Feb 16, 2016
Executives
Michael Fries - Chief Executive Officer Bernard Dvorak - Executive Vice President and Co-Chief Financial Officer Diederik Karsten - Executive Vice President and Chief Commercial Officer Balan Nair - Executive Vice President and Chief Technology Officer Bryan Hall - Executive Vice President, General Counsel and Secretary Tom Mockridge - CEO of Virgin Media
Analysts
Michael Bishop - RBC Capital Markets James Britton - Nomura Amy Young - Macquarie Ulrich Rathe - Jefferies Matthew Harrigan - Wunderlich Securities Jeffrey Wlodarczak - Pivotal Michelle Morris - Morgan Stanley Daniel Morris - Barclays Ben Swinburne - Morgan Stanley
Operator
Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global’s 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 a question-and-answer session.
As a reminder, this investor call is being recorded on this date, February 16, 2016. Page 2 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 outlooks 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. 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.
Michael Fries
Thank you, operator, and welcome, everybody. We certainly appreciate you joining our call today.
I have with me, as usual, a whole host of management folks that I will call upon and will help chime in today and get all your questions answered. I’ll provide an overview.
So, traditional agenda and then Bernie will take us through the numbers and then we will get right to your questions. And we are talking from slides and it might be benefit so you can get a hold of those because we will be referring to them throughout the course of our prepared remarks.
So I am going to kick it off on Slide 4 with what I believe are the key messages you are going to want to takeaway from this call. We know there is a lot of noise and activity in the market right now, in our sector in particular.
So to keep it simple, these are the things we think you need to know about our business. First, and I think foremost, we are very fortunate that the foundation of our story continues to be growth.
Since the formation of Liberty Global over ten years ago, we have delivered 42 straight quarters of positive growth in subscribers, revenue, and operating cash flow. And as we look out, we actually see a long runway for us to keep delivering those great results.
In fact, we think the trend is actually improving from here. If you look at 2015, our second half of the year was better than the first half across the board.
I’ll walk you through those numbers in a moment. If you look at our OCF guidance for 2016, you’ll see improved growth compared to last year and if you look out the next three years, we are actually forecasting even better financial growth through 2018.
Now we are fortunate to be honest to operate in a very, very good sector here. I mean, there are few industries I am aware of where consumer demand for your core products, in our case, fixed and mobile broadband or TV anywhere services are growing at such a fast pace.
But our confidence in these numbers is also grounded in the launch of our Liberty 3.0 program which is a rock solid plan that focuses on new and existing revenue drivers and a streamlined operating model to deliver better and better results and this is actually now in full swing for us. Now there is no doubt, you’ve seen the news about the Vodafone JV where we’ve agreed to create a 50-50 venture together with Vodafone in The Netherlands.
This is going to be a great deal for everyone involved, especially Dutch consumers and I’ll walk through it in a moment. But the JV not only creates a national powerhouse in Holland, but it is a highly accretive transaction for shareholders with a number of strategic and financial benefits.
And then lastly, at times like these, we think you should take particular comfort in the hard work we put into our balance sheet and the commitment we have to our capital structuring by that program. Our proven levered equity model is anchored by long-term, fixed rate debt, significant liquidity and the recent increase to our authorized buyback program.
So those are the main headlines that we’ll flush out here in the course of the call starting on Slide 5 where I am going to provide another layer of highlights that supports some of these main takeaways. And I’ll start with operating and financial results here.
We added 344,000 RGUs in the fourth quarter. Our best quarter of the year that bringing full year net adds to 870,000 and on top of that, we grew our postpaid mobile sub base to over 450,000 in 2015.
Revenue was up 4% in the fourth quarter and 3% for the year while OCF operating cash flow was up 6% in the quarter and 4% for the full year. Now these results are driven in both cases by a combination of volume, price increases and growth in mobile and B2B and we generated $830 million of free cash in the fourth quarter bringing the full year free cash flow to $2.5 billion.
That’s up 20% on an FX adjusted basis and actually ahead of our guidance. In the center of this slide, we highlight a few value creation drivers.
I mean these are the deals, the initiatives, the products that are really moving the needle for us. I’ve already mentioned, that the Dutch JV with Vodafone and more on that in a moment, but we are also working hard to close the cable and wireless transaction where we continue to believe this will be transformational for LiLAC.
We are adding substantial scale and synergies to our existing assets in that region and so we are hopeful to get that done in the second quarter. We expect to deal the close around then and after that, we will probably begin the process of spinning LiLAC to shareholders as many of you have anticipated.
We recently closed and already integrating the BASE mobile acquisition in Belgium which will give Telenet all the ingredients for a superior fixed mobile offering and great synergies down the road. And Project Lightning in the UK which we talk about every quarter is off to a great start.
The quarter million new homes built and released in 2015 project is right on track or ahead of plan on just about every metric, number of homes, the cost per home, penetration rates in ARPU and has really has lit a fire under us to pursue new build opportunities throughout Europe, which I will talk about as part of Liberty 3.0. And on the video side, we added a record 1.5 million next-gen TV subs in 2015.
That’s up from 1.1 million in 2014 and bringing our total next-gen base to 6.5 million. We ramped innovation this year big time with new products like, MyPrime, in our SVoD Service, Replay TV, and the expanded Horizon Go TV anywhere app in all of our European markets.
I’ll talk a little bit more about Horizon in a moment. And then lastly, on the right-side of the slide, we highlight our balance sheet, just referenced briefly, which we believe remains derisked with, basically $4.9 billion of liquidity, gross leverage at around 4.9 times and a record low fully swap cost of capital of 4.9%.
Over the last few years, we’ve termed out most of our debt. So 90% of that debt is due to 2021 or after.
And this should, in our opinion be a source of comfort for investors in volatile markets like these. I’ll also say though volatile markets create opportunities and we did buyback a record 2.2 billion of stock in 2015, nearly 900 million in Q4 alone.
And today, we are announcing a new buyback program which together with the 1.6 million remaining on our previous buyback program takes us to a total authorization of 4 billion by the end of 2017. So let me jump to Slide 6 which illustrates the momentum point that I started with and the momentum that we saw through the course of 2015 and it shows you all the key growth metrics for us, what we did in the first half and what we did in the second half and how those ramped up.
On the left side, you can see that, we more than tripled net adds from the first half to the second half, 200,000 over 660,000 and that was across all products. We halved our video attrition.
