid to high single digit rebased growth second half over last year’s second half. We will better job of explaining that. I think we should have made clearly to you that there were some accounting definitional issues between two quarters, some accrual releases that the Company had decided to take in the fourth quarter, some seasonality but for the most part we’re tracking back to levels that I think people are expecting.
On the content question, I think we’ve been pretty clear about that. We’re starting to see some things pay off. We will be announcing some production activity with All3Media across our foot print. So, we have decided to produce and cooperate with them on four scripted series that will find the way into our networks exclusively, at least the outset. We are doing some great work between All3Media and our Irish broadcast networks. The Lionsgate relationship’s off to a great start. I think there is going to be some interesting cooperation there. Just renewed our Discovery deal which we think is going to be very positive from the point of view of sports and Olympics and all the rights that we need to get our customers happy. So, I don’t think the content investment strategy has changed materially. We’re looking at smart opportunistic investments, not investments that significantly change the weighting of our balance sheet or cash flows, but where we can get inside and make some important strategic moves with that partner. And thus far that’s paying off. So, I think you should expect more of that. The broadcast investment in Brussels is paying up. That show hit it hard, I mean 0.5 million views was one of the top shows in Belgium. And we did that with our broadcast partner and got directly involved, and it’s been a huge benefit for Telenet. So, those are just smart, clever, opportunistic and offensive moves and don’t cost a lot, but will have a big impact in our local markets.
We’ll take our next question from Daniel Morris with Barclays.
You showed a very interesting Lightning chart in Q1, showing the 13%, 22% and 26% penetration rates after three, six and over nine months. I just wondered if you’ve got an update on those data points or any comments around whether you’re seeing a shift in that momentum since Q1 or it’s still very similar. And then, I have a little follow-up on ARPU if I could.
Punch line on that -- and I’ll let Tom provide some color, is we are seeing very good penetration rates in the mid-20s after nine months, and nothing has changed our view I think the forecast that we gave around penetration ARPU and the bill cost and Lightening. Tom, do you want to provide some color on the first half or perhaps the second half?
Thanks, Mike and thanks for the question. Look, I’ll confirm the point that we’re seeing a continuation very much of what we’re seeing in the previous quarter that the penetration is very much on target, remember when we say 39% after three years. And we’re achieving 26% roughly after the first nine months at the moment, across the various types of network that we’re building. The volume is picking up. You’ve seen a further pick up in this quarter. And to give an indication, we have at the moment in the build program that is issued to our build partners, 700,000 premises, at this time last year that equivalent number was about 50,000. So, in terms of the engine that is driving this is now really getting into gear, and we continue to have a high degree of confidence that the execution is on target.
That was very clear, thanks. Just the brief follow-up was just on the UK ARPU trajectory. There is obviously a bit of pressure and I wondered if that was back-end loaded customer additions, the Lightning mix or something else, so just color on the UK ARPU, if you could?
Go ahead, Tom.
There is one regulatory issue I think was mentioned in the release where we did lose a bit of revenue in the way we billed people on paper bills that could make a concession there. And that did impact the numbers. But fundamentally what’s happening here is that as we are ramping up the pace of the business in the last 12 months, we’ve increased gross additions for an annualized rate of over 100,000 customers, these people are inevitably coming in on promotional deals that generally go three, six, nine, 12 months. You’ve also seen in the first half of this year we have to a greater extent relied on [indiscernible] to drive the growth of the business. We’ve got good growth out of that typically Virgin Media in the UK had flat growth in the first half. You will see that swing hard to triples in the second half as it normally does with the football season, as Mike mentioned. And so, we’re very confident that we will get those people up as they come up the promotional discounts, that we’ll give more triples in the second half. But the other thing I would mention that we’re conscious of our ability to offer great product, 200-meg going to 300-meg. And so, we will be looking at our ability to take costs across the BASE. So, a combination of these things, we’re very confident about the ARPU going forward.
And we’ll take our next question from Jeff Wlodarczak with Pivotal Research Group.
I was hoping to get more color on the implied healthy EBITDA acceleration in the second half. Is that mainly Liberty Go and Project Lighting which you touched on the call or are there other things breaking your way in the second half to accelerate your growth? And then, I have got a follow-up.
