May 10, 2016
Executives
Michael Fries - Chief Executive Officer Bernard Dvorak - Executive Vice President and Co-Chief Financial Officer Charles Bracken - Executive Vice President and Co-CFO (Principal Financial Officer) Tom Mockridge - CEO of Virgin Media Lutz Schüler - Chief Executive Officer, Unitymedia Diederik Karsten - Executive Vice President and Chief Commercial Officer Balan Nair - Executive Vice President and Chief Technology Officer
Analysts
Frank Knowles - New Street Research James Ratcliffe - Buckingham Research Group Jeff Wlodarczak - Pivotal Ulrich Rathe - Jefferies Vijay Jaynat - Evercore ISI Jason Bazinet - Citigroup Justin Funnell - Credit Suisse Michel Morin - Morgan Stanley Matthew Harrigan - Wunderlich Securities Ben Swinburne - Morgan Stanley
Operator
Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global’s First Quarter 2016 Results Investor Call.
This call and the associated webcast are the property of Liberty Global, and any redistribution, retransmission or rebroadcast of this call or webcast in any form without the expressed written consent of Liberty Global is strictly prohibited. At this time, all participants are in a listen-only mode.
Today's formal presentation 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, May 10, 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 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-Q and 10-K. Liberty Global disclaims any obligation to update any of these forward-looking statements to reflect any change in its expectations or in the conditions on which any such statement is based.
I would now like to turn the call over to Mr. Mike Fries.
Michael Fries
Thank you, operator, and welcome, everybody. Thanks for joining us on our Q1 call here, our first of the year.
Nice to have both sets of shareholders on the call with us, Liberty Global and LiLAC. I am joined by a number of folks of our management team who you will hear from likely in Q&A.
I will do a quick overview as we normally do over the numbers and the results. And I’ll turn it over to Bernie for some financials and then we will get to your questions as quickly as we can.
We are talking from slides as we normally do. And I am going to start on Slide 4, which has what we think are really the key messages, the key takeaways that you need to get from the call today.
And I think first and most importantly, we had a strong quarter on subscriber growth. We doubled our net-adds versus last year.
We exceeded our own internal expectations pretty considerably. We saw improvements across all three products: video, broadband, and telephony with really strong results in the UK.
I'll dig into this in a bit in just a moment. Secondly, we were particularly pleased with this kind of volume growth after taking price increases across two thirds of our customer base in the first quarter.
By the way if you add Ziggo, those customer increases were closer to 80%, which just got their price increases announced. We took a lot of lessons that we learned from last year and ensure that this year we reduce the impact of churn and optimize the benefits to sales.
And we think we hit the mark here. Going forward as we manage the price-value relationship in this timeframe Q4, Q1 we think this sort of RGU growth in the first quarter is the new normal for us, and phasing will be more back ended throughout the year, so make note of that.
Thirdly, our plans to build 1.5 million new homes in 2016 are right on track. Like I've said previously, these are high return cash flow generating investments that exploit our existing scale and innovation platform and materially enhance our growth in the future.
Product Lightning results at Virgin are very encouraging as you'll see and we're getting more active outside the UK as well. Fourth, our mobility plans are taking shape in every market.
We're spending a lot of time optimizing the revenue and margin opportunity represented by the quad-play with a flexible market-by-market approach that keeps our options open in what is becoming an increasingly converged market. That's a nice segue to the Cable & Wireless acquisition which is set to close next week.
We think this deal is a game-changer for us in the region, increases our scale with great mobile and fixed assets. And then finally, we're confirming all of our 2016 guidance today, for Liberty Global and for LiLAC.
We think it's been a good start to the year from our perspective. Subscribers are ahead of plan and our rebased operating cash flow growth.
Well, perhaps behind some of US [ph] estimates is right in line with our own budget phasing. And as I said on our last call, it shows that the business is ramping and we expect it to ramp in the second half of 2016.
That's the foundation for our 7% to 9% operating cash flow growth guidance for the next three years. Now, Slide 5 provides more detail to highlight some of these main takeaways from Q1.
I'm going to start on the left hand side of that slide, with operating and financial highlights. We gained 156,000 RGUs in the first quarter as I mentioned.
That's more than double our Q1 performance from last year. We also added 100,000 postpaid mobile subs organically.
