Nov 6, 2015
Executives
Michael Fries - Vice Chairman & Chief Executive Officer Bernard Dvorak - Executive Vice President & Co Chief Financial Officer Charles Bracken - Executive Vice President Thomas Mockridge - Chief Executive of Virgin Media
Analysts
Benjamin Swinburne - Morgan Stanley James Ratcliffe - Buckingham Research Jeffrey Wlodarczak - Pivotal Research Group Tim Boddy - Goldman Sachs Michel Morin - Morgan Stanley Frank Knowles - New Street Research Saroop Purewal - Redburn Michael Bishop - RBC Vijay Jayant - Evercore ISI
Operator
Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global Third Quarter 2015 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 materials 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 the question-and-answer session.
As a reminder, this investor call is being recorded on this state, November 6, 2015. Page 2 of the slides details the company's Safe Harbor statements regarding forward-looking statements.
Today's presentation may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including the company's expectations with respect to its outlook and future growth prospects and other information and statements that are not historical facts. 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-K and 10-Q. 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 such statement is based.
I would now like to turn the call over to Mr. Mike Fries.
Michael Fries
Thank you, operator, and welcome, everybody. I want to welcome both sets of shareholders today, actually.
Appreciate you joining us. I've got several of my top execs on the phone with me, and I'll introduce them as they chime in during the call.
Our agenda is going to be familiar to many of you, I hope. I'm going to provide some overview remarks, some highlights, and then Bernie will get into the details on the numbers, then we'll take your questions.
And I'm speaking from slides today as we normally do, and I hope you can get those off our website, because I'll be referring to them at least in my remarks. Starting on slide 4, with what I think are some key themes here.
If you're looking for five or six key takeaways from the call, well, here they are. And I'll spend a few minutes on these because I think they'll provide great context for you as we go through the rest of the presentation.
First, as predicted, our subscriber growth is back on track and accelerating. And as you've already seen, we added more RGUs in the third quarter than the first two quarters combined.
In fact, nearly all of our European operating regions delivered materially better RGU adds this quarter than Q2. And growth ticked up in every product segment with 525,000 RGUs added through nine months, we definitely have our work cut out for us in Q4 to hit our target of up to 1 million net adds for the year.
But this is traditionally our best quarter, and we're working hard so. Secondly, we're starting to see the top-line benefits from three new revenue drivers.
We now have mobile launched in 10 countries and we've added 450,000 postpaid subscribers in the last 12 months with good ARPUs and healthy margins. That mobile revenue is now 8% of our total revenue and it's up 18% year-to-date.
Our focus on the SOHO and SME segment is supporting high-single-digit growth in our B2B business, which is now also 8% of our rebase revenue and up 8% through nine months. And the construction of 4 million new homes in the UK is off to a great start with millions of additional new homes in our sites across Europe.
Third, I feel better and better about our competitive position every quarter. There's no question that incumbent telcos across Europe are putting up a good fight with more aggressive bundles and improved video offers.
I mean, this has been happening for a while, and we never underestimate these guys. But they're still mild behind us on broadband speeds.
We just moved to 200 megabits in the UK, for example, nearly three times the speed of BT. And we've got an incredibly efficient road map to 1 gig when we need it.
Our mobile offers give us great flexibility and leverage to grow and retain customers. And I'll talk about our advanced video platforms in a second.
When you consider that our next-gen video services and TV Everywhere products consist of very fat content offers that are being sold for very skinny prices, it's becoming increasingly clear that we've got OTT on the run in Europe. And I'll provide a bit more detail on that in a second.
And to complement and super charge our strategic growth plan, we're now in the implementation phase of what we call Liberty 3.0. This is a massive transformation program designed to streamline our operating model, accelerate our growth and drive even greater efficiency through the business.
It's ambitious, it's exciting, and it's 100% accretive to what's already a very strong growth business. And fifth, even though you know it, we always feel good about repeating, and that our levered equity growth plan is on track in delivering returns.
The balance sheet is strong and our buyback program is in full swing. Then lastly, we are confirming all of our financial guidance targets today even after a slower first half.
So, growth is accelerating, new revenue streams are kicking in. We're very well positioned vis-à-vis telcos and OTT.
And Liberty 3.0 is adding horsepower to our growth engine. I could theoretically end the call right there and go to questions, but I promised the team I'd walk through the rest of the slides.
So, bear with us. And I'm going to move to slide 5 now.
We summarized some of the key highlights from the quarter which support the themes I just talked about. On the left, you'll see our operating and financial metrics, as I mentioned, sub growth was back on track with 320,000 new RGUs in the quarter compared to about 200,000 in the first half of the year.
Bernie is going to provide details on our financials, but we had our best Q3 revenue performance in two years with rebased revenue up 4%. And I'll show you how that's been trending up throughout the year in most of our core markets.
Meanwhile, rebased operating cash flow came in at 3% for both the third quarter and year-to-date. And this number was obviously impacted by Ziggo, which is in full-fledged integration mode, as you know.
But if you net call it out, our Q3 and year-to-date OCF growth was around 4.5% with several of our regions like the UK, Germany, and Belgium growing at 6% or better, and LiLAC at 10%. Moving to the middle of the slide.
I'm just going to touch briefly on our M&A pipeline which remains, in my view, both diverse and intriguing. You're aware of our mobile acquisition in Belgium which is progressing due to regulatory process.
There are great synergies in this deal. We're confident we'll get regulatory approval.
And assuming we do, it will be the first time that we'll own cable, mobile, and the free-to-air broadcast business in one market. Ireland will be another test case when we close the acquisition of TV3, the largest commercial broadcaster there.
You would have also read about our discussions with Cable & Wireless, a market-leading fixed and wireless operator in the Caribbean and Latin America. I'm precluded from answering any questions, I'm telling that right up front, or saying anything really about the opportunity.
But as we rolled out our Lat Am tracker, we did mention that in our opinion, this region is underpenetrated in broadband and pay-TV and is likely to experience above-average growth, just look at our own assets, and is ripe for consolidation, particularly by experienced and well-capitalized operators, which is a good segue to the right-hand side of the slide, where we recap the numbers behind our levered equity growth strategy. You'll see we're sitting on over $5 billion of current liquidity, with gross leverage at the high-end of our range of 4 to 5, and no material obligations due before 2021.
Our average cost of debt is now 5.2%, the lowest ever. And we repurchased 500 million of stock in Q3, over $1.4 billion year-to-date, and we still have $2.5 billion to go between now and the end of 2016.