Jeff, I think it’s a combination of things. On the top line, it’s going to be the impact of new build and I can’t just give you some numbers around the Q if you will for the pipeline of new homes coming on line, we know that’s a big part of it. Definitely going to see some benefits of the scale efficiencies I referenced. When we look at the second quarter, we think indirect costs, as we adjust them are flat year-over-year. And we’ve made that clear that that’s our goal try to keep those numbers flat. And I think you should expect that in the second quarter. The last nine to 12 months of planning are certainly going to start picking up on the cost line. But on the revenue line, it’s all the factors we’ve discussed. It’s new build for sure, in the UK it’s also selective price increases where we might take them across Europe; it’s going to be our B2B business and mobile business layering in. You’re going to start to see a turnaround slowly in places like Belgium where that integration as we’ve signaled, has impacted their numbers at least in the first half or for second quarter two. So, it’s all the main drivers we’ve identified in the past. And so far, we feel good about it. Number one, and perhaps most importantly is the subscriber growth we’ve achieved in the first half of the year, we’re 2X of what we did last year. So, there is no question that the growing RGU momentum is going to benefit us, both in the second half of the year and going into 2017. So that is the good news, I mean for sure. Not only are we seeing benefits on our new builds and B2B and mobile but also just raw customer and subscriber growth, which is of course going to drive your revenue more than anything. So, that’s where the confidence comes from.
And then I am looking for more color on Switzerland. I mean, you had the very large price increase, which you announced in fourth quarter hit in the first quarter and hit your RGU results. Are you seeing some bleed over from that in the second quarter or is that more competition related, and then what are you doing to stabilize Switzerland?
Well, I’ll let Eric -- Eric Tveter is on, I’ll let him talk in. But Switzerland is really an isolated issue around broadband. Do you want to address that Eric?
Sure. In the second quarter, we branded dropping the legacy Cablecom name, some of the bright spots; our mobile growth accelerating steadily; customer experience and product satisfactions as well as churn, deduction are improving, but the main competitor has been affected at the low end in the first half. And we have a competitive response for them. And I expect our sales performance to improve in the second half with the strong marketing effort and the aggressive rollout of our new Connect Box to almost 200,000 internet customers to drive internet market leadership and provide them seamlessly connectivity. So, I think the price increase had an effect. And I think in the next months we will also improve our fixed mobile convergence product and that our Mega Deal is working well which is a three plus one product. And again, confident about improved performance in the second half.
We will take our next question from Vijay Jayant with Evercore ISI.
Mike, I just wanted to get some clarification that the inclusion of BASE is about a 50 basis-point drag on EBITDA and about $100 million impact on free cash flow, given that we have no sense on what that asset is doing. And second, obviously your comments and your expectations are suggesting that we are at an inflection point now with Liberty Go kicking in. And given your growth in the first half of 2.7% EBITDA for Europe and implying the new target suggests 5.5% to 6.5% EBITDA growth. So, the question really is -- I think it was asked earlier, but the confidence on the cost side that you control, is there any way you could size that for us and sort of let us understand why that’s really achievable, given that your underlying business seems to be at least 3% growth right now?
Charlie, you might want to look up, I don’t think John is on and answer on BASE if you have it handy. I don’t know that we disclosed the specific -- or quantified the specific impact, just have to say that the business was clearly, we know what it was doing when we bought it. It was in some structural decline. And we knew that it was going to take some integration effort to get to business back into the Telenet fold. So, Charlie, you want to quantify some of that, I don’t know if disclose and make this point -- and can you talk to it? Go ahead.
You are right. I mean again, [indiscernible] what has been disclosed in the Telenet, but it was certainly the Liberty level that is the what the numbers you mentioned 0.5% and broadly $100 million is about right, and clearly exchange rate dependent, blah, blah, blah. But that is right.
I think Vijay, on the Liberty Go side and on the cost side, we have in the past and we can do it again, explain where exactly we’re finding those benefits, but it’s not rocket science. As we brought this company together, as we change the operating model as we -- as the management team set our sights on improved efficiencies, there are a dozen work streams underway covering everything from customers, call centers to supply chain to procurement on the CapEx side to consulting cost, I’m sorry for consultants but that’s coming down to travel. There are just dozens and dozens of things we are doing as a team collectively and cooperatively to get our cost base where we think it ought to be. But it’s not just costs that are going to drive our performance, of course it’s revenue and that’s where the rubber meets the road.
