Liberty Global Keeps Ziggo Spin on Track, Targets £800 Million in VMO2 Savings

Liberty Global (NASDAQ: LBTYA) said its planned Ziggo Group spin-off remains on track for the second quarter of 2027, as VodafoneZiggo returned to revenue growth for the first time since 2024 and posted its strongest broadband performance since 2019. The company also launched a broad restructuring at Virgin Media O2 targeting £800 million of annual run-rate cost savings by 2029, while placing greater emphasis on cash generation and leverage reduction.

The updates were the main focus of Liberty Global’s third-quarter 2026 presentation, which maintained full-year guidance across its telecom businesses and corporate operations. The company nevertheless adjusted its year-end corporate cash target to $1.8 billion and said it was reviewing VMO2’s planned 2026 shareholder distributions, with an update expected alongside full-year results in the first quarter of 2027.

Ziggo Group prepares for separation

Liberty Global said it has appointed lead bank advisers and a full management team for Ziggo Group, which combines VodafoneZiggo in the Netherlands and Telenet in Belgium. Initial confidential prospectuses are expected to be filed with U.S. and Dutch regulators in December.

The company continues to target approximately 4.5 times leverage and €500 million of Adjusted Free Cash Flow for Ziggo Group in 2028. Those estimates depend on future operating performance, synergies, asset-sale proceeds and other assumptions.

Liberty Global said expected synergies are tracking well above the initial €1 billion net-present-value target. It also expects more than $700 million of tax assets to be recognized on Ziggo Group’s balance sheet. Deleveraging is expected to be supported by €669 million of proceeds from the VodafoneZiggo tower sale and €2.4 billion of Wyre financing. The tower transaction is scheduled to close in the fourth quarter.

VodafoneZiggo’s quarterly revenue returned to growth, supported by price indexation, an ESPN surcharge and customer gains. Adjusted EBITDA declined as lower sales margins and increased commercial investment offset the revenue improvement, while Adjusted EBITDA less property and equipment additions was affected by continued spending on network resilience and service reliability.

The Dutch business added 12,000 broadband customers, its best result since the second quarter of 2019, and 31,000 postpaid mobile customers. Fixed ARPU rose to €57.7 from €57.3 a year earlier, while postpaid mobile ARPU declined to €17.7 from €18.2. Ziggo also expanded onto DELTA Fiber’s network, adding more than 680,000 households and taking its total serviceable footprint above 8 million homes.

VodafoneZiggo launched an 8-gigabit service using DOCSIS 4.0, which Liberty Global said can support future 4-gigabit and 8-gigabit deployment across the broader footprint without extensive street excavation. The company estimated that the upgrade costs about one-tenth as much as a fiber build, allowing it to continue using the existing cable network.

In Belgium, broadband additions remained positive for a sixth consecutive quarter, while postpaid mobile additions recorded their strongest performance since the first quarter of 2023. Telenet’s revenue remained stable as higher Wyre network revenue, handset sales and football programming revenue offset other pressures. Adjusted EBITDA declined because of lower subscription revenue and higher programming fees under a new DAZN agreement, while Adjusted EBITDA less P&E additions benefited from capital-spending timing and lower 5G investment.

VMO2 targets lower costs and capital intensity

Virgin Media O2’s new strategic plan targets approximately £400 million of run-rate savings in 2027, £600 million in 2028 and £800 million in 2029. The program carries about £250 million of estimated one-time costs and includes a planned 30% reduction in employee costs, equivalent to roughly £300 million, alongside senior leadership changes and wider use of artificial intelligence and digital tools.

VMO2 also plans to stop further fiber upgrades within its own network and redirect capital toward projects with clearer expected returns. The operator will prioritize a lower-cost hybrid fiber-coaxial upgrade designed to offer 2-gigabit speeds across about 70% of its footprint by 2027. It will continue investing in its mobile network, including standalone 5G and its network-sharing agreement with Vodafone.

Third-quarter VMO2 revenue was $3.26 billion, with total service revenue of $2.74 billion. On a rebased basis, total revenue declined 3.9% and service revenue fell 2.6%. Adjusted EBITDA declined 5.7% to $1.34 billion, while Adjusted EBITDA less P&E additions decreased 8.7% to $565 million.

UK consumer broadband losses narrowed to 27,000 from 45,000 a year earlier, and postpaid mobile losses improved to 22,000 from 30,000. Competitive and promotional pressure continued to weigh on fixed ARPU, which declined to £45.8 from £48.2, while postpaid mobile ARPU increased to £18.1 from £17.8. VMO2’s full-fiber footprint, including premises served through nexfibre, reached 9.4 million, and its outdoor 5G+ population coverage rose to 86%.

Liberty Global said it remains committed to VMO2’s proposed Netomnia transaction but disagrees with the UK Competition and Markets Authority’s interim findings. Completion remains subject to the regulatory review.

Guidance maintained as cash target changes

For 2026, VMO2 continues to expect total service revenue and Adjusted EBITDA to decline by 3% to 5% from 2025 levels adjusted for the Daisy transaction. P&E additions are forecast at £2.0 billion to £2.2 billion, with Adjusted Free Cash Flow of about £200 million. Liberty Global is reviewing the planned distribution of approximately £200 million to VMO2 shareholders and expects to provide an update in early 2027.

VodafoneZiggo continues to forecast stable revenue to a low-single-digit decline, a mid- to high-single-digit decline in Adjusted EBITDA, P&E additions equal to 23% to 25% of revenue and Adjusted Free Cash Flow of about €100 million. No shareholder distribution is expected.

Telenet expects stable revenue growth, low-single-digit growth in Adjusted EBITDA after leases, P&E additions of around 20% of revenue and a return to positive Adjusted Free Cash Flow of approximately €20 million. Liberty Global Corporate continues to expect an Adjusted EBITDA loss of about $50 million.

Liberty Global ended the third quarter with $2.05 billion of corporate cash and Liberty Growth investments with an estimated fair value of $2.92 billion. The company completed $100 million of share repurchases during the quarter and anticipates another $100 million in the fourth quarter. Management said it does not intend to deploy Liberty Global’s existing cash into its telecom assets.

The company’s plans remain exposed to execution and regulatory risks, including approvals and tax treatment for the Ziggo Group separation, realization of anticipated cost savings and synergies, completion of asset sales, the outcome of the Netomnia review and continued competitive pressure in European broadband and mobile markets.