So, as promised, on slide 6, I'm going to dive a bit deeper in our subscriber results year-to-date. And I think slide clearly illustrates how we've been able to accelerate growth throughout the year.
On the far left-hand side of the slide, you'll see that our video attrition has improved substantially over the three quarters, from a loss of 159,000 in Q1 to just 63,000 in the third quarter, driven mostly by higher digital conversions and with every European market actively showing improvement in video attrition quarter-after-quarter. In the middle of the page, you'll see the broadband and voice subs total 380,000 in the quarter.
That's up from 240,000 in each of Q1 and Q2. And then the chart at the far right shows the acceleration of total RGU need ads for both Europe and LatAm from 68,000 in Q1 to 138,000 in Q2 to 320,000 in the third quarter.
I want to give a quick comment about cord cutting, by the way. It's a certainly a popular topic.
In our world, connectivity to customer households is a golden ticket. Whatever services they take.
And in the third quarter, we had positive cord connections on a consolidated basis, adding new customers in half of our markets and remaining flat to down in the remainder. Case in point, we saw record customer growth in the UK, and 68,000 new RGUs, our best Q3 in years, with nearly as many broadband additions on our footprint as BT had in the whole country.
So, continuing with some brief country highlights, and we're obviously happy to take questions on this, Germany delivered over 100,000 net adds due to good broadband momentum, our second lowest video attrition ever, and a much-better tier mix with 70% of new broadband subs taking 120 megabit speeds and higher. Switzerland had weaker RGU trends, partly related to our announced basic cable price increase of 7%, the first in January.
But we also announced plans of double broadband speeds, the majority of our sub-base, which we think will add considerable value. Belgium had another strong quarter, effective marketing campaigns drove continued subscriber growth in fixed and mobile and high ARPUs, and our broadband subs on average are subscribing to 110-megabit broadband speed, again [indiscernible] what the incumbent is offering.
Moving to Latin America then, LiLAC reported another strong quarter of organic RGU additions adding 24,000 in the quarter, now 100,000 year-to-date. Chile nearly doubled RGU additions compared to last year, helped by a new bundled offering of 50 HD channels and broadband speed to 40-meg in that market.
And even Puerto Rico added customer relationships around 6,000 of them in the quarter. Now, we have long talked about driving top line growth in our core markets through subscriber growth, an improvement in the price value relationship of our bundles, and the success of our strategic initiatives.
And on slide 7, you're going to see that we've been doing just that and pretty much most of our core operating regions over the last three quarters. Starting on the top left with our largest operation in the UK and Ireland, you'll see that Virgin Media has seen a steady increase in revenue growth year-to-date rising from 2.5% in Q1 to 3.4% in Q2 to 4.5% in the last quarter.
Our residential cable business consistently post steady gains as we enhance value for customers and take reasonable price increases. B2B was up 5% in the quarter, and mobile including our freestyle proposition is gaining great traction.
Germany, in the middle of the page delivered its highest revenue growth in six quarters at 7% for Q3, up from 6.3% in Q2, and 4.6% in Q1, largely driven by accelerating net adds, more sales of our premium bundles, reasonable price increases and ARPU growth of about 7%. Telenet in Belgium is like a well-oiled machine growing consistently at 6% to 6.5% in the top line for three straight quarters.
Of course, they were benefiting from a 4% price increase and new video products by play and play more and the recently-relaunched sports package. Holland, as you know, has been suffering from strong competition and integration-related issues, which we've been addressing successfully, and we think the business and the market have stabilized.
I'll go into that in second. But as our second largest market, it has clearly been a drag on our consolidated results, which is why I gave you those numbers net of Holland a moment ago.
In order to drive scale benefits, we've combined the operations of Austria in Central and Eastern Europe under Switzerland. So, we show that here combined growing at about 2.2% to 2.7%.
Now, Switzerland and Austria are actually closer to mid-single-digit growth but are way down by CEE. So, a lot of moving parts here, seven countries, but we feel really good about driving greater top-line growth and efficiencies over the next few years especially with the Liberty 3.0 plan.
And then, finally, LiLAC grew 7% over the last two quarters and has great momentum. Our broadband bundles are killing the competition, on average, three times faster than the other guys.
One of the ways we're growing at top line is with our next-generation TV and mobile platforms, which we talk about on slide 8, both of which help us create happier and stickier customers. On the video front, I got to tell you, I could not be more convinced that we're on the right track.
Our next-generation TV platforms are now offered in eight countries across 42 million homes passed, more than 80% of our footprint. We now have 6 million of our digital TV customers tapping into an incredible user interface at home with all the best television on-demand on every device.
Interestingly, Reed Hastings said earlier this week, you may have seen it that he's always been most scared of TV Everywhere. I think his words were, you get all this incredible content that the ecosystem provides on demand at no extra costs.
And while Halloween was a week ago and I think Reed's got a good reason to be scared in our markets. When you download our Horizon Go app on your phone or tablet, you get all the same broadcast and cable channels that you normally get on the big screen, which means you get all the same sports programming, and you add to that a seven-day replay TV feature, catch-up TV on-demand and thousands of movies, drama and kids' programs packaged like Netflix on every device both in and out of the home, and you get all that content of functionality essentially for free.
And today, our customers are streaming live news and sports at the bus stop or replaying their favorite TV shows or watching our hard bundled SVoD services like MyPrime in Holland and Maxdome in Germany where we're getting 35% usage rates. We've got 1.8 million subs who use our TV Everywhere services today, and that number is going to grow rapidly as we continue to make that available to more and more customers.
I think Reed was right, so stay tuned. The other important consumer innovation is our mobile and converged offers.
As I mentioned, we've now launched mobile in 10 countries, and are seeing the benefits of the quad play with over 4.7 million customers. It's all about data and broadband.
We know that. So, we're focused on monetizing and/or securing the best terms from our MNO partners when it comes to pricing and technology.
We've already launched 4G in Switzerland and the Netherlands, and we've seen a rapid increase in sales and revenue activity in both those markets. Maybe just a quick comment on mobile consolidation since we're now sort of experts given our Belgian acquisition.
For the record, we do not see a seismic shift in regulatory policy under the new EU competition commissioner. The current approach to mobile consolidation in our view reflects a prudent look to pros and cons, and a clear willingness to improve transactions with reasonable remedies.
In Belgium, we are providing those remedies. And in other markets like Austria and Ireland, we are beneficiaries.