We grew broadband additions by 50% in particularly in markets like Germany and the UK and nearly doubled our telephony adds. Rebase revenue growth ticked up every quarter this year driven in part by B2B and mobile revenue growth which increased by double-digits in the second half of the year and several markets like UK and Germany and LiLAC improved rebase revenue growth to 5% and 7%.
And the rebased OCF growth ramped to 5% in the second half of the year and that’s including, as I said, over 6% in Q4. We are really excited about the momentum across the platform as evidenced of course by our free cash flow, where we had 60% of it generated in the second half of the year and total of a $2.5 billion.
I think demonstrating that, we are able to balance price and volume and also the prudent use of vendor financing to try to drive free cash flow. So we are very, very pleased with that number which was ahead of guidance.
Now, Slide 7, let’s jump to the deal we announced today. I will tell you personally, I am very excited about this 50-50 joint venture with Vodafone in The Netherlands.
We think this combination makes perfect sense for shareholders. It makes perfect sense for customers and it makes perfect sense for the entire Dutch market by combining Ziggo’s fiber-rich broadband network with Vodafone’s 4G mobile network.
This new joint venture will instantly become a major national player in what is a rapidly developing quad-play market and converge market in Holland and that’s no surprise to anyone that our two operating businesses are highly complementary with very little overlap. Today they serve collectively over 15 million broadband, video, mobile and fixed telephony subscribers.
I mean, you can see the breakdown in the right-hand side of the slide and of course we are also creating an even stronger B2B challenger to KPN which will target all segments of the Dutch economy and I am very excited about that piece of this. And as you might expect, the headline synergies in this deal are substantial.
We estimate the NPV of synergies at around €3.5 billion, 70% of those synergies are coming from OpEx and CapEx efficiencies with the balance coming from revenue and the cost synergy side is – are things that you are going to be familiar with infrastructure savings, backhaul, IT, SG&A redundancies, procurement, R&D and then of course the revenue upside comes from cross-selling converged products which we are excited to get started on. And on Slide 8, we’ll add a few more details here on the deal structure and then, importantly on the benefits as we see them.
And just to remind you it’s a 50-50 JV in all respects. So, both parties here will have equal governance and we are jointly appointing management.
We are making all the key decisions together which we are actually encouraged by some quick comments on valuation. Now when you combine two operating units, the key is actually relative valuation.
So I’ll try to explain how we at Liberty, see the €1 billion equalization payment which was in the press release. To begin with we valued our business in Holland, add about €14 billion or roughly 11 times Ziggo’s 2015 adjusted operating cash flow and we’ve broken those cash flow numbers down for you at the bottom of the slide there.
When you subtract Ziggo’s €7.3 billion of debt from that €14 billion number, you’ll arrive an equity value for Ziggo at roughly €6.7 billion. This is how we see it.
Now the equalization payment of €1 billion implies that there is a €2 billion difference in those equity values in a 50-50 deal. So, the debt free value we attribute to Vodafone is about €6.7 billion minus €21 billion or €4.7 billion, which equates to roughly 7.8, 7.9 times their 2015 EBITDA.
These are how we see the numbers. The €14 billion enterprise value for our assets, roughly a €4.7 billion enterprise value for their business and when you put those together, subtract our debt to equalize the payment, it’s about a – equalize the difference in equity, it’s about €1 billion payment to us.
A few other important points, between signing and closing, both parties will keep the free cash flow of their respective businesses and then post-closing, we’ve agreed to maintain a new capital structure which targets 4.5 to 5 times leverage. All proceeds from those recapitalization and from the free cash flow in the future will be distributed to each of us equally going forward.
And then lastly, we will retain about €2.9 billion of Dutch NOLs for use outside the JV which is obviously beneficial to the rest of the Group. Why do you like to deal so much.
First, obviously, we are encouraged by the premium multiple we are getting for Ziggo going into the deal of around 11 times. Especially, when you factor in, that we’ll be retaining 50% of the business and its future upside moving forward, so, when it’s future free cash flow or recap proceeds, so from our perspective, that is a terrific outcome for our shareholders and our half of the synergies alone if you just added – took that number, €3.5 billion, it’s about €10.5 billion on top of that €11 billion.
So, that’s one way to look at it, certainly how we looked at, people can look at it differently. Few other benefits, we’ll be moving over €7 billion of debt off balance sheet.
So the deal is obviously deleveraging to the Group and we’ve agreed to an appropriate, we think appropriate exit in liquidity provisions, which are always important in joint ventures like this. And lastly, perhaps most importantly, I am really excited to partner up with Vodafone.
We’ve got to know each other pretty well over the last year. I have great respect of Vittorio and his management team.
We are really looking forward to tackling this opportunity together, learning from each other and creating substantial value for our respective shareholders. As we indicated in the press release, we expect this to be an EU filing on the regulatory front and if all goes as planned, we should close the deal around the end of the year if not sooner.
So let me jump to Slide 9 here and build on some of these things. It’s the first call of the year and as we typically like to do, we want to lay out for you a bit of our strategic game plan, specifically with Liberty 3.0 off and running and we wanted to show the key value drivers as we see them.
You could see it on Slide 9 in the circle there and I’ll talk about each of them. These are the things that we think will accelerate revenue and OCF growth for us over the next three years.
I’ll start at the top of the slide with market share. Today, we serve 27 million customers that subscribed 57 million services and all of our innovation, all of our product development and all of our technology investments are focused on driving increased profitable market share in our core businesses.
In broadband for example, we continue to leverage our speed advantage. Everything we market and sell today is 100 megabits or faster, I think our average, looking at the back book is 90 and we are not far from a gigabyte speed with DOCSIS 3.1 soon to be rolled out.
When you couple that, with the most advance TV platforms available, you’ve got a very powerful one, two punch. We added a record 1.5 million Horizon TV subs last year.
Today, our next-gen TV platform is about 40% of our digital TV sub base and growing and these platforms provide seamless entertainment in and out of the home, on all your devices with Replay TV, SVoD services, hundreds of apps, network DVRs and beautiful user interfaces and then of course when we rollout our new more powerful cloud-based set-top at a lower cost, a lower CP cost than our current boxes, the benefits of this Horizon platform go beyond just higher ARPU and lower churn and they start to encompass the entire business model CapEx included. Now all of this investment gives us the room to price our services in a way that optimizes value for us, but also still provides great value to consumers.