But we have shown in the past, and I think it is a little bit of credibility here on our ability to drive efficiencies. I don’t think we missed the synergy budget in 10 years of acquisitions. You can go back and check that. And so when we say, we think we can bring the costs in online, I think we can -- we should be trusted; revenue stuff that is where we make or break this thing. And thus far, we feel extremely like confident on things like Lightning and new build, but our work is cut out for us. So we have to work our butts off and figure out how we get the engine moving in second half. We have headwinds. Ziggo is a headwind. That deal is going to be a terrific transaction for us, we all know that, it’s going to generate cash, free cash and it’s going to be stronger business. So, we have to manage our headwinds as we do, but I feel pretty confident about it. I don’t think we will be repeating ourselves. I don’t think, we had an opportunity here. I don’t think we wouldn’t be conforming our mid-term guidance if we didn’t feel we could achieve it. So, I think that’s the best answer to your question.
We’ll take our next question from Frank Knowles with New Street Research.
Yes. I wonder if you could expand a bit more on your comments on content; I think you noted that both in the UK and the Netherlands, content costs had gone up a bit in the first half. Could you just refresh our view on the content cost per sub on your main markets and where they might be heading given your increased investments in some original content and local sports and so on?
Our content costs across the board are up mid single-digit, I think maybe less than that. But there is going to be puts and takes. I mean we did announce the discovery deal that required us to make good on some earlier periods. So, that comes with huge rights and also some very positive content benefits. Clearly, that was something -- that has impacted the second quarter. We don’t see anything specific on the horizon of that nature that should be impacting us. We’re still in the high single-digits on a cost per sub basis, $7, $8 more or less, and most of the increases year-over-year going into our SVOD content, same as like the production deal that I described, which I probably described we did prematurely that’s single million euro kind of dollar share. We aren’t suggesting for a second half we’re going to start spending huge amounts of money on renewal content. It is smart, clever, relatively small investment by multiple markets to get some content in our platform that’s unique to us. So, I think the content picture remains as we’ve described it in the past. The pie is shifting. We’re putting more emphasis over time in SVOD content, in the rights that drive our digital TV Everywhere platform which is performing extremely well. We’re working our tails off to manage linear costs where we can. But big, big providers like Discovery who drive huge amounts of rights onto our non-linear platform are critical for us; I mean the Olympics and other things. So, we’re going to find some of those things happening from time to time, but the picture still remains in online extremely positive.
We are in the -- if you take premium out of the UK, we’re in even lower content cost on a per sub basis, more like $5 to $6. So, we’re in a very advantaged position relative to for example U.S. operators when you look at our content picture. And it’s our jobs to ensure that we are driving great product into the stuff we know customers love, TV Everywhere, non-linear rights, VOD, et cetera, and that we’re managing the fixed cost as we go or the more linear costs as we go.
And I think we’ve done a good job. Bruce Mann who we hired as our new Head of Programming is working extremely well across our footprint. We just brought a new -- one of our new -- one of our core content guys into LiLAC to drive those content costs. So, I think if you look at it globally, it’s a huge priority of ours. And I think we’re going to have good success there.
If I could have a quick follow-up just on the advanced TiVo and the new EOS platform you mentioned. If you could just talk a bit about what you think the effects of those are going to be maybe in 2017 and onwards? Is it -- we going to see any sort of meaningful reduction in CPE cost; is it primarily to improve retention or ARPU by moving people up the chain in the video world?
Well, I’ll let Tom talk about the TiVo UI itself, but the EOS box, and Balan is on here as well, is certainly just one good example of how we’re driving scale across footprint. And it’s 4K box, it costs much less than our current Horizon boxes. It’s cloud based. It is essentially -- going to be the work horse of our video platform. It’s powerful, inexpensive with great scale benefit. And we’re going to roll that out wherever we can of course; and the faster we roll it out, the better. And that’s what we should be doing; that’s what you’d expect a company of our size to be doing. Balan, do you want to add anything on that EOS box?
No, I think you’ve covered all this. This is going to be -- certainly, the box will be rolled out all across Europe and will benefit South America as well. And we’ll have a very easy way to move UIs on, so you could have TiVo one day on and you can have the Horizon UI in the same box, the next day. So, it’s a very fungible low cost high powered box.