I will get into the details in a moment. Rebased revenue and operating cash flow growth were both up 3% year over year.
Revenue, of course, remains driven by a healthy mix of volume and price and mobile and B2B. And operating cash flow growth followed that same trend, and when you exclude Holland, and the BASE acquisition, both revenue and operating cash flow were up 4%, again in line with our internal forecast.
We did have a negative free cash flow of $85 million in the quarter. But that was due among other things to the timing of working capital and some vendor financing issues.
Shifting gears to M&A, in the middle of the slide, we were busy. We have been busy, the Cable & Wireless acquisition, will close next week.
More on that in just a minute. Our JV with Vodafone in Holland is progressing nicely, it's on track.
In fact, we're in a very constructive dialogue with the European Commission right now and still expect that transaction to close around the end of the year. We completed the acquisition of BASE, the mobile business in Belgium.
That integration is going very well, underway now. It’s still in the early days but we've already publicly increased our synergy estimates, 50% from €150 million to €220 million.
Speaking of growth opportunities and efficiencies, Liberty 3.0 is in full swing. I’ll provide a bit more detail in a minute but the punch-line here is that momentum is building across the whole organization on both the revenue front and with respect to our operating model.
And you should expect to see some benefits of that in the second half of this year. Finally, on the balance sheet.
We ended Q1 with a total of $4.4 billion of consolidated liquidity, a record low cost of capital, 4.8%. And while leverage is up a bit, over 5 times due to among other factors some FX movements on the BASE transaction.
We expect more normalized levels going forward and we still benefit from a long term fixed rate capital structure where less than 15% of our debt matures in the next five years. Finally, we were meaningfully restriking on the buybacks in the first quarter, most of you probably know that, due to the Cable & Wireless transaction.
So we were only able to repurchase $286 million worth of stock. Needless to say, we expect to restart our buyback program next week after that deal closes, and we're likely to accelerate that activity in the weeks and months ahead.
Slide 6 provides a bit more detail on the subscriber growth in the quarter and compared to last year, so you can see in the left hand side of that slide, all three fixed product categories improved year over year. We lost fewer video subs across the group, including our markets like Holland as we pushed our killer apps like Horizon Go and Replay TV.
We added more broadband and voice customers in markets like the UK where net adds were up 43,000 over last year. As I said earlier, this growth came in a quarter where around two-thirds of our customers were impacted by price increases in that period.
In the middle of the chart, you'll see that net adds in Western Europe were up nearly four-fold, again driven by the UK which had its best first quarter in six years. And of course, those were offset by another challenging quarter in Holland where RGU losses improved year over year but were still down 40,000.
Now there are some green shoots in Holland. We added 8000 broadband subs in the first quarter.
And KPN announced some sizable price increases recently, more or less double the level of previous years at 4%. We'll see how that sorts itself out.
And finally, our Central and Eastern European region gained 64,000 RGUs in the first quarter, and they’re starting to see the benefits from our network expansion and new products like Horizon. Moving to Slide 7.
We've been updating you regularly on Liberty 3.0 and after a solid year of planning, I am pleased to announce that Liberty 3.0 is definitely a GO. In fact, we've rebranded the entire initiative to Liberty Go to capture the energy and the enthusiasm of our top 400 leaders and to connect the entire organization of 38,000 people to our three-year mission of growth and customer centricity.
This is no longer a transformation project, or an overlay. It's one integrated plan from top to bottom.
Now you've seen this visual. These are the five-building blocks that support our acceleration in revenue and operating cash flow over the next three years.
Have touched on the first two and I'll get to more of those in a second. I'm talking about smart execution of price rises across our footprint and then of course expanding that footprint with highly accretive new-build activity targeting 7 million homes.
Let me spend a minute on the efficiency side, though. I think we've been clear that while direct costs like content and bandwidth will always grow along with revenue, the bulk of our indirect expenses, which total approximately $5.5 billion a year, are expected to stay broadly flat over the next three years.
Now, how are we going to do that? Let me rattle off just a few examples, so you get a sense of what we're focused on.
In order to take advantage of our scale across Europe, we're pretty far along in restructuring and centralizing our entire technology organization, including product development, our core network management, IT, our supply chain. Along those lines, we just issued the biggest RFP in the market to consolidate, reduce and improve our customer contact centers.