So, basically, you see how UK unfolds which, of course, we're watching closely. But we're very encouraged by consolidation in Europe.
We think we're in the sixth inning there with lots of opportunity ahead of us. And the complementary mobile networks, we've been aggressively rolling out Wi-Fi across our footprint.
Today, we have 6 million Wi-Fi spots across nine of our European markets, and we should have about 10 million by early next year. So, our customers can roam for free, which is a huge advantage for them.
And the offloading benefit can be a material advantage for us. So, in Belgium, for example, households with a mobile device offloads 50% of their daily usage outside the home to Telenet's Wi-Fi network, which had a direct impact in terms of cost reduction and margin improvement for us.
And it's real money, so we don't to pay our M&O partner. So, by combining our fixed network with a mobile strategy centered around full MVNOs and Wi-Fi, we think we can deliver fast, seamless, and superior connectivity to our customers wherever they are.
And I'll wrap up my remarks on page 9 with some operational developments that have a direct impact on growth for us. And I'll start with just a bit more color on Liberty 3.0.
And as I said before - and this is an important point. This is not just a cost-cutting exercise.
I think we've seen or you are likely to see what that sort of single-minded approach does to revenue growth, customer engagement, churn, et cetera? Our plan is to push both buttons.
Revenue will come from a greater focus, I think, like B2B mobile, broadband market share and newbuild opportunities. And you can see an update on Project Lightning, our newbuild in the UK, in the middle of the slide.
Early results on build costs, penetrations and ARPUs are right on target. And we're actively evaluating projects to build millions of additional homes across Europe.
These top line initiatives together are the largest contributors to OCF growth over the coming years at Liberty 3.0. At the same time, we are targeting a total cost efficiency program of about €1 billion from across the organization over the next few years, including obvious areas like procurement, supply chain and IT.
In fact, about half of these work streams are already in flight, as we like to say, and when we started to program. So, there's nothing magical here.
And we think we have a pretty good track record of integrating and streamlining operations. And these are smart efficiencies that we know exist because of all the acquisitions that have taken place over the last five years, it really is just as simple as rethinking how we do things and how we operate our business.
And when you combine the high-single-digit rebased growth on the OCF line that we think we can trend towards over the medium term, together with our levered equity approach, Liberty 3.0 is a powerful value creation model for us. I'm going to end with a quick update on Holland.
I got to tell you I'm very encouraged by the turnaround of Ziggo where our renewed focus on service quality and innovative products is starting to pay off. For example, in July we initiated an aggressive sales campaign for our high-value offers that's centered on Horizon TV and superior broadband speeds.
And we saw Q3 sales jumped 40% over Q2. On the operating front, we implemented a number of quality initiatives that resulted in reduced customer calls and reduced [indiscernible] and now KPI is starting to trend towards pre-integration levels.
Now, we had a small RGU loss in Q3. It was better than the earlier periods.
And there's more work to be done. But one area where we're already outperforming today is Horizon.
We added a record 128,000 subs during the quarter and our Horizon Go app was downloaded 1 million times since the rebranding in mid-April. And 700,000 unique households are using it regularly.
The current marketing campaign highlights the benefits of things like Replay TV which is an incredible product, a new killer app, and I think growing really rapidly, usages by 80% of our users just in the first quarter. And we just announced Ziggo Sport.
This is our own basic sport service built off of our existing premium sports platform and provided exclusively through our customers at no additional cost. So, behind the scenes, of course, we continue to make significant progress on our €250 million synergy plan, and we expect a portion of those synergy benefits to actually favorably impact operating cash flow in the fourth quarter.
So, before I turn it over to Bernie I'll come back to my key themes. It's all about growth for us, customers, ARPUs, revenue, and OCF.
And while we feel good about this year, we feel really good about the next two years. The competitive environment is becoming clearer to me.
Our networks deliver superior quality. We're innovating at light speed, in my view.
And despite our success, we're challenging ourselves to do more through Liberty 3.0, more for our customers and more for our shareholders. So, I look forward to your questions; and with that.
I'll turn it over to you, Bernie.
Bernard Dvorak
Thanks, Mike. I will provide a financial update on each of our two businesses, starting with the Liberty Global Group which includes our European business; and then move on to the LiLAC Group, which tracks our operations in Chile and Puerto Rico.
I'm on slide 11 where we present our third quarter results for the Liberty Global Group. For the first nine months of 2015, we reported $12.8 billion of revenue as compared to $12.7 billion for the prior-year period.
From a rebased growth perspective, which adjusts for FX movements and the impacts of acquisitions and dispositions, our revenue growth was 3% year-to-date. But I would also like to highlight that our third quarter rebased revenue growth was 3.5%, which represents an improvement over the first two quarters of this year.
In terms of OCF, we have generated $6.1 billion year-to-date versus $6 billion in 2014, resulting in rebased growth of 3%. Our rebased OCF performance for the year-to-date period includes the net negative impact of certain items, the most significant of which was $31 million of additional integration expenses primarily related to Ziggo.
Looking ahead, we're confirming our full-year guidance for mid-single-digit OCF growth rate, although we expect to end up at the lower end of that guidance range, mainly due to weak performance at Ziggo. Given these expectations and our year-to-date results, it's clear and we anticipate a higher rebased OCF growth rate in Q4.
In Europe, we reported an OCF margin of 47.8% for the full year-to-date period, which is a 40-basis point improvement compared to the same period last year. Turning to our capital intensity, we reported $2.8 billion or 22% of revenue for P&E additions in Europe year-to-date.
The increase in P&E additions in both absolute and percentage terms was primarily related to an increase associated with the acquisition of Ziggo, as well as higher spending for newbuild and upgrade projects. For the first nine months of 2015, Liberty Global Group delivered free cash flow $1.7 billion, an increase of 24% as compared to the prior year on a reported basis.
We expect to deliver another strong quarter of free cash flow in Q4, driving mid-teens growth for Liberty Global Plc for the full year. On slide 12, we break out our third quarter rebased revenue and OCF growth rates for our operations in Western Europe, which make up over 90% of our total European revenue.
Starting on the top left with the UK and Ireland, our largest operation, Virgin Media posted another robust quarter, with rebased revenue growth of 4.5%, and OCF growth of 4%. Similar to last quarter, the year-over-year increase in revenue was mainly driven by higher cable subscription revenue due to a combination of volume growth, and ARPU improvements and higher mobile handset revenue following the November 2014 launch of our split contract program in the UK.