And the TiVo UI, I just saw it couple of weeks ago. Tom, you can add it to it, looks beautiful, great, super. I mean it’s a terrific looking UI, I think will be state of the art in that market with exactly all the features and functionality you need to see. And there is a perfect migration path for us to not just stay relevant but to lead in the video space in the UK or were we the only guys with all the content, only guys with all the sports, only guys with that et cetera, et cetera. Anything on that Tom on the TiVo relationship.
Well, I’ll just add on that point that the re-launch under the brand Virgin TV in the United Kingdom with the new EOS box and new interface will in addition give us a very, very significant step up in our ability to on-demand programming across multiple forms and give our customers access to a wide range of over the top applications which those of you our customers will have seen already, but we will definitely be adding to that. So, I think we’re very confident that we can structurally lift the breadth of programming and the utility of it that we give to our people in a way that certainly hasn’t happened since the TiVo box was initially launched in the United Kingdom four, or five years ago.
And, we’ll take our next question from Ben Swinburne with Morgan Stanley.
I have two questions, may be for Tom in the UK around Lightening. I think Mike said about half the customer adds roughly versus with new footprint this quarter. Wondering if you could just help us think about the homes marketed. I think we have a sense for how quickly you’re building homes in the UK, I think you said 700,000 premises sort of under construction may be, but what’s sort of the homes marketed number we should be thinking about as we track the success of that build, which is so key to your full year guide? And Mike, just on the programming cost side, if you think about your three-year guidance, is there a number kind of you have in your head either for programming or may be for direct versus indirect as we think about what you think you’re going to be investing over the three-year period annually in growth around programming costs, so we can kind of fine tune the ramp here through 2018?
Sure. Tom, do you want to start with Lightening?
Yes, on Lightening I think it’s the numbers we did refer to in the release that there are 85,000 additional premises released from the locking program in Q2 which was in addition to the 70,000 we did in Q1 and we have a full year target of release this calendar year of 500,000 which we have a high degree of confidence that we will achieve as the team continues to bring on these contractors, skill them up, give them the clear commitment that we’re going on with this program, so they put the resources into it. So, 500,000 plus is the number to look forward…
On content, I mentioned the number earlier. We’re at about 850 a month per sub; I think that on current FX includes premiums, certainly lower than that I am confident, we don’t have [indiscernible] et cetera. You should expect and we do expect, I’ll give you some basic parameters that that number in our overall content picture will grow at or above our revenue range. But that’s smart investment, that’s what we need to retain high margin, high IRR, customers across the video platform. Video is -- maybe it might only be 35%,of our revenue, but it is a critical part of our bundle of course. And we’re really pleased with our ability to compete on the video front. So, you’re going to see us of course maintain, not just relevance but I think really important superiority if we can, in our content offer. And so for the most part, I think we said this publically in the past, you’re going to see content cost grow year over year and at or above our revenue rate. But of course we have -- that’s investment we’re making to drive revenue. You will see other aspects of our expenses, in particular in direct cost, reduced. So direct cost, Ben, I look at it, our direct cost as you should expect will grow at or above or near our revenue, because that’s what’s driving that revenue, interconnect, content, things of that nature. And so want to push top line and revenue growth, that’s the number one things; drive absolute margin; and then of course, a benefit from -- longer term from a more efficient cost model below that line. So, that’s the basic way of looking at it. I think that’s probably how you’re modeling it already but...
And we’ll take our final question from David Wright with Bank of America.
It’s actually a couple of questions. If you could just confirm just the guidance change is just purely mechanical that there is no change to the underlying, that’s just a very simple question, mechanical from obviously the new consolidation effects. And then, my second question is just on Lightning, I just wanted to just get a bit of a view on the net add swap, sort of the percentage of triple-play apps who’ve come aboard. I think you gave some indication on the Q1 so that it was roundabout 50% or so of the net adds were coming on triple play, which was running below the blended base. Are you seeing a similar number in Q2, a number higher, number lower? I guess if it’s not higher, what level of confidence do you have in selling into triple play or is this the kind of structural change that we are a little nervous of, which is the consumer being a little more focused on the broadband pipe and maybe taking the OTT solutions?
Tom, do you want to start with the Lightning question?