We’ll be much more systematic, I can tell you we already much more systematic comprehensive and analytical in how we manage pricing going forward and we know that this will be a significant source of cash flow over the next few years, you should expect that. And then we also intend to use all of those benefits to super charge these investments in products and technology by extending our reach and adding millions of new marketable homes to our footprint.
This is the new build component of the plan. Project Lightning in the UK really lit a fire under the network team and all of us and in addition to those four million homes in the UK, we now believe there are millions and millions more across our footprint.
Our budget is to build 1.5 million in 2016 including over a 0.5 million in the UK alone and a total of over 7 million homes over the next three years. As I’ve stated before, these are high return, cash flow generating investments that exploit our existing scale and actually enhance our growth materially, that’s a big driver for us.
Moving to mobile. Europe is developing into a quad-play market and we are committed to convergence across our business with the completion of the BASE deal in Belgium, we have approximately 7 million mobile subs, which generate over $2 billion of revenue.
All of that growing essentially in double-digits. Combining that with our fixed network and our Wi-Fi and 4G mobile, you put all that together, it’s starting to provide ubiquitous and seamless connectivity experience to customers and we know that’s what they want.
I think we’ve been extremely disciplined and smart in how we’ve tackled this opportunity. In most markets we have MVNOs and they are working well at good pricing, 4G access, and Belgium we purchased an MNO, but for very good and very specific reasons, and in Holland we are partnering with the best operator in the market and we think the best brand in the market.
You should expect us to remain opportunistic here, right, we are in the driver seat, that’s how we see it and we are well positioned to make decisions in each market that maximize value creation for our business going forward. On commercial, B2B services, the effort is also ramping as we focus on exploiting the SOHO opportunity across our markets and extending our business solutions into the SME market.
In Belgium for example, we have successfully penetrated 50% of the SOHO market and this ought to be a realistic target for us in other markets, we think it will be. Meanwhile, our B2B revenue growth accelerated to 9% last year, that’s up from 7% the year before and that’s driven by SOHO segment in particular which is growing 20% a year.
Today our European footprint passes over 4 million SOHOs and over 500,000 SMEs. But these numbers will clearly grow, of course as we expand our network by another 7 million residential premises over the next three years.
So B2B is undoubtedly an important part of our growth story. And then I’ll wrap this slide with a few words on efficiencies and what we expect to generate as part of Liberty 3.0, it’s not really a cost-cutting exercise, it’s an efficiency exercise and the best way to articulate it I think, is to simply say that we believe we can keep our indirect cost base flat over the next three years as we accelerate our top-line growth, and deliver on these strategic drivers that I’ve just talked about.
Now 50% of these efficiencies if you will are already in flight, means these programs are already underway. We are in the midst of developing them and I think you’ll see some of that benefit in 2016, you can see, in a moment I’ll talk about guidance and you’ll see that.
But we really expect to growth to ramp in 2017 and beyond. So, let me get to the punch line of my remarks before I turn it over to Bernie and talk about our outlook and guidance on Slide 10, now we have two sets of shareholders here.
So we are going to provide an outlook for each of Liberty Global Group, which is Europe and the LiLAC Group which is Latin America and soon to be Caribbean. So for the Liberty Global Group, we are targeting 5% to 7% OCF growth for 2016.
this is obviously an uptick from current trends and the forecast excludes Ziggo, which of course will move off-balance sheet when the JV closes and that also excludes BASE in Belgium, since we haven’t provided guidance on that. But 5% to 7% OCF growth for 2016 and despite an expanded investment in new builds which I just spoke about, which drives the bulk of our expected increase in PP&E additions around $700 million.
We’d still expect at least $2 billion of free cash flow in 2016. Now for the first time, we are also providing specific medium-term outlook for OCF growth.
We haven’t done that in the past as you know and we’ve talked a lot about Liberty 3.0, I just did it now and we feel it’s time to be a bit more granular with you. So, for the three year period, ending 2018, we are forecasting OCF growth for Liberty Global Group of between 7% and 9%.
Now we understand that most analysts and investors are not forecasting anywhere near this type of growth, but we are confident that we can execute on our 3.0 plans and get to these levels, these high single-digit levels. And of course, we plan to repurchase 4 billion of equity over the next two years which will certainly benefit the equity story here.
Quickly guidance numbers for LiLAC are very similar. We are forecasting 5% to 7% OCF growth this year in 2016 and 7% to 9% OCF growth or an OCF CAGR for the next three years in 2018.
Both of those figures exclude Cable and Wireless, because – and we are already on record of course by saying we expect double-digit OCF growth when we are able to combine Cable and Wireless in LiLAC, but for the time being we are providing this guidance for LiLAC standalone. So let me wrap it quickly.
We consistently talk about three things in our business, growth, scale, and the benefits of a levered equity capital structure and all the things I’ve talked about today, I think support those three primary drivers of value creation for us. We see accelerating growth for us, not flat, accelerating growth.
Certainly we are adding to scale with a new build program that targets seven million homes with a joint venture in Holland which adds a massive mobile base and gives us great opportunity in that market. And on the capital structure, we remain extremely confident and I think the $4 billion buyback certainly should signal to you that we believe in our story, believe in our equity and we are excited about what lies ahead for us.
Bernie, all yours.
Bernard Dvorak
Thanks, Mike. A quick note before I start.
First, I will present the financial results of the Liberty Global Group, which includes our European operations followed by an overview of the performance of the LiLAC Group, which includes our operations in Chile and Puerto Rico. On Slide 13, we present financial results for the Liberty Global Group.
For the full year ended December 31, 2015, we reported total revenue of $17 billion when adjusting for FX and the impacts of acquisitions and dispositions, we grew the top-line by 3% while our rebased OCF growth was 3.5%. As expected, our growth rates improved in the second half of the year and we reported Q4 rebased growth of 3.5% for revenue and 6% for OCF.
On the next slide, I will give you more detail on the performance of our key markets. Our European operations reported a 2015 OCF margin of 47.9% marking a 70 basis point improvement over 2014, which was partly driven by operating leverage and cost controls.
Moving to our property and equipment adds, we ended the year within our guidance range of 23% of revenue and above the 21% of revenue we reported in 2014. The step-up in our absolute P&E additions was due principally to increases associated with the acquisition of Ziggo, as well as higher spend for line extensions, new builds and upgrade projects.