Rebased OCF growth was slightly slower than revenue growth, due primarily to higher sports programming cost, as well as the adverse effect of a net £17 million non-recurring benefit in Q3 last year related to a retroactive reduction and local authority charges. Moving to Germany, Unity Media reported strong rebased results, including 7% revenue growth and 9% OCF growth, our best quarterly performance in over a year.
Germany's top line result was primarily driven by growth in our subscriber base, including higher take up of broadband products and lower video attrition coupled with higher ARPU, which continues to benefit from the broadband price increase that we took in the first quarter of 2015. On the OCF level, we continued our focus on tight cost controls, leading to a record margin of over 63% in Q3.
Our Belgian operation reported 6% rebased revenue growth in Q3, driven by continued strong cable and mobile subscriber adds, as well as a 4% price increase in Q1 this year. Telenet's Q3 OCF grew 7% on a rebased basis, driven largely by the same items as revenue growth.
In the Netherlands, we posted a rebased revenue contraction of 2% in Q3, mainly reflecting headwinds associated with RGU losses over the last 12 months. The rebased OCF decline of 1% represents an improvement over Q2 when rebased OCF contracted 5%.
The improvement was mainly due to lower integration costs in Q3. It's worth nothing that we reported a sequential absolute OCF improvement in local currency from Q2 to Q3 which is a sign of progress.
Given the lack of recent subscriber growth and the current competitive environment, we expect the fourth quarter of 2015 to remain challenging with respect to rebased revenue growth. However, we are delivering on the Ziggo synergy plan which we expect to have a favorable impact on OCF performance in the fourth quarter of 2015.
And finally, our Swiss and Austrian operations delivered 3% rebased revenue growth and 7% rebased OCF growth on a combined basis. So in total, our Western European operations generated 4% rebased revenue growth and 4% rebased OCF growth in the third quarter of 2015.
Slide 13 lays out Liberty Global Group's leverage ratios and our share buyback plan. At September 30, we had total debt of $44.7 billion, an increase of approximately $1 billion from the second quarter of 2015, primarily due to incremental borrowings related to our increased position in ITV.
With respect to our leverage position at the end of quarter, our gross and net leverage ratios in Europe stood at 5 times and 4.9 times at the higher end of our 4 to 5 times target range. But we remain comfortable given the quality of our underlying cable cash flow stream, our low interest costs and our long-dated maturities.
We have an average maturity profile of nearly eight years with no material principal obligations due before 2021. In addition, the Liberty Global Group's full-swapped borrowing cost now stands at 5.1%, an 80-basis-point reduction from 5.9% at yearend 2014.
Turning to our buyback program, you'll see at the bottom of the page that we repurchased nearly $500 million of stock in the third quarter and over $1.4 billion year-to-date, which leaves approximately $2.5 billion to repurchase of the new 15 months under our current plan. On slide 14, we present a summary of the year-to-date results of the LiLAC Group, which is comprised of operations in Latin America and the Caribbean.
LiLAC delivered rebased revenue growth of 6% year-to-date reaching $908 million. Our operations in both Chile and Puerto Rico continue to deliver solid results, which I will break down on the following slide.
On the OCF front, LiLAC posted rebased growth of 10% for the first nine months of 2015, bringing our year-to-date total to $364 million. We continue driving operational leverage, increasing our OCF margin by 160 basis points year-over-year to 40% for the year-to-date period.
As a reminder, we expect a difficult comparison in Q4 2015 in Chile as a one-time benefit recorded in Q4 2014 is not expected to recur in Q4 this year. Moving to the bottom of the page, LiLAC's year-to-date P&E additions were 20% of revenue, an improvement from 22% in the corresponding prior-year period.
And finally for the year-to-date period we delivered free cash flow of $40 million up from $29 million last year. On slide 15, we take a slightly-deeper dive into our Q3 results in Chile and Puerto Rico.
Starting with Chile, VTR reported third quarter revenue of $204 million, which represents 7% rebased revenue growth, and our best third quarter result in five years, fueled by a well-balanced combination of cable and mobile subscriber growth, as well as higher ARPU. Our Q3 OCF in Chile increased 11% on a rebased basis, driven by the same revenue drivers, as well as improved operational leverage, partially due to improvements in SG&A.
In Puerto Rico, our Q3 rebased revenue and OCF growth came in at 6% and 9%, respectively. These results were primarily attributable to increases in cable subscription revenue related to volume gains.
Lastly on this page, we turn to LiLAC Group's leverage, which was 4.4 times gross and 3.9 times on a net debt basis for Q3. On a sequential basis, leverage increased approximately half a turn as a result of a series of transactions that we undertook to re-strike a large portion of the derivatives associated with $1.4 billion of debt at VTR.
As a result, our average fully swap caused the debt drop to 6.4% at the end of Q3 down from 8.7% in Q2 2015. At September 30, we had $239 million of cash attributable to LiLAC, including $99 million that was held outside of the two credit pools, and $232 million of aggregate available borrowing capacity under our undrawn credit revolvers.
I will close our presentation on slide 16. In summary, subscriber additions rebounded in Q3, and our NextGen TV platforms continue resonating well with customers.
We are running our fall campaigns, and are in the middle our best-selling season and we are targeting after 1 million RGU additions for the full year. As mentioned before, we expect to achieve mid-single-digit rebates to OCF growth for the full year albeit at the lower end of that range.
With respect to Liberty 3.0, we are making big strides and are confident that this program will meaningfully increase our growth profile in the coming years. And with that, I will hand it back to the operator to open it up for questions.
Operator
The question-and-answer session will be conducted electronically. [Operator Instructions] In order to accommodate everyone, we request that you ask only one question with one follow-up if needed.
If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We'll pause for just a moment to give everyone an opportunity to signal for questions.
And we'll take our first question from Ben Swinburne with Morgan Stanley.
Benjamin Swinburne
Good morning. I'll ask my question and follow-up upfront.
Mike, can you talk about - you mentioned that Belgium's the first market that you'll have a free-to-air mobile and cable business. Those are interesting comment.
Can you talk about what that means in terms of growth or whether that's a framework that you'd like to replicate another markets if you can? And then separately, at the beginning of the year, you laid out your Project Lightning plans and talked about sort of fine-tuning your [indiscernible] expectations.