On the procurement front, we’re putting in place master service agreements for our largest vendors by category, cutting off that long tail of company specific solutions and many vendors and we’ve developed group wide preferred supplier list for all contingent labor, to drive an even better customer experience. We're starting to digitize much of what we do self-help or online tools, we’re launching a company-wide service apps and implementing digital first philosophies of cross customer engagement centers.
Obviously the goal is quicker response times, higher satisfaction levels but also to be more efficient. And these are just a few examples and there are many.
But as you can see, it takes time and a lot of hard work and doesn't happen overnight. And now as we move into full execution mode, as I said, you should expect to see tangible benefits to begin flowing here in the second half of this year.
Again, 2016 really lays the groundwork for our three year plan and start getting 7% to 9% OCF, a CAGR of 7% to 9% between now and 2018. Now, as I've said publicly 60% of the value creation in Liberty Go starts on the revenue side, which means we need to constantly innovate and invest in our residential products like Horizon TV, Wi-Fi and the fastest broadband speeds.
So Slide 8 takes you through a few highlights there. Starting with the Horizon, with over 2 million Horizon TV subs, and 13 million households eligible for our TV Everywhere product Horizon Go, we think we're starting to reach critical mass here with our next generation digital platforms.
Horizon Go offers 60 to 100 channels, live streaming services, recording functionality, all of our on-demand content, including Replay TV. Replay TV is nearly as popular as the DVR.
We are seeing over 60% usage of Replay TV at home or on the mobile in the four markets where we've made it available. We should [ph] look for us to expand that killer app to many more markets through the course of this year.
To take advantage of our scale, we're developing faster, cheaper and smarter devices like EOS which is a project name for our cloud based set-top box that we're going to be trialing later this year. It's going to be faster, cheaper, provide more functionality than today's Horizon box.
We also have a new Wi-Fi router, we call it the Connect Box, which is now live in all European markets and sets us even farther apart from the competition by providing faster, more reliable in-home signals and up to one gigabit speeds. The customer response has been positive.
This is a big issue. When you've driven average customer speeds to 100 megabits per second and you don't control the in-home Wi-Fi router, customers complain.
So we're already seeing reduced call volumes, CapEx savings from lower maintenance and truck rolls. This is going to be a terrific product for us.
On the right hand side of the slide, you're going to see more details on the new build program, again targeting 1.5 million new homes and 7 over the next three years. We're starting to tick up steam across our footprint.
We added 210,000 new build homes in the first quarter. You've already heard us talk about the economics, right, these projects are scalable.
They’re demand led, they have great cash-on-cash paybacks and unlevered IRRs in the 30’s but they do require capital, right. We spent $100 million in the first quarter and have referenced I believe in our last call that we might spend up to $700 million this year in incremental CapEx on new build.
I personally can’t think of a better way to put our capital to work and we're going to endeavor to provide you as much visibility as you can and how our new build program is impacting our Q results from revenue to free cash flow. Fourthly, we're far enough long on Project Lightning in the UK, to feel really confident with these plans.
And we're just over a year into that market and are already delivering great results. And you can see some of those on the slide.
We added another 70,000 homes in Q1 bringing cumulative homes released to approximately 330,000. And we’re budging an additional 400,000 plus homes this year in the UK.
Average build costs are just under 500 pounds, that's lower than our estimated average. And the commercials are right in line, you can see that on the graph, on the bottom right, penetrations at the end of Q1 for premises that released, three, six and nine months ago, are exact where we thought they would be, or in fact, ahead of plan in many cases.
After nine months we’re at 26% penetration. So we're well on our way to achieving our 40% goal over three years.
And of course there's plenty of opportunity in other markets like Germany, Central and Eastern Europe and even Chile. On Slide 9, I am highlighting two additional drivers of growth here, beginning with mobile.
Now, I know most of you are already aware of this but I just want to repeat it. In Europe, there is no confusion about where mobile fits in the cable bundle.
We are all in as they say, and focused on providing seamless connectivity with up to 500 megabits fixed broadband, in-home Wi-Fi, outdoor public spots and 4G. And pro forma [ph] for the recent Belgian acquisition, we now serve over 7 million mobile customers in Europe, representing over 10% of our revenue.