These increases were partially offset by the impact of the strengthening of the US dollar against all of our European currencies. The increase in the year-over-year ratio was mainly due to higher new build investments.
And finally, our European business delivered $2.4 billion of free cash flow in 2015, up 16% year-over-year on a reported basis, and over 20% after adjusting for Ziggo and FX. The improvement in our reported free cash flow was attributable to the effect of lower interest rates, our organic OCF growth, the inclusion of Ziggo versus the prior year, and benefits from our vendor financing programs, partially offset by trade working capital outflows, the adverse impact of FX and higher tax payments.
Looking ahead to 2016, we expect the rebased OCF of Liberty Global Group excluding Ziggo to grow from 5% to 7% as mentioned earlier by Mike. We expect our free cash flow to exceed $2 billion while our P&E adds as a percentage of revenue are expected to range from 25% to 27% in 2016.
The P&E addition guidance represents an increase over 2015 while those are due primarily to higher planned spend on new builds and upgrade activities and we expect to meaningfully increase our vendor financing program to fund a portion of this higher spend. Slide 14 breaks down our 2015 revenue and OCF growth rates in Western Europe, which makes up approximately 90% of Liberty Global Group.
Picking off of our largest operation, Virgin Media in the UK and Ireland, we delivered rebased revenue growth of 4% and rebased OCF growth of 6% in 2015 including strong Q4 revenue and OCF growth rates of 5% and 7% respectively. The revenue growth in Q4 and full year 2015 was primarily attributable to higher cable subscription revenues driven by over 200,000 net RGU adds in 2015, as well as improvements in ARPU and per RGU, higher mobile handset revenue in the UK and faster B2B growth.
Our OCF margin at Virgin Media expanded 110 basis points year-over-year to nearly 45%, a stringent cost control has helped to offset higher programming and mobile handset costs. In Germany, Unitymedia successfully balanced subscriber volumes and pricing in 2015 and we are pleased to report 6% rebased revenue and 7% rebased OCF growth for the full year.
Unitymedia reported a particularly strong Q4 for OCF with rebased growth of 11%. Moving to Belgium.
Telenet reported rebased revenue and OCF growth of 6% each for the full year 2015 period. Revenue growth in this market was driven by the continued traction of our triple-play products and a growing contribution from our mobile and B2B businesses.
In The Netherlands, Ziggo reported a 2% rebased contraction in 2015 for both revenue and OCF. Both declines reflect a continued competitive environment in the Dutch market and challenges associated with the integration during the year, primarily as a result of cost controls and a continued delivery on our synergy plan, Ziggo’s OCF in Q4 was $10 million higher than Q3 and 2% higher than the Q4 2014 amount.
Looking forward to 2016, despite our subscriber losses last year and the current competitive environment, we expect a stabilized top-line performance in The Netherlands through continued investment in our product suite, improved customer service, and the positive momentum in our mobile and B2B operations. It’s worth noting that our Dutch business remain on track to deliver €250 million of runrate synergies by 2018.
Rounding out our Western European operations, Switzerland and Austria delivered rebased revenue growth of 3% and rebased OCF growth of 6% in 2015 including 13% rebased OCF growth in Q4. Our top-line growth was driven by a mix of our fixed residential business, B2B and mobile, while our rebased OCF was aided by lower staff-related and network costs, as well as lower marketing spend in Q4 2015 versus Q4 last year.
On Slide 15, we take a look at leverage, share repurchases, and liquidity. At year end 2015, we had $45 billion in total debt attributable to the Liberty Global Group, which was flat from our debt level in Q3.
Early in 2015, we took advantage of attractive capital markets, which allowed us to push down our blended cost of debt to a record low level of 4.8% at year end 2015, 110 basis points below our interest cost a year earlier. Consistent with our longstanding policy, our debt remains nearly 100% hedged as we have swapped our non-functional currency exposures to match local currency cash flows and we have fixed all of our floating rate debt.
Our gross and net leverage ratios at the end of Q4 2015 were five times and 4.9 times respectively, excluding $2.4 billion of debt backed by the underlying shares we hold in ITV, Sumitomo and Lions Gatte. We have an extended maturity profile with an average tenor over seven years and only 11% of our debt comes due before 2021.
Turning to the middle of the slide. We continue to focus on returning capital through share buybacks and bought a record $2.3 billion worth of our shares in 2015 including $900 million in the fourth quarter.
As Mike mentioned, our Board recently authorized an additional 2.4 billion of repurchases, so we plan to buyback a total of 4 billion by the end of 2017. As a reminder, we will be locked out of the market during the period in which the CWC shareholders vote on the transaction and make an election on the consideration to receive which we expect will occur for up to two months at the end of Q1 and the beginning of Q2.
We plan to use our substantial liquidity position which amounted to $4.4 billion at the end of 2015 to reignite our share repurchase program as soon as we can, especially with our stock at these levels. Moving to Slide 16, we present a summary of the LiLAC Group’s 2015 financial results, which is made up of our operations in Chile and Puerto Rico.
Starting with the graph on the left-side of the page, rebased revenue increased 7% year-over-year to $1.2 billion. Our growth was well balanced between Chile and Puerto Rico, which I will show on the next slide.
LiLAC’s OCF growth increased to $491 million in 2015, representing rebased growth of 8% for the full year, partly driven by the fact that we delivered customer growth in every quarter during 2015 in both Chile and Puerto Rico. The LiLAC Group’s OCF margin increased 70 basis points over the last 12 months due to the aforementioned revenue growth and supported by operational efficiencies.
Looking ahead to 2016, we expect the rebased OCF of LiLAC Group to grow 5% to 7% in 2016 as mentioned earlier. P&E adds for the LiLAC Group declined to 19% of revenue in 2015, as compared to 21% of revenue in 2014.
The decrease in absolute P&E adds was primarily related to the depreciation of the Chilean Peso against the US dollar lower spend on support capital, scalable infrastructure and CPE. The inclusion of the Choice acquisition in Puerto Rico seven months in 2015 partially offset this decline.
As we look to 2016, we are targeting P&E additions of 21% to 23% of revenue, the year-over-year increase as a percentage of revenue is directly attributable to our build programs in both Chile and Puerto Rico as we look to roughly double our 2015 construction activity in 2016. Ending with the last chart on the bottom right, you can see that LiLAC’s free cash flow increased 25% year-over-year in 2015 on a reported basis.