I don't know if you're far enough through the budgeting process, but do you guys have - as we think about the mid-teens free cash flow growth rate you're going to put up this year, is 2016 a year that can see that growth continue or do you think you are going to lean into the overbuild enough with that algorithm of exchanges for the time being? So any color you have on that would be helpful.
Thanks.
Michael Fries
Sure. Thanks, Ben.
I think, on the first question around free-to-air mobile and cable, I mean, when we look at it, first of all, independently, each of those combinations create interesting cost synergies and revenue synergies. So, putting together, of course, the cable business in Belgium with the mobile operation there, we've already described $140 million of synergies, somewhere in that area.
And we know, we all know these days that there are six mobile-convergent synergies in - whenever you put together mobile and fixed assets. And that will be, for us, a really indicator and a really good opportunity to prove those out for you and for ourselves.
So clearly, that's one element of the interest. And when we combine a broadcast asset as we're seeing in Ireland or we'll see here, we do that for strategic reasons.
We know that there's an ability to increase the reach of our brands. We know that there's an opportunity to ensure we've got all the right content in the right format, on the right platforms.
We know there's advertising opportunities in our business. Mike can tell you, and I've said it publicly, we have 50 billion hours of viewing information a year, and 80 billion-plus DNS clicks a day, which we generate no revenue on.
So, I'm not suggesting for a second there's any advertising revenue in our long range plan because there isn't. It's all incremental if it comes about.
But we're looking at advertising, events advertising using our data, and having opportunity to put these businesses together, to manage these opportunities together we think is exciting. Will we do it on a bigger stage?
I know where the question was leading and the answer is not necessarily. I don't think there's anything - you can't draw any conclusions about whether we will or won't try to put these types of businesses together in every market.
But we certainly think in the smaller markets like Belgium and Ireland, it's going to be very interesting. And on Project Lightning CapEx, we're not giving any guidance today about 2016.
I will say that we were pretty clear on the Project Lightning CapEx in the phasing of that project when we announced it, and I think we do a good job, and we'll try to do a good job in the future laying those differences out for you, or those incremental expenditures. But we've always said that we're about growth, as I mentioned in my remarks.
And if we think there is an opportunity to put capital to work, that's going to generate returns like Project Lightning in the UK mid 30s kind of IRRs unlevered. Then we're going to do that, and you should want us to do that now.
Are we going to look at it - do we think it'll result in a material change in the complexion of our capital structure and our free cash flow profile? No.
We don't think so. But even if it did for a short period of time, we'll make sure you understand that number, and we're looking at the next three to five years when we make decisions like that.
Benjamin Swinburne
Helpful. Thank you.
Michael Fries
Yeah.
Operator
And we'll take our next question from James Ratcliffe with Buckingham Research.
James Ratcliffe
Morning. Thanks for taking the question.
Two, if I could. Mike, just generally, how do you think about the marginal benefit of broadband speed as speeds continue to ramp both from a consumer impact, actual real consumer impact experience and from a marketing value.
So, as you move from a lead of, say, 50 megabits to 10 megabits compared to, say, going to 200 in the UK versus 70 for telco, how does that change the competitive environment? And secondly, just brought down the rating further for group and quite a bit for LiLAC.
Can you update us on just how far you think those can go? As you've said, I think in the past about 4.7 to 4.8 in Europe.
Is that still the right number to be thinking about? Thanks.
Michael Fries
Could you repeat the second question? I didn't get all that.
James Ratcliffe
Sure. Just in terms of [indiscernible] to bring the effective rates down on the debt...
Michael Fries
Oh, I see. Debt rates, yeah.
James Ratcliffe
Where should we be thinking about the base case where you can get to level for this broadband?
Michael Fries
Got you. If you think about that one, on the broadband speeds, there is a very strong correlation that we see in almost of our networks between the speed of the service we provide to a home and the amount of consumption that that home has.
Today, our average home is getting close to 80 megabits per second. Our average consumption is close to 80 gigabytes a month.
And that almost - you can almost draw a straight line between the increase in our average speed delivered last three or four years and the increase in consumption. And there's a reason for that.
Number one, people who want higher speed generally want to be more engaged in the Internet, and they do and they are. But also, they're finding that the experience is better.
So, there is a competitive advantage, in our opinion. We do believe - and it's certainly not surprising that the entire world begins to need, desire and want great and greater speeds.
It is going nowhere but up. And if you look in that ecosystem, we're in a great position.
We can get to 1 gig. I think I said it publicly, €20 home pass or something we think on average to get ourselves to 3.1 and 1 gig.
And this is the right model to have, the cable model in our opinion, and be careful, of course, about how we push that. But we feel very, very good about it, and it has a huge competitive impact.
But more importantly, it has a huge customer value impact. We know that in the UK, if we're getting 200 megabits from Virgin, you are a happier broadband customer than the person getting 38 meg from BT.
You just are, especially as there's more devices in the home, more OTT products being provided, more video consumption, we all know it, we all experience it. So, I think the marginal benefit is increasingly clear to us at especially as video consumption rises.
And Charlie, you want to hit the interest rate point? Charlie, you might be on mute.
Charles Bracken
Oh, sorry. Here I am.
Sorry. [indiscernible].
Look, I would say 5.1% is a pretty good financing rate, and we have financed cheaper than that. And, obviously, it depends on the market because here, we can continue to drive our average cost down.
But one thing I would say is that we remain focused on long maturities. So, clearly, if we wanted to, we could cut our cost to borrowing by going shorter.
And we're not going to do that. So, we are going to continue to go for long maturities on our debt.
So, I think there's probably some upside in the 5%, but I wouldn't say it was immaterial now. But the most important thing is that we're able to refinance and roll these very long maturities at these very attractive rates.
And, clearly, it helps us that the overall backdrop particularly in Europe is very positive for that. I can't see EU rates going up anytime soon.
And in terms of the UK, as Connie has said, at least another year of low interest rates. So, I think that there may be some upside.
It would depend a bit on market conditions. We have financed below 5%, but the step change of going from 6% to 5% is where you won't see us go in those kind of step changes going forward.
James Ratcliffe
Thank you.
Operator
And we'll take our next question from Jeff Wlodarczak with Pivotal Research Group.
Jeffrey Wlodarczak
Good morning, guys. Mike, can you talk broadly about the attractiveness of doing more wireless acquisitions versus, say, leveraging a potential Wi-Fi first MVNO strategy?
And then, in your view, how key is being able to offer consumers a quad-play as the subscriber attrition [indiscernible] I've got a follow-up.