And if you add in the pending Cable & Wireless acquisition and our JV in Holland, our mobile base moves closer to 15 million. And I get it, we're not AT&T but we are starting to build a sizable and profitable mobile business that complement our fixed platforms, and the benefits are material in terms of churn reduction and the competitiveness of our bundles.
Just in our existing base, we added 100,000 postpaid mobile subs organically in Q1 and we saw a especially high take-up among our most important set of customers, that’s our triple-play subs. I think we've done a nice job of balancing the speed of launch, the capital spend and the importance of margin to deliver the right mobile solution for each market.
Most of our MVNO contracts are future proof from a technology point of view. And they provide some protection from significant increases in usage or falling retail prices.
We’re already offering 4G in four markets and will launch in additional four markets later this year. Now in conjunction with our mobile offerings, our Wi-Fi network currents stands at 6 million public access points and we'll expand that to 10 million in the second half of the year.
Another key area of organic growth for us is of course B2B which grew revenue 10% in the first quarter and now run rate around $2 billion of annual revenue for us. Now we're particularly focused on the SOHO segment which grew over 25% year over year and surpassed the 1 million subscriber mark.
Now we know we've got relatively low market share in both SOHO and SME on our footprint today and we believe double-digit market share is achievable in the next few years. In SOHO, we're offering our customers enhanced products and service levels at a premium price point to residential.
And in SME segment, we've got tailored packages that are focused around superior data services, with value added applications for voice, Wi-Fi, security, and even storage. Lastly, we see even better B2B results, or we will see better B2B result of course, as we build out 7 million more new homes.
Those are going to generate an additional 600,000 to 700,000 businesses that we can market those services to. My last slide, Slide 10 just gives you a quick update on Cable & Wireless.
And you should have seen that the transaction was approved by 99% of shareholders who cast a vote -- by both companies, so clearly there is pretty good support for this deal. On the eve of closing the transaction, I have to tell you I'm even more excited than before to own and operate this business.
Cable & Wireless adds substantial scale to LiLAC which it needs to stand on its own. Cable & Wireless adds depth to our regional management team, especially on mobile, and we’re going to need all of that to exploit the growth opportunities in this region.
Cable & Wireless adds a powerful B2B platform, including a submarine fiber network to capitalize on what I'm seeing as explosive growth in data consumption there. And the deal unlocks significant synergies well beyond the $125 million that we publicly disclosed, and of course, as we get closer to having the exact number, you can expect us to communicate that as quickly as we can.
Now we've also discussed that there are plenty of M&A opportunities in the region, it's highly fragmented. There is a very large pipeline of deal flow [ph] but I want you to know that you can expect us to be opportunistic but not hasty here.
Post closing, LiLAC’s market cap is going to be around $7 billion, with 67% of the stock held by Liberty Global. We want you to know that we're exploring the pros and cons of distributing the LiLAC tracking shares that Liberty Global holds to Liberty Global Group shareholders so that a 100% of LiLAC would be freely traded.
A final decision hasn’t been made, that’s important to point out but we certainly think there are benefits and we will certainly tell you what we intend to do as soon as we know. Let me just wrap by saying there are a lot of good things happening across our business today.
Growth is steady and in line with our forecast and phasing. Liberty Go is up and running and the entire leadership team, I am telling you, is mobilized and motivated to deliver that kind of growth and value creation of the next three years.
All of these things make us pretty anxious as you can imagine to get back into the market with our buyback program after the Cable & Wireless deal closes next week. So we're really excited, I am excited about what's happening here.
I look forward to your questions but in the meantime let me turn it over to Bernie for the financials. Bernie?
Bernard Dvorak
Thanks, Mike. On the following slides, I will present financial results for the Liberty Global Group, which consists of our European operations, including BASE since February 11, followed by an overview of the performance of the LiLAC Group, which consists our operations in Chile and Puerto Rico.
On Slide 12, we present financial results for the Liberty Global Group. When adjusting for FX and the impacts of acquisitions and dispositions, we grew our rebased revenue and OCF by 3% year over year in Q1.