On Slide 17, we lay our 2015 results for our businesses in Chile and Puerto Rico, as well as consolidated leverage ratios for the LiLAC Group. Starting with revenues, Chile and Puerto Rico delivered 7% and 6% rebased growth respectively in 2016.
VTR’s rebased revenue result was driven by a combination of cable and mobile subscription revenue, both of which increased as a result of subscriber gains and higher ARPU per RGU. Despite a challenging economic environment, our revenue growth in Puerto Rico was primarily driven by volume growth.
Moving to OCF, both Chile and Puerto Rico produced strong full year rebased growth rates in 2015 of 7% and 10% respectively. With regard to our Chilean results, it’s worth noting that unfavorable currency movements relating to our non-functional spend in US dollars reduced our OCF on a year-over-year basis by approximately $8 million during 2015.
The chart on the right displays the gross and net leverage ratios of the LiLAC Group, which came in at 4.4 and 3.9 in line with our leverage ratios from Q3. Over the course of last year, we were able to lower our total cost of debt to 6% from 9.2% at year end 2014, due largely to the restrike of our derivative position associated with the senior secured notes that we completed during Q4.
At December 31, 2015, we had total debt attributed to the LiLAC Group of $2.3 billion in cash and cash equivalents of $275 million. Meanwhile, liquidity of the LiLAC Group increased from $470 million in Q3, 2015 to $506 million in Q4, split between $231 million and unused borrowing capacity and $275 million of cash.
To sum up, in 2015, we achieved our key financial targets. We were able to improve our performance in the second half of the year and we are excited about the growth prospects ahead of us.
We remain committed to shareholder returns as evidenced by our share repurchase authorization. And finally, we are very excited about our JV in The Netherlands, which is a game changer for this business and is expected to be substantially accretive over time.
After the cable and wireless transaction - and the cable and wireless transaction is progressing as planned. We have filed our preliminary proxy statement and we expect the deal to close in Q2, which is just a few months away.
On that note, we appreciate your vote in the upcoming Shareholder Meeting. And with that operator, please open it up for Q&A.
Operator
[Operator Instructions] And we will take our first question from Michael Bishop with RBC Capital Markets.
Michael Bishop
Yes, hi, good morning guys. I just wanted to ask when you think about the JV with Vodafone, if you think back to the purchase price of Ziggo and the implied 14 billion EV of the transaction today.
I was just keen to get a sense of how fast through the original 25 million of synergies you are through and how you thought about the equalized Asian payments from Vodafone versus as I am obviously guessing 50% of the future synergies which might include some of those original Ziggo’s synergies. And then, just following on from that, do you have any specific thoughts about the use of cash from the Vodafone JV you mentioned it’s a deleveraging event.
Clearly, we have seen the buyback on guidance slightly increased, but is there room for more buyback on top of that with the extra cash? Thanks very much.
Michael Fries
Hey, thanks, Michael. First of all, the synergy numbers that we provided and provided some detail on in the press release reflects the synergies between the two entities post-JV.
So they are on top of the synergies, we are already pursuing and are well underway in achieving from the Ziggo, UPC NL merger while back. So they are on top of that.
Your second question, what was your second question, Michael?
Michael Bishop
It was just about on the potential use of cash, or that’s a deleveraging event, so you are obviously getting the equalization payment plus the releveraging of the JV?
Bernard Dvorak
Well, I mean, we did announced today an increase in our buyback plan of 1.6 billion or 4 billion that could be potential use of cash obviously. But we haven’t – deleveraging in the sense that we are taking over €7 billion of debt off the balance sheet.
I didn’t mean to imply that we would use that extra cash to delever as such, but it’s delevering from our Group balance sheet and the uses of cash are to be determined. Of course, we have been and continue to be very focused on our capital structure and buyback.
So you can assume that that’s a use of cash and just generally running our business the way we run it. So, I don’t see any material difference and we haven’t specified a specific use of proceeds for that number.
But, the 2.5 billion is not meaningfully different than the increase in the buyback we just authorized, but an necessarily related item. So, I think it’s business as usual.
Michael Bishop
Great, thanks so much.
Operator
We will take our next question from James Britton with Nomura.
James Britton
Thanks very much. Firstly, on the deal in The Netherlands, given you’ve got a very good valuation for the Vodafone asset in your negotiations, can you just explain why you prefer not to buy the Vodafone business outright and secure 100% synergies for yourself?
And then, this is a follow-up on the Ziggo business, when do you expect the network problems of Ziggo to be fully behind you? And on what timeframe can we expect you to push price again in that market?
Thanks.
Michael Fries
So, on the Ziggo business, we have seen continued and sustained improvement in almost all of our network statistics and service statistics from – really from September and I think I’ve reported on that. We’ve talked about that in our previous calls and we continue to see that.
The network is highly stable today and we’ve actually seen a nice uptick in the beginning of the year and our sales and net adds, on pricing, we are a rational pricer and we did of course make some moves recently in the market to reduce the number of pre-months and continue to believe that products in this particular market are fairly valued and fairly priced. So, we are not really pushing that competitive position too aggressively.
We are trying to be reasonable on how we price it, manage our products and I think you might have noticed today we’ve done that very thing. So, I think the business is stabilizing.
The network and all the service metrics are clearly stabilizing and have through the third and fourth quarter of the year with the launch of Ziggo Sports and the massive uptake of Replay TV and the other things that are really having a positive impact on MPS in this market. We are really pleased.
So, this particular operating business has been doing quite well. And in terms of your first question, I think the deal we have done is the right deal to do.
In this particular market, combining these businesses, and working together to jointly achieve the synergies that exists, that we know exists in this particular combination. That’s the right way to do it.
So that’s all – I mean, I am not going to go back, say what, this or that, this is the transaction made the most sense for us and I believe for Vodafone and for shareholders and for consumers. So, that’s how we ended up here.
James Britton
Thanks.
Operator
And our next question comes from Amy Young with Macquarie.
Amy Young
Thanks. Michael, I was wondering if you can just talk a little bit more about the pros and cons on the wireless side, MVNO versus owning and clearly as you are keeping your expertise, can you just talk a little bit more about the unit economics of controlling your subscriber a little bit more and some of the metrics that you are focused on whether it’s churn and ARPU?