Michael Fries
Sure. I think this is a question we address all the time with shareholders, and happy to do it again.
Looking at M&O acquisitions it's too soon to tell exactly what will - what the benefits will be in Belgium, but we have a pretty good idea looking - when we looked at the scale of that mobile sub-base for us. The opportunity to drive margin in a better customer experience we felt that that fundamental acquisition made a lot of sense.
In other markets, we'll see. We have a lot of options.
That's the beauty of our strategic plan and our footprint. We have a lot of options.
And when we look at taking advantage of a fixed-to-mobile environment. A lot of options.
MVNO, MNO and as you mentioned even Wi-Fi first which, of course, everybody's looking at. And one of the reasons we keep rolling out our Wi-Fi hotspot network and one of the reasons that we have aggressive R&D and innovation platform.
It could very well be a solution over time. Right now, Europe is a quad-play market.
It's a quad-play market because the incumbent telco who has nationwide fixed coverage has a nationwide mobile coverage. And it wasn't beyond the wit of man to assume at some point they're going to put those bundles together, and we had done the same thing with great success.
We have over 4.7 million mobile subs today. And the bundling effect, the reduction in churn is real, and the revenue growth is real, and the margins are good.
So, we feel very positive about our approach today which is capital light, variable cost. We feel pretty good, I would say, about each of our MVNO contracts and we have 4G or a path to 4G in almost every market.
And we'll look selectively based on the market, based on the opportunities. And just as you've known as to do over time.
We'll look selectively and very carefully at in acquisition of additional assets like an MNO when and where it make sense, but I know you can trust us on that. What's your follow-up?
Jeffrey Wlodarczak
And then your guidance for mid-single digit rebased EBITDA. That implies to - if I'm wrong, sort of a 5% plus kind of EBITDA growth in the fourth quarter.
And then Liberty 3.0 was a $7 million drag in the third quarter. Should we expect that to be contributing to EBITDA growth in the fourth quarter, or is it something that's more 2016?
Michael Fries
Well, we're right in the middle of our budgeting process, as you can imagine. And we did have some extraordinary costs like the Ziggo negative synergies and Liberty 3.0 which the accountants never let us break out on paper, and we understand that.
And, of course, our EBITDA - sorry, operating cash flow result was impacted by those things. And that's investment, right, investment in the future.
So, going forward, you will certainly, we believe, see some benefits from Liberty 3.0 in 2016. Fourth quarter would seem too soon to me.
And it's, again, though, as a reminder, a three-year program. We want you to know this is not about the cost-cutting, as I said.
This is not about slashing and burning. This is about building an incredible relationship with customers.
It's about having the best products in our market, and it's about just being smarter and more efficient on an already efficient platform in terms of how we operate. So, it's a balanced approach.
It's the right approach. And I think it's going to take a little time to implement.
It's not going to happen overnight. And there will be some startup cost.
But we'll try to do the best we can in terms of identifying those for you and then giving you a sense of the curve as we approach it.
Jeffrey Wlodarczak
Thanks, Mike.
Michael Fries
Yup.
Operator
We'll take our next question from Tim Boddy with Goldman Sachs.
Tim Boddy
Yeah. I wanted to ask a bit, thanks for the question, about your pricing.
You obviously took a more aggressive move this year than you've done in the past. And we think that we'll see impact in the customer base and that, I guess, particularly this quarter in Switzerland where the KPIs are weakened further.
Are you thinking that for next year it might be better to be more prudent in terms of the quantum of price that you take, or perhaps the way that you take it? And then, I guess the alternative explanation is maybe you feel that it's not pricing that's been a challenge for the KPIs.
It's more the quad-play pushed by the incumbents. And if that is the issue, how do you plan to respond?
Thanks very much.
Michael Fries
Well, I think - thanks, Tim. I think on the second point, you know how we're responding.
We rolled out in 10 markets. We've got bundled offerings in every case.
So the truth is, we feel very good about our ability to be aggressive, disruptive or just flat-out accretive on a mobile offer and a quad-play offer. So, I don't believe that's what it is.
I think we learned a lot this year in the first half of the year about our pricing abilities, about our price value relationships, about our customer's elasticity. So, we're a lot smarter going into this budgeting process than we were perhaps going into the last budgeting process and that's what you'd expect me to say, of course.
But we're going to always be, I would say, careful and targeted in when and where we take rate increases. In some markets, it's a very normal and ordinary course reality.
In the UK, People understand, customers understand. There's a cost of doing business and it's usually something we can predict and bake in easily.
In other markets, we have to be more thoughtful. And incumbents, as I mentioned in my remarks, are quite aggressive and very clever.
So, they're responding. It's a bit of a cat-and-mouse game.
But you can bet and you can expect that looking at our price value relationship will continue to be a major source of both revenue and cash flow growth for us over the next three years. It's not something that we're abandoning because of the first two quarters of subscriber growth.
It's something that we're just recommitting to but in a slightly more intelligent way as we get smarter about the elasticity in our market. That's how I'd answer that.
Tim Boddy
So, do you think we'd see similar price tag next year in aggregate? Or a bit more cautious and how would you balance that?
Or is it too soon to say?
Michael Fries
Really market by market, it's - you got back book front book issues. In some cases last year, we took prices up on the acquisition portfolio more than we should.
I mean, so there's a lot of moving parts in there, Tim. I don't want to get too specific for you, but I'll just simply say that you should expect that we will continue to adjust the price value relationship of our products and services as appropriate, not meaningfully inconsistent with prior years.
Tim Boddy
Very clear. Thanks a lot.
That's helpful. Thanks.
Operator
And we'll take our next question comes from Michel Morin with Morgan Stanley.
Michel Morin
Good morning. First question is on for those of us who are a little bit newer at following your company.
How should we be thinking about the synergies in cross-border M&A? And then secondly, you mentioned, I think in reference to Europe, you were talking about how you're giving the OTT a run for its money I think is the expression you used.
What are you seeing on that front in LatAm? And are you seeing much growth in terms of broadband subscribers who are not taking your Pay TV offerings?
Thank you. Two questions.
On the cross-border effect, they vary, of course, by market and by industry. In our case, the cross-border effects are meaningful and substantial.
Our ability to procure equipment centrally and our ability to provide IP backbone and data and bandwidth efficiently, our ability to procure and secure content and develop content relationships across Europe, our ability to use best practices, revenue and otherwise. The relationships we develop with suppliers, strategic and otherwise.