Similar to our first quarter of last year, we increased prices in the majority of our markets in order to lay the foundation for faster growth during the remainder of the year. In terms of the capital intensity of our business in Europe, property and equipment additions were 22% of revenue, above the 21% of revenue that we reported in the prior year period.
The increase in P&E additions both on absolute and percentage terms was principally due to higher customer premise equipment spend as a result of higher subscriber volumes and increased line extension spend related to our new build activities. In terms of our Q1 2016 P&E additions, 43% pertained to line extensions, upgrade and rebuild and scalable infrastructure.
33% was related to CPE and 24% was related to support capital. Our new build spend is expected to accelerate for the remainder of the year.
And we are reconfirming our full year P&E additions to range from 25% to 27% of revenue. From a free cash flow perspective, Liberty Global Group reported negative free cash flow of $105 million as compared to positive free cash flow of $356 million in Q1 2015.
This variance was due to trade working capital and vendor financing outflows. And it was in line with our expectations.
We continue to expect our full year 2016 free cash flow to exceed $2 billion. Slide 13 shows the performance of our operations in Western Europe, which represents over 90% of the Liberty Global Group's revenue and OCF.
Virgin Media, our business in the UK and Ireland delivered rebased revenue and OCF growth of 4% in Q1. Topline growth was supported by a wide range of drivers, including strong subscriber growth, ARPU improvement, higher mobile revenue, including handset sales, and B2B growth.
Unitymedia in Germany grew rebased revenue by 5% and rebased OCF by 6% on the back of ARPU and broadband volume growth. In Belgium, Telenet reported Q1 rebased revenue growth of 5% primarily fueled by higher ARPU, continued growth in subscribers and increase in mobile and B2B.
Rebased OCF growth of 2% was impacted by higher marketing spend and costs associated with the BASE integration. In the Netherlands, Ziggo reported a 3% revenue decline -- rebased revenue decline while OCF grew 3%.
The top line decline reflects the continued competitive environment in the Dutch market and the impact of RGU losses over the last twelve months. Our rebased OCF performance was stronger as reduced integration expenses and synergies realized during Q1 2016 more than offset revenue headwinds.
And finally, Switzerland and Austria delivered rebased revenue growth of 2% and rebased OCF growth of 8% in Q1. Our revenue growth was driven mainly by ARPU per RGU expansion and volume growth in mobile, while our rebased OCF performance was primarily driven by lower network and marketing spend and supported by benefits from the ongoing integration of these two markets.
On Slide 14, we show Liberty Global Group’s leverage, share repurchases and liquidity position. At the end of March, we had $47 billion of debt attributed to the Liberty Global Group with an average tenor of over 7 years.
Most of the $2.3 billion increase in Liberty Global Group's debt from year end 2015 is due to the addition of debt associated with the BASE acquisition. Our blended cost of debt improved further to a record low of 4.7% as compared to 4.8% at year end, as we took advantage of current market conditions to restrike portions of our derivative portfolio.
Our debt remains nearly 100% hedged as we have swapped our non-functional currency exposures to match the local currency cash flows and have fixed all of our floating rate debt. Our gross and net leverage ratios at the end of Q1 stood at 5.4 times and 5.3 times respectively, excluding $2.5 billion of debt backed by the underlying shares we hold in ITV, Sumitomo and Lions Gate.
The increase to our gross leverage ratio from 5 times at the end of Q4 2015 is due to a sequential decrease in OCF in local currency terms excluding BASE, higher debt balances on a reported basis associated with the weakening of the US dollar and the inclusion of BASE. Turning to our buyback program.
In Q1 we repurchased only 285 million of our shares, as our daily volume limits were impacted by the Cable & Wireless deal. The recent buyback moratorium will be lifted on May 18, which coincides with the anticipated closing date for the Cable & Wireless transaction.
By the end of 2017 we plan on repurchasing 3.7 billion of our shares. Finally, regarding our liquidity, we ended the quarter with nearly $4 billion of liquidity, consisting of $685 million of cash and $3.2 billion of borrowing capacity.
Turning to Slide 15, we present an overview of the LiLAC Group's Q1 financial results. We reported a strong first quarter with rebased revenue up 6% year over year to $304 million primarily driven by VTR.