And then lastly, if you can talk about your wireless strategy in the UK, given some of the regulatory changes there and then also Germany? Thank you
Michael Fries
Sure, so, I mean, I said that in my remarks, so, I’ve been clear that we have taken – I would say an opportunistic but disciplined approach in how we’ve dealt with the wireless opportunity in all of our markets and in many instances MVNO deals work well for us where we have full MVNOs to all of our customer, use of our own core network, and access to 4G, we have been satisfied and continue to be satisfied with those types of opportunity and the economics look good to us in many of the markets we are in as we forecast consumption and demand and penetration of products. So, from our perspective, if you look at how we’ve tackled mobile throughout Europe, it’s a hybrid and that hybrid makes sense to us.
In the case of Belgium where we purchased BASE, the synergies were material. The network overlap and plan was material and the asset was relatively small.
So we really felt that this was a way of perhaps improving the economics a bit through greater synergies, but also having even greater control in a market where we felt it was necessary. The JV here in Holland is a third approach and one that we think also makes a lot of sense given our relative positions in this particular marketplace.
The quality of the Vodafone network the number two network by market share, but by far the best network we believe in Holland. So it made terrific sense for us and this was the deal that we are able to get done.
I think you should expect as you look forward which is the really the basis of your question that we will continue to be opportunistic and disciplined in terms of how we look at the mobile opportunity in each particular market. It’s too soon to say what we might do in any one market except that we feel good about the strategy we are pursuing today.
We feel good about each of the markets we are in. The UK specifically has been a terrific set up for us and I can’t get too detailed about where we think this regulatory review of the – deal will – where land up and what it will mean to us.
I have to be careful about that. But suffice it to say that we are the largest MVNO in that market and we have a substantial subscriber base.
We have demonstrated a commitment to convergence and we are of course having been through it ourselves in Belgium and understanding in Austria and Ireland and having seen the mobile consolidation narrative play out. There may very well be benefits to us in this particular situation, But I can’t be more specific than that.
I will just tell you that our forecasts, our predictions, our outlook for the UK market which is quite robust do not include or assume any improvement in the MVNO arrangements that we have there today. We believe our business model is set for the foreseeable future in that particular marketplace and the guidance that we delivered both for 2016 and the next three years do not presume any improvement in the MVNO.
So should something happen in that market that’s all upside as far we can tell and of course you can bet we are around the sidelines of that discussion to see what might make sense for us.
Amy Young
Great. Thank you.
Operator
Our next question comes from Ulrich Rathe with Jefferies.
Ulrich Rathe
Thanks very much. I was wondering whether you could comment a bit more on the interim period in The Netherlands before the deal was closed you have a method out of the guidance which now interpret on one to – and interpret that one could maybe suspect that you are either on target sure, or that maybe there are particular risks that you don’t want to expose yourself from the guidance.
Could you just describe your views on that a bit? And also whether you have shifted management priorities, I mean, in the interim for example, by deemphasizing your own mobile push in anticipation of the JV and focusing maybe more on the fixed line side of things or any other changes in the way you approach The Netherlands and while you are going for this period?
Thank you.
Michael Fries
Yes, I can’t – I would like to provide you with detail on the Dutch market, specifically for Ziggo, but I am precluded from doing that. I am told by our lawyers because of the cable and wireless transaction in the UK takeover panel.
So we can’t do that today. I apologize and you might be able to discern that number on your own, but I can’t provide guidance for Ziggo specifically and in terms of management priorities, remember Vodafone is our MVNO provider.
So, in the end, from our perspective that will be business as usual for both parties and we will – we are not quite sure how long the regulatory process will take. We’ve said publicly we think by the end of the year, if not sooner, so, each party I am sure and Vodafone I am sure with discern the same thing, we are going to run our businesses as we would expect to run them and deliver to the joint venture the most robust and successful business as we can manage.
So, I don’t see any meaningful change in how we run and operate our business through the course of the year. I’ll say that, I have been pleased with the turnaround in Ziggo and I can describe it as a turnaround.
If you look at our ability to continue to deliver broadband subs and we’ve had good success through the first part of the year. If you look at our ability to prove the customer experience which was a critical issue for us over the summer and you look at our discipline around pricing and the new products we’ve launched which had a material impact on customer satisfaction and demand, I think we are in good shape.
So, it’s just business as usual for us.
Ulrich Rathe
Thanks. Could I follow-up, just as a follow-up on Germany please?
I mean, given you have announced – I think to your customers some price increases, what gives you the confidence that the churn issues this year would be contained compared to the experience on the price increases last year? Thank you.
Michael Fries
We have learned quite a bit about price increases through 2015 and Diederik might answer comment on that as well, but, we have become much smarter about how we manage prices and looking at our acquisition prices in particular in relation to our back book prices. The experience in Germany last year was really mostly driven around an acquisition price increase which impacted sales of course and the prices this year are lower and I think certainly we believe implemented more appropriately across the sub base yet still impactful to cash flow.
So price increases are - continue to be an important part of our growth in cash flow and free cash flow as you might expect. But I think we are much more intelligent and certainly we believe more effective in how we are implementing those price increases and we learned a bit about Germany for sure the last year and you can expect we won’t make those same mistakes.
So, the increases are across the different part of our sub base, less focused on acquisition prices, more on finding the areas within our back book and existing customer base that we think we can manage and improve or normalize pricing and it’s plenty to be gained in the revenue line from those types of activities. Diederik do you want to add anything to that?
Diederik Karsten
No, Mike, I think, absolutely right and looking at price increases it’s so better balanced between different segments and if you look at the early reception, it seems they were indeed more intelligent than last year, that’s also how it seems they were perceived in a market on this.
Ulrich Rathe
Thank you very much. Sorry, thank you.
Operator
And our next question comes from Matthew Harrigan with Wunderlich Securities.
Matthew Harrigan
Thank you. There was a lot of excitement out of CTE on Wi-Fi first chance as some of that’s dissipated T-Mobile’s Bright House trial getting pulled.
But could you talk about some of the things on the roadmap for wireless that make that even going out to 5G where you need to have lower latencies and all that where it makes the deal make even more sets and maybe that’s kind of a follow-on question. And then secondly, when you look at your video pricing, do you think you are going to get any halo from the advent of 4G hopefully – and all that, because it feels like maybe you could price segment a little bit more aggressively?
Thank you.
Michael Fries
Hi, Matt. I’ll let Balan circling to your wireless question.