Michael Fries
So, I think the cross-border benefits of our footprint are substantial, and you're seeing that in a consistently increasing EBITDA margin or OCF margin over the last five years as we've made acquisitions, and you're going to see that, hopefully, in our Liberty 3.0 plan which will take that cross-border opportunity to the next level, in our opinion, in terms of how we manage and run and operate our businesses. So, they are substantial in our business.
And in the LatAm space - and [indiscernible] I think you're welcome to chime in here. I think it's really days for OTT.
There are a couple of platforms that folks have launched. Pay TVs does not have high penetration in the region.
In some cases, it's a bit expensive. In other cases, it's not.
There's an opportunity for both OTT and for traditional video platforms, and we see that across the markets that we've investigated. So, we tend - we expect - as everywhere - just like everywhere on the planet, there will be video opportunities on line and Internet-driven video opportunity.
We don't doubt that for a second. But if you look at what we've done in Europe, we've been able to create essentially look-alike OTT products hard bundled into our traditional video platforms and, more importantly, our innovative cloud-based video platforms and provide those to customers, essentially, at no additional costs.
And that really is one of the things that gives us confidence in OTT, generally, as we look at it as a competitive factor with our ability to essentially duplicate the experience and have 10 times the amount of content. So, how about if I say to you, you get the exact same experiences, Netflix or Amazon picture provider - but by the way, you don't have to give up on your broadcast network.
You don't have to give up on free-to-air which is 80% of your programming viewing anyway. You don't have to give up on sports.
You get all that too. I mean, that's really the approach we'll take everywhere including LatAm.
Michel Morin
Great. Very helpful.
Thank you.
Operator
And we'll take our next question from Frank Knowles with New Street Research.
Frank Knowles
Hello. Yes.
A quick question on the sort of - as you're thinking about rolling out network extension projects in other markets according to the UK. Just wondered how broadly you're examining that.
It is going to be a similar sort of pattern as in the UK, just essentially very close to the existing network and infilling gaps? Or are you considering a more broader sort of extension pattern.
And would you expect a sort of the hurdle payback to be similar as you've expressed in the UK? And then I just have a sort of slightly more detailed question just on if you could explain the impact of, revenue impact of moving to split contracts on the mobile side in Belgium and the UK.
Is it possible to sort of quantify how that impacted revenues? Thank you.
Michael Fries
And I'll let Tom and maybe, Diederik, address the contract question. On the network new build, as I mentioned, we are with the success so far of Lightning and we know the opportunity there.
We are looking at it more aggressively across our - when we think there are pockets. They don't always look the same.
It's not always a simple network extension meters. Sometimes, it's an infill.
Sometimes, it's an upgrade. Sometimes, it's creating a better activation opportunity with an existing home path.
There's lots of - and it differs by market. So, I really can't generalize for you.
I don't want to generalize for you. As we get smarter about those opportunities as we begin to commit to those opportunities you can bet we will help you understand them.
And I promise you that we'll do it. If you exist in multiple markets, in place in Europe, Germany as you describe, we are looking for comparable IRRs and paybacks, and it's something that we're pretty excited about.
So, I really can't say much more about that. And Tom or Diederik, you're welcome to address the contract question.
Thomas Mockridge
It's Tom here. Certainly, the term in the UK was split mobile contracts is proving a very significant success for us.
The customer finds it particularly attractive to have the opportunity to own their handset and have the airtime paid under a separate contract, and that has accelerated our growth into the postpaid contracts. So, we're very pleased with it.
Of course, it does bring forward our revenue because in effect, we are selling those handsets. So, it doesn't have the revenue growth and that contributes to our overall growth that in a way which is very positive for the customers and is enhancing our whole product base.
Frank Knowles
That's really helpful. Is there any way of just sort of quantifying how much of your revenue growth in the UK was as a result of bringing forward revenues in that way?
Thomas Mockridge
I think on that question, I understand we don't split out the numbers to that detail. It hasn't been the practice in the past.
Clearly, it has contributed, but many other things have contributed as well. We'll continue to take price rises through the period.
You're probably aware that a number of operators in the UK have done that. And typically, we made an announcement towards the end of the year, so you might look for that very shortly in the UK.
I think we can take a well-judged price rise across our cable customers and secure our revenue there. We have good growth in our B2B segment and aim very positive growth and in the mobile as I mentioned, we have good growth there also and with additional services.
So, I think you'll see was that a broad pattern of growth based around the price and volume in the United Kingdom, and I very much expect that going forward.
Frank Knowles
That's really helpful. Thank you.
Michael Fries
By the way, I'll just add that there is a positive and negative impact from split contracts. Revenue upfront, but it also impacts how the revenue will go along.
So, over a little while, it evens out. Let's put it that way.
Frank Knowles
Great. Understood.
Operator
We'll take our next question from Saroop Purewal with Redburn.
Saroop Purewal
Thanks, everyone. It's Saroop here from Redburn.
Can I just ask, would any of the MVNO contracts that you've currently entered prevent you from bidding on an MNO in that market should you see any opportunity there? Or is there anything material we need to know in terms of your commitments on your MVNOs?
Thanks.
Michael Fries
The answer to that question is no. These contracts are [indiscernible] agreements.
They don't generally deal with anything related to assets or M&A.
Saroop Purewal
Okay. Thanks.
Michael Fries
Yeah.
Operator
And we'll take our next question from Michael Bishop with RBC.
Michael Bishop
Yes. Thanks very much for the question.
I've got two quick ones, please. Firstly, the growth in Eastern Europe seems to be picking up nicely.
So, I was just wondering if you could update us on your sort of strategy and view of the region. Clearly, it's been a couple of tough years over the last few year, but do you think it's about just building scale now and sticking in all the different regions within that area?
Or is it a case of being more selective? And then, secondly, just on the UK, clearly, a very good broadband number.
Could you give us some indication of how many of those net adds were coming Project Lightning, on new builds versus success in the existing footprint? Thanks very much.
Michael Fries
Yeah. On Eastern Europe, two points.
One is, as I mentioned in my remarks, we have now consolidated that group underneath Switzerland and Austria. So, we should expect that that region as a whole - so, it's not Austria and Central Eastern Europe - and our markets there will start to generate efficiencies as a group as we manage them differently as we find way to reduce overhead, be more efficient, et cetera.
So, I think as a group, you'll see that region perform better. Central Eastern Europe and Romania included have seen some uptick in RGUs, which is great.