I confirmed that number that number that 50% in Q1 regarding Q2, coming in on triples. But remember, this is the first half of the calendar year and the -- as I mentioned a minute ago, historically in the UK region Virgin Media has been a flat company in the first half. This year we are close enough to 85,000 customers up. And we will unquestionably lift that triple number through Q3 and Q4. Obviously the tact for us is to maintain our overall leverage in order to maintain the business in general. One point, I should make about the programming cost is that, going into Q3, we left the increase in football cost that came through at the beginning of season last year. So, there would be a year on year benefit that we see in the underlying numbers, with that being left. But sure, -- we 50%, we’ll look that number Q3, Q4…
I wasn’t quite sure on the -- go ahead, do you have a follow up there?
No, sorry; I didn’t mean to interrupt. I guess I just sort of am curious, you are adding the dual-play sub spot. What is your confidence on their not selling them into triple play, is it not the case that you might face a little more pushback now from the kind of structural OTT threat; what is the hook that’s bringing the double and triple play for the net new Lightning adds?
I think one of the issues there of course that when we go into these Lightening areas, we’re generally taking subscribers off an existing platform. So, some of the people haven’t been on service before but many of them do have service. And there is every reason to think we can sustain that ratio. And that we can get growth from June, we can get growth from triples and progressively we’re going to get growth from quad-play. So, I think…
It also has to do with how we’re offsetting sales teams, I mean there is some blocking and tackling there as well. So, we think there is -- those issues are easily sorted.
And if you could maybe mention on the guidance, Mike, I guess it’s just a purely simple; I guess yes effect, I guess it’s just purely….
I want to make sure I understand your question, maybe you could just repeat it; I didn’t quite follow the question.
Yes. So, you’ve changed the guidance to increase BASE and CWC. So, is the guidance purely a mechanical change from those two or can we confirm there’s no change to the guidance of any of the businesses ex-BASE and CWC?
If I’m following you correctly, we changed on the case of LiLAC; we did after 80 days here we have enough information around Cable & Wireless to believe that our guidance for LiLAC is confirmed, both short-term and medium-term. So, the answer is that when you include Cable & Wireless into our previous guidance, the guidance doesn’t change in LiLAC. In the case of Europe, the principal impact from BASE is what’s driving that most materially. We also have some FX headwinds. And so I think the European guidance is a bit more complex of course. There are two or three elements in there, but the one that’s most concrete of course is included in the BASE asset which was not included when we provided guidance in February. Is that fair?
Yes. I am just -- yes, I guess just without taking too much time, so I guess those additional impacts beyond BASE, you mentioned there was a little currency…
There’s a little FX, yes, and we know where we are in H2. So, we’re not breaking all that down for you. But in the end, we felt it was smarter to narrow it and certainly include assets that we now own and operate. So, I know where you are going but there is not much more detail.
Yes, essentially there is no downgrade essentially to the guidance ex-BASE, is that correct?
Well, there is a number of factors, I mean FX is clearly one of them. There is other -- we know where we are now through H2 -- through H1 and we know where need to be H2. So it’s a combination of factors and the most concrete of those is BASE, and I think we already just quantified that enough for you in the earlier question.
Okay, thanks guys.
Yes. All right. Listen, we appreciate you getting on the call. It’s as we said at the outset, an inflection point for us. And we do feel confident about the second half, not the least of which because of subscriber growth in the first half, which is twice last year. We think the cost efficiencies will start to factor in as we predicted. Some of the headwinds will tail off. So, the second half of the year is important for us. This is a journey. I want to remind you that. This is a journey for all of us. We’re not -- we’re in this for the long-term and hope you are too. And we did signal this for everybody. So, while we feel good about the trajectory, what it does, to us reflect anything but exactly what we more or less expected. On the LiLAC piece of the equation, I’ll just repeat that now with the own Cable & Wireless, we’re absolutely pleased, it’s a terrific business, strong management, tons of opportunity not just around synergies but around revenues. But as we integrated the business, it was important for us to get a level set especially around gap. And we’ll do a much better job of providing transparency to you in the second half around comparable periods prior and current, so that you can understand how we’re looking at those numbers. But, as I have indicated earlier, we do feel the second half will be a mid to high single-digit grower rebased and that the numbers will look more like what you had in your consensus.
With that we’ll let you go. We hope you have a great rest of the summer, and speak to you on the next call. Thank you.
Ladies and gentlemen, this concludes Liberty Global’s second quarter 2016 results investor call. As a reminder, a replay of the call will be available in the Investor Relations section of Liberty Global’s website at www.libertyglobal.com. There you can also find a copy of today’s presentation materials.
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