We have certainly done work on Wi-Fi first as you know, we’ve talked about that publicly and the roadmap, the technology roadmap for mobile is something that we are monitoring. We are not of course launching 5G anywhere.
We don’t have a particular plan to do that and we are sort of in the – if you will, in the wake up our mobile MVNO providers in the markets that we have those arrangements. But in terms of video pricing, I don’t know whether 4K is going to make material difference, Matt.
To be honest with you, I think we are in a wait an see mode. It does have – been in CES where there too I am sure it has certainly an impact obviously marginally on the viewer and its experience.
So I think it’s too soon to say, we’ve got to have content, we’ve got – in terms of what will it mean to our broadband delivery and things of that nature, we are also in a wait and see mode. So, I am – we haven’t taken any action today per se to anticipate meaningful consumption of 4K.
I’ll let Balan jump in if he has a different view on that, but it’s something that we are in a wait and see mode on and it will be more impactful than 3D which everybody felt was going to have some material impact on consumer satisfaction and it didn’t but I think we are still in the early stages of knowing what that might mean to us. Balan, do you want to add anything to that?
Balan Nair
Sure, Mike. On the 4K, for sure, beginning next year, I would devices, the set-top boxes that we have put out there will be 4K capable.
So we will be ready for it when the content catches up with it. In the 5G front, we think that that most of the standards will be done around next year, 2018, perhaps and deployments in the network perhaps after 2020, you’ll probably start seeing handsets right about 2020 and beyond and there is opportunity for us for sure it allows us to reform spectrum and perhaps give more spectrum back to LTE offerings.
I think, on the Wi-Fi first question, we’ve done trials on it. We can get it working, but the more you do on the MNO side, the less the need for Wi-Fi for its solution.
Matthew Harrigan
Thanks, Mike, Thanks, Balan.
Operator
And our next question comes from Jeffrey Wlodarczak with Pivotal.
Jeffrey Wlodarczak
Good morning guys. Can you use the remaining 2.9 billion or so in NOLs to shield your income from the JV or kind of JV effectively purchase your NOL and you want to shield their chance?
Michael Fries
We want to be careful about being too specific about the tax arrangements here. I think it’s – you are spot on that the 2.9 billion of NOLs that remain outside the JV could be put into JV, but that would require some measure of compensation and what we might do with those NOLs I think is something we have to just see in time what the best use that would be, so.
Jeffrey Wlodarczak
Okay, thanks and then, I think it was 350 million of dis-synergies how should we think about the timing of how those cost hit in 2017, in 2018?
Bernard Dvorak
Yes, I mean, in this case, we’ve been a little – it’s a slightly longer timeframe for synergies that I think that’s part of – just because they are substantial and if you look at them as a percent of OpEx or CapEx or even revenue synergies are material here, probably larger than most people thought and so, we’ve been appropriately conservative about the timeframe closer to four five years and what we would typically do two or three years. I don’t think we are not providing annual guidance on that today, Jeff.
But of course, as time goes by and we have greater visibility and working more closely we can provide a bit more transparency, but, so that’s all I can say. But the negative synergies would layer in, in the early part of any synergy plan of course and the timeframe we provided here is little longer than normal on the upside.
So, that’s all the color I can provide at this point.
Jeffrey Wlodarczak
And then, one last quick one. At some point, are you going to be restricted from share repurchases around the close of the deal?
Michael Fries
The only restriction I am aware of – I’ll let Rick or Bryan, chime in here. When we file the proxy for cable and wireless deal, we will be out of the market from the point in time if that is filed until – that get closes with the shareholder vote, I am not sure, but, we are in the market if you will clear of course as of today and through the date of that filing which we anticipate to part.
So, Bernie, do you want to anything to that which you spoke about it?
Bernard Dvorak
No, and I don’t think there is any restriction around the Vodafone closing transaction as you can see that restatement.
Jeffrey Wlodarczak
Okay, great. Thanks very much.
Operator
Our next question comes from Michelle Morris with Morgan Stanley.
Michelle Morris
Yes, thanks. Good morning.
I just wanted to touch on LiLAC and your guidance. You’ve talked about 5% to 7% OCF growth with limited free cash flow.
So I am assuming it implies slightly higher CapEx, just can you explain a little bit what’s going on there? Perhaps it’s a currency effect.
And then your mid-term guidance calls for an acceleration and I was wondering if you could give us a little bit more color to whether or not that would also be true for revenues or that’s really coming on the cost side. And my second question would be on Chile and your mobile net adds that you can recur in the second half of the year, so just wondering if you can comment as to what’s going on there?
Again, then it’s still relatively incipient – if you know there? Thank you.
Michael Fries
Sure, that was I’ll again work up the Chile answer. In terms of the mid-term guidance that we provided and we’ve been somewhat clear on that in the past, but generally speaking the increase if you will, over our run rate growth, we attribute about 60% to revenue and 40% to efficiency.
So, the plan that we’ve been talking about publicly is always been a - primarily a revenue-driven plan and I talked about in my remarks that the core revenue drivers B2B, mobile and market share gains and price increases where appropriate. So, for sure, you should expect that this is not a cost-cutting exercise, in fact, if you look at our indirect cost, we expect them to be flat, that’s not really cost-cutting, that’s really cost maintenance.
And of course our direct expenses would go up because many of those are variable and driven by revenue. So, as you anticipate and forecast greater revenue growth, you are going to see an increasing in direct cost, but if we maintain that indirect cost line, relatively flat, that allows you to generate obviously incremental margin which is what’s driving our expected increase in growth.
So it is definitely a revenue – primarily revenue-driven business opportunity. In terms of LiLAC, the free cash flow posture of that business has always been a little bit different and that has to do as much as anything with the CapEx profile we are in today, partially currencies, but we do anticipate free cash flow in that market – in that region of course to ramp and with the cable and wireless deal, the synergies we anticipated in that particular deal we did say that we saw double-digit OCF growth over the medium-term post closing and you would expect that that would also have a positive impact on free cash flow.
We just didn’t provide any guidance on that. That’s about – do you have the Chile mobile net adds figure?
Unidentified Company Representative
Good morning. What we see in the Chilean market is an entrance of a new player one, that came very aggressive, but despite that, we were able to grow our base by 30,000 postpaid subs focusing as we were doing for the last years on our base expanding into a quadruple play.
So, I think that the other players were impacted more partly by the new player. We will keep on focusing on our expanding our base into a four-play.