And I think that it's a function of a few things, most importantly, our ability to launch new products. I mean, we have our Horizon Go service, our Horizon Go type view [indiscernible] launched in most markets.
We're pushing aggressively our broadband speeds just like we are in Western Europe. So, part of it just where we are in the cycle, and I think that - we think the opportunity in the next three years in that market certainly looks better than the last three years.
Is it going to be Western European level in Romania, and Hungary, and Czech, and Slovak and Poland, Western European level growth rates, not necessarily. But they will, we believe, become accretive and positive growth.
And that's something that's encouraging. Do you want to hit the UK point, Tom?
At Virgin Media, we estimate in the UK we took nearly 60% of broadband and market share in Q3. And overwhelmingly, that was off the existing network.
The Lightning Project is certainly underway. We are in the beginning of the build process.
We're getting those homes to market. But to market and sell and install is a process.
So, a portion of those homes that we did acquire in the quarter, it is from Lightning, but a very small portion. Within that portion, we are certainly getting the penetration rates that we have targeted and getting the ARPU that we've targeted.
But overwhelmingly, the growth in Q3 has come from the existing base. Of course, as we progressively move forward will continue work the existing phase and aligning homes to it.
Michael Bishop
All right.
Operator
All right. And we will take our final question for the day from Vijay Jayant with Evercore ISI.
Vijay Jayant
Hi, Mike. Two questions.
First on just broadly on the B2B side, which seems to be a good growth area for you, can you help us really understand what the total addressable market is? How you sort of segment your revenues right now?
What sets are growing? How fast?
And I really want to understand the runway for growth longer term. And second, with DOCSIS, your DOCSIS 3.1 coming along and also the telcos talking about G.fast and some other DSL technologies.
Can you talk about the speed differential longer term, and is that something you can really monetize by some form of users base pricing for the fastest speed, or is that purely going to be a differentiation on getting subscribers? Thank you.
Michael Fries
Vijay, would you repeat your first question for me real quickly? Summary of it.
Vijay Jayant
Just wanted to understand the B2B market between large enterprise, SOHO and medium enterprises. Where are we - really want to understand how the big the market is for across your footprint, where we are on penetration, really trying to understand the runway for growth across the various segments, but then the business to business opportunity.
Michael Fries
Got you. I got you.
So, on the B2B front, it is - the complexion of opportunities vary. In most of our markets, almost all of our markets, we are underpenetrated in SOHO and SME.
And so, we had made a concerted effort, and you'll see it in our numbers, to penetrate. We think up to 50% is achievable of our SOHOs on footprint.
And so, there's a massive bush, if you looked at SOHO revenue. You would see that as growing 25% to 30% a year, quarter-over-quarter, year-over-year.
And that kind of growth, and it's becoming an increasingly larger and larger part of our overall B2B platform. And that is going to be the engine of growth for us in the B2B space.
So, we have to invest in products. We have to invest in people.
We got to find and find and penetrate the small medium, in particular, the SoHo market place. That's an exciting growth initiative for us.
And secondly, there are market where we have works still B2B at all, or we have very small B2B footprint like Germany. We take those opportunities, those revenue drivers and we fly them to new markets, that's almost organic of the best type.
The third element of B2B for us, obviously is our medium and large enterprise business which is harder to predict and over time a smaller and smaller percentage of our revenue and going to be generally lower growth, because that's where we're competing with BTs and the KPNs. Not to say that we aren't emphasizing that, we will emphasize it, it's a huge - it's two-thirds of our revenue today or more, 70% I believe, so we're going to grow that and grow that steadily.
But the real excitement in B2B is coming from SoHo. I think I've quantified in the past, I'll don't have it at hand, Vijay, exactly how many SoHos we think are on our footprint.
It's a big number, and we think a goal of penetrating half of those should be achievable over the medium term and that's what we're trying to do. The last element, of course, is mobile.
We think there's - as our mobile products improves, as our mobile [indiscernible] grows, having a mobile offer with B2B customers isn't graceful. Ask anybody, ask Vodafone.
So, there's a real upside in mobile as well for us. On 3.0 at one point, I know [indiscernible] on here.
He can talk about it. I mentioned that we have a roadmap to 1 gig, we have roadmap to 10 gig.
And I'm asking this question all the time. I think we can get to those places pretty efficiently.
You know the competitive technology, for the home, we know that in the vast majority of our consumer market there is little to no fiber-to-the-home, and there is anticipated to be little to no fiber-to-the-home really other than Holland which has about 30% coverage. I don't see anybody building fiber-to-the-home.
We don't expect them to build. So, what we're competing with principally is VDSL, in some cases, vectoring, and maybe over time, G.fast, which will take a large amount of money and capacity and time to develop.
But either way, we don't see anything - if those technologies, putting us at a disadvantage or materially impacting our competitive advantage as we continue to push much more cost efficiently those same buttons on speed. So I hope that answers your question.
We're not going to get there any faster than we need to get there, right? We've offered and launched 500-meg products.
Not a lot of customers today but we have it out there as a signature product. A year ago, I would have said, hey, 80 to 100-meg.
That's our sweet spot. Today, it's 150 to 200-meg.
The sweet spot is growing every year and that's really a good problem to have. One last point, we are very, very encouraged by the net neutrality position of the European government, European commission.
What Dave approved recently to us is a very balanced, healthy approach to innovation, to growth in that marketplace. We are allowed to do - there are no restrictions in volume-based billing.
There are no restrictions on specialized services. There are no restrictions on zero rating or the ability to manage your traffic.
There is no obligation to provide essentially free access to over-the-top providers. It's a very healthy approach to a vibrant rapidly changing ecosystem that does not need regulation.
And those things will pay dividends for us. You can bet over time.
We incorporate them into our plan. When?
We'll let you know. But trust me when I say that the environment we operate in, in Europe, is really very encouraging and positive when it comes to allowing companies like us to invest, grow, build, innovate, and that's going to be the best thing for customers.
Michael Fries
So, if that's the last question, well, thank you all again for joining us this morning. I realized our comments, our prepared comments were a bit longer than perhaps normal.
We'll do a better job next time of keeping those tighter. But we had a lot of to say and we're pretty excited about our results today.
So, we're busy, busy, busy on the fourth quarter and we look forward to talking to you about those in the new year. So, take care, everybody, and thank you.
Operator
Ladies and gentlemen, this concludes Liberty Global's third quarter 2015 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.