At the same time rebased OCF growth at LiLAC grew 11% to $122 million in Q1 2016 which compares to 6% rebased OCF growth in the prior year period. LiLAC OCF margin increased 250 basis points over the last twelve months to 40.1% supported by operational efficiencies.
P&E additions for the LiLAC Group increased to 24% of revenue in Q1 2016 as compared to 20% in the prior year period. The increase in both absolute P&E additions and as a percentage of revenue was primarily related to higher spend for new build and upgrade projects, as we've built over 20,000 homes in the quarter partially offset by the depreciation of the Chilean peso against the US dollar.
Finally, LiLAC generated Q1 2016 free cash flow $20 million as compared to a cash flow deficit of $26 million in Q1 last year with the variance mainly attributed to lower interest related derivative payments, organic OCF growth and trade working capital improvement, slightly offset by higher interest payments due to the inclusion of Choice debt. The lower derivative payments in the second quarter – sorry -- in the first quarter were directly related to the re-striking of all of VTR’s derivatives during the second half of 2015.
Slide 16 provides more detail on our Q1 performance at our businesses in Chile and Puerto Rico. Starting with ravening, Chile and Puerto Rico delivered 8% and 3% rebased growth respectively in the first quarter of 2016.
VTR’s revenue growth was its best Q1 performance in three years as cable subscription growth -- revenue growth was driven by an increase in ARPU per RGU and continued growth in subscribers. In Puerto Rico, Liberty grew 3% on a rebased basis driven by organic subscriber growth and the continued success of B2B.
This growth has partially offset by a decline in ARPU per RGU. Moving to OCF, VTR reported 13% rebased OCF growth for Q1 2016.
This result was primarily due to the aforementioned revenue drivers together with operating leverage, as the increase in LiLAC Group's revenue significantly exceeded increases in its programming and other costs. In Puerto Rico, we delivered rebased OCF growth of 7% in Q1 driven in part by the previously mentioned revenue growth drivers and SG&A cost reductions in Q1.
The chart on the right displays the gross and net leverage ratios of the LiLAC Group that stood at 4.9 times and 4.3 times, up from 4.5 times and 3.9 times in Q4 due to lower sequential OCF at VTR. The LiLAC Group's average tenor of third party debt exceeds seven years with minimal maturities prior to 2022.
And our blended fully swapped borrowing cost was 6% at the end of the quarter. To summarize.
We had better volume growth this year as compared to Q1 last year while successfully implementing annual price increases in most of our markets. Looking ahead, we expect RGU growth to be higher in the upcoming quarters of 2016, a trend similar to what we saw last year and supported by ramping new build.
And as Mike mentioned earlier, we are reconfirming all of our guidance targets today. Under Liberty Go, we are entering the execution phase of this transformation program.
The closing of the Cable & Wireless transaction is imminent and we're excited to kick start the integration and begin unlocking synergies. And next week we will be back in the market with share repurchases.
Finally, one housekeeping item. Please be aware that our upcoming annual general meeting will be taking place in London on the 16th of June.
And with that, operator, please open it up for Q&A.
Operator
[Operator Instructions] And we'll take our first question from Frank Knowles with New Street Research.
Frank Knowles
Yes, good morning. I'd like to ask if possible one question on new build and maybe also just a quick one on LiLAC.
On the new build you’ve talked about 1.5 new homes in 2016. You did a couple hundred thousand in Q1.
So obviously you’re going to need to ramp that up quite a lot, and I think even further in subsequent years to meet your Project Lightning targets and so on. Could you just discuss how that’s likely to look in terms of, which quarters are we going to see a significant increase both in the sort of CapEx and the adds?
And maybe also, how much of that to the 1.5 million is LiLAC versus the call [ph] of the operations? And then just very quickly on LiLAC, I wonder if you could discuss the pros and cons of whether you’re thinking also of a possible sort of full spin off of the business rather than just the distribution of the tracking shares to Liberty holders, what the sort of thinking is in terms of the benefits or dis-benefits [ph] of doing even of those?
Thank you.
Michael Fries
Sure, thanks, Frank. On the new build question, I think it's safe to say that across the markets where we are expected and planning to build, we're going to ramp every quarter from here until the end of 2018.
We're targeting 7 million homes, so we’re budgeting 1.5 million this year. So you should expect that every quarter.
There's no real cyclicality for the most part to build, no material cyclicality to it. So this is all about gearing up, ramping up, being thoughtful.
And so I think you can expect every six months that, that's going to be a bigger number than the prior six months. And there is a little bit of new build in LiLAC, I think we're budgeting for the full year, [indiscernible] a couple hundred thousand new build I think in that part of the world.
We did do some in the first quarter. In terms of the spend, I think -- I said this publicly there's two benefits to spin.
One of course is creating a fully distributed and traded public vehicle. And the second of course is having its own identity and giving it a bit more flexibility and freedom if you will.
Now I think the tracking stock is accomplishing a lot of that. And certainly if we are to decide to distribute the shares at our own by Liberty Global in the tracking stock so that we have a fully distributed LiLAC tracker, I think we’ve accomplished at least half that goal.
And by that I mean there won't be an overhang, what happens to the 67% of the shares that Liberty Global owns for example. But more importantly it'll be hopefully trading well, would be a large free float.
And that has major benefits for those who want to own the stock and create opportunity for those who don't want to own the stock. So I think it's the right thing to do and I think most people will agree with that.
I'll tell you that there's a lot we can add to Liberty, to LiLAC Group as soon as we have control of this business. And I'm anxious we have -- we are ready to go, we have been unable to do much during the approval process.
So I think it's a little soon to set the ship on its own, I’d like to put a little cargo on there if you follow me. And I do know that with respect to allocation of capital, product development, technology roadmaps, there's a number of things we want to be able to influence and manage from the center before we go ahead and spin that business.
I think ultimately that is what will happen. But distributing the tracking shares I think achieves quite a bit from the point of view of those who want a fully distributed and traded public stock.
And for those who would prefer perhaps not to own LiLAC, to Liberty Global, then they’ll have the ability to do what they choose to do. So it's a good interim step.
Operator
And we’ll take our next question from James Ratcliffe with Buckingham Research Group.
James Ratcliffe
Thanks for taking the question. Two if I could, first of all I’ve noticed you expanded the expected synergy gains out of the BASE acquisition.
Can you talk a little bit about what the timing of this is expected to be for those additional synergies as a whole? And secondly, your EBITDA margin was down, UK was flat, most of the rest of the business was up.
Was there any meaningful EBITDA impact of Lightning and [indiscernible] expansions in the quarter and how do we think about that flowing – on the impact from EBITDA basis through the rest of the year?
Michael Fries
Sure. Charlie, you can think about the margin question, Central and Eastern Europe.
On the synergies in Belgium, I don't believe we have not changed the timeframe of those synergies, they are a little more back-end loaded than some but remember, the biggest source of synergies in the BASE acquisition is of course migrating the customer base from Telenet to BASE itself and that is something that's going to drive pretty meaningful benefits. So I think it's good that we are more aggressive and more ambitious in the synergies but I don't think the timeframe of those synergies has changed.
But we did increase I believe in small amounts the cost of integration to I think approximately 300 million. So this is going to cost us a bit more to get those synergies.
But the timeframe hasn’t materially changed. Charlie, you have any thoughts in the Central and Eastern Europe question?
Charles Bracken
I think [indiscernible] the margins is still holding, there is no particular reduction in margin. It's more a question of phasing of marketing.
So I don’t see any [ph] discernible trend to be concerned about.
Operator
We’ll take our next question from Jeff Wlodarczak with Pivotal.
Jeff Wlodarczak
Good morning guys. As we think about modeling EBITDA for the balance of year, is it fair to say based on your comments that Q1 was a low watermark and we should see a steady acceleration for the balance of the year?
And then Mike, specifically I wanted to get your thoughts on the 3.02 deal [ph] or I guess lack of deal. It sounds [indiscernible] and how do you feel like Virgin’s positions for either circumstance?
And I have a follow up.
Michael Fries
I think the short answer on the EBITDA question is yes. It is a low watermark, I mean we're still providing guidance of 5% to 7% in this year.
So clearly we need to step it up in the second quarter and particularly in the second half. But that -- as I kind of tried to allude to in my remarks that's how we budgeted it.
So while the number might not be where all the analysts had it because understandably, maybe looking at things on a straight line basis, we never had it that way internally. So we weren't discouraged at all by the Q1 OCF number.
In fact, it’s right where we thought it would be. On the O23 deal [ph] – Tom’s on the phone as well, let him chime in.
We don't -- we're not privy to any specific knowledge about what the commission will or won't do. We certainly have been engaged in some conversations along the way here as you imagine.
And I think from our point of view we're well positioned whatever occurs. So if for example they decide not to approve the transaction, then we have an optionality around what we do in the long run with our MVNO contract.
Of course, our current MVNO contract, last of 2018 we will be launching 4G. There's a number of positive things and our estimates to you for the next three years do not assume any changes to our UK mobile situation.
We think whatever happens, there’s greater optionality for us. If the deal is approved, then we do have some backstop arrangements that we could possibly implement.
And I like the idea personally of having optionality. We don't think there's going to be a big difference one way or the other to the ARPU in the market or growth in the market.
But as we sit back and look at it we can proceed forward with our base case which we think is terrific in the UK on mobile, or we can look at options that might be accretive to that, and I can’t give these specifics on what those are. But I like the position that Virgin is in.
Anything you want to add to that, Tom?
Tom Mockridge
No, thanks Mike. Absolutely, one [ph] is we have that optionality and we’re still in a good place with the alternatives available to us.
Jeff Wlodarczak
And then just a quick follow up, not sure what you can say, Mike, but some have argued publicly that if the 30T deal [ph] falls apart Q2 might be interesting -- for you all to merge off with. Can you say anything about that or –
Michael Fries
No, I can’t say anything about it. You should expect that we look at all options in the marketplace.
And it would be strange if we didn't evaluate that option. But I can't give you any color on that, and to be honest with you, I can say we like our current plan.
And while I like optionality I'm not particularly fond of options that preclude optionality. So we're going to be thoughtful not just about the economics of a transaction or something along of our mobile business there but also just looking three, four, five years down the road, that’s the right plan for us.
And that's what we're doing in every market with mobile. We're basically saying here's where we are today.
Here's what our three to five your plan says. We can achieve with the current arrangements under -- that we have under contract.
And what are our options for improving that as time evolves and then we just sit back and figure out what works best for us and for the shareholder so. But no, there's no color I can provide you on that right now.
Operator
We’ll take our next question from Ulrich Rathe with Jefferies.
Ulrich Rathe
Thanks so much. I'd like to start with Germany.
It seems that the RGU sort of impact in the first quarter was down year on year, and it seems that you had some spending on retention if I look at your OCF trends. Now in the fourth quarter you sort of talked about -- having that control on a much – that process on a much better control than last year, you’re approaching it, with the learnings of last year.
I'm just wondering how you look at the results after this is now water under the bridge, I mean how do you see – interpret this development?
Michael Fries
One big difference and I don't know if we actually let made this transparent to folks. In Q1 2015 the price increases across our base really only impacted I think about a million of our customers.
We did take increases across our acquisition portfolio. This year the price rises have impacted closer to 4 million customers.
So there's been -- so what we did is we didn't impact t the acquisition portfolio as materially but we did take price increases across 4 million customers. So I think we're actually really pleased with these results.
Because last year our ability to impact margin and OCF was materially less, because we were not taking increases across a very large proportion of our base. This year that increase impacted over 4 million of our customers.
That’s I think the main issue. I would take this particular type of Q1 over any other Q1 because those price increases will benefit us through the course of the rest of the three quarters.
Is that clear?
Ulrich Rathe
That's very helpful. Thank you.
If I may just to follow up on something, sort of taking a step back. I mean at the Q1 last year, you provided fairly upbeat guidance for the year, that was also very much back end loaded.
In fact, I think. we were told just now that we should sort of think about second half or the remainder of ’16, not unlike the remainder of ’15.
But of course it is true that not all the targets that you communicated after Q1 did come through, the RGU -- were not the one million and it didn't quite get to sort of mid single digit OCF growth and how there were good reasons this past year -- but I was just wondering what's different this year such that we should have more confidence of this sort of big step up in trends to come through in the second half, is anything structurally different this year –
Michael Fries
Yes, I think there are some structural differences particularly in the cost equation. So the Liberty Go plan, as I indicated, have a number of initiatives underway that