Michelle Morris
All right. Thank you.
That’s helpful.
Operator
Our next question comes from Daniel Morris with Barclays.
Daniel Morris
Good morning and thanks for taking the question. It’s on CapEx really.
I just wanted to understand how best to bridge between the kind of 22%, 23% runrate and the 25% to 28% you are talking about for the next three years. I mean, if I look at your incremental build plans, it looks like it’s at least 1 million a year of extra household you are planning to build out versus, certainly my expectations and if we think about a kind of 600, 700 CapEx per home pass that seems to – you’ll be 3 to 4 percentage points of extra CapEx to sales.
So, is it kind of as simple as that and there is nothing else really going on in the CapEx line? And then I have a follow-up please.
Thanks.
Michael Fries
I think you are looking at it correctly, Daniel. Charlie, you can chime here, or Balan, but I would say the vast majority if not all of the increase in our CapEx to revenue ratio as we put in the 10-K is attributable to incremental new build which we estimated at 7 million homes over the next few years.
So, that’s a lot of activity, it’s a lot of CapEx and you should obviously anticipate that that is going to impact the CapEx figure and we did say for 2016, the vast majority of the 700 million increase in PP&E is going to be attributed to the incremental new build activity, but remember, these are in our experience, 30% IRR, huge cash-on-cash returns, self-financing after a period of time and easily financed, vendor financed. So, from the point of view of free cash flow, we can manage that and they do become accretive very rapidly, but certainly there is some impact on the accounting figure and I think you’ve correctly assessed it.
Daniel Morris
That’s very clear.
Bryan Hall
I’d say – the only thing I would say is, there was a little bit of an increase in CPE because clearly the new hire and you’ll need more net adds we have, but otherwise the other major cost categories are flat. That is all coming out of new builds and CPE just to make them.
Daniel Morris
That’s very clear. So, it’s great CapEx.
Just as a follow-up, can you just let us know you obviously had a lot of big build in the second half of 2015 in terms of the UK lightning. I just wonder has the take rate going there any surprises either on the upside or is it or downside or is it really running inline with expectations?
Michael Fries
Well, it’s running inline and I think we said that in our remarks, but Tom if you are on I’ll let you address more specifically.
Tom Mockridge
Yes, good morning all. I think as Mike mentioned earlier, the numbers are generally running ahead of our expectation in terms of take up we are finding in new – probably developments whereas the new construction after six to 12 months we are getting penetrations as high as 50%.
In the infill areas where we are filling in those gaps and the network that we had previously after six to 12 months we are getting 20% and that continues to rise over time. So, we are very pleased about the take up we are getting and certainly it’s lightning which has supported the record growth in subscribers that Virgin Media had in Q4, not only lightning because we had a good quarter as well, but we see both those contributing to continuing growth in the first six weeks of the new fiscal year.
Daniel Morris
Great. Thanks for that.
Operator
And we will take our final question from Ben Swinburne with Morgan Stanley.
Ben Swinburne
Thank you. Good morning.
Mike, I think we’ve historically thought about, kind of mid-teen’s free cash flow growth from Liberty and you’ve laid out this three-year plan for OCF. I wondering if you have anymore you can add to help us at least think directionally about the free cash flow CAGR?
I would imagine that it’s probably pretty back-end loaded, but you’ve got a lot of moving pieces between the new builds and the vendor financing piece that I think ultimately sort of reverse itself. So, any color you can help us and think about the free cash flow CAGR and along those lines, can you help us with the 7 million new build homes will be the homes in Germany and any other markets you are thinking about build about be less expensive than in the UK?
Just any color on sort of regional differences to help us fine tune would be helpful. Thanks.
Michael Fries
Yes, sure, Ben. Certainly on the new build, you should expect that the most expensive construction we are undertaking today is in the UK and we’ve been public about those numbers, 400 pounds to 600 pounds and you should expect that those numbers are lower in Germany and lower in other markets like CEE, or Central Eastern Europe which is also a component of the 7 million.
I don’t know that we provided any specific guidance. But perhaps we can think about that for the next call or on the next occasion in terms of translating or maybe Bernie, tell me if we put any specific figures in 10-K.
But they are going to be lower than the UK. That’s for sure.
Bernard Dvorak
Yes, we didn’t disclose anyway.
Michael Fries
Yes, on the free cash flow figure, I mean, we did say this year, even with the 700 million increase in CapEx mostly attributed to the new build activity, we still think we can generate 2 billion of free cash and we didn’t provide free cash flow guidance over the three year period, but – you I think have also correctly assessed that it’s partially back-end loaded, because that expenditure is obviously driving growth and driving scale and giving us the opportunity to impact the cash flows as we expect to. So the 6% of the 3.0 value accretion if you will coming from revenue does take capital.
So, it is – we are not providing that guidance today, but you can bet, Ben, because you know this, we are highly focused on free cash flow, that for us, free cash flow per share and having access to that free cash flow is critical and as we get – perhaps in the next call we’ll be a little more specific as we are farther into 3.0 we have greater transparency on the joint venture, et cetera. But, I think you are correct in saying that it’s partially back-loaded, back-ended.
Ben Swinburne
Okay, thank you.
Michael Fries
I think that’s our last call. So really thanks everybody for joining the call today.
We are – as I sit here, never been more excited about where we are headed. If you look at the three things that we have talked to you about consistently for a decade, growth scale and sort of prudent management of our capital structure, all three of those things are in great shape today.
I mean, on the growth front, the fact that we are telling you we see an acceleration and an improvement in our growth profile over the next one to three years. That hopefully gives you confidence that the trajectory is improving that we are committed to 3.0 and that we are all incented properly to achieve those sorts of numbers.
With the new build program, even with the JV in Holland, our ability to optimize and maximize scale across our European footprint has never been more important and quite frankly, I feel really good about the things we are doing to achieve that. And then lastly, whether it’s free cash flow or commitments to leverage – appropriately leverage our derisked balance sheet and then lastly – probably just importantly our commitment to the buyback program increased today, all that should give you the confidence that we believe in what we are doing.
And that we feel really good about the next three years and the medium-term. So, appreciate your support and I am sure there will be plenty of questions and opportunity to chat about this over the next couple of months before our next call, but thanks as always and we’ll speak to you soon.
Operator
Ladies and gentlemen, this concludes Liberty Global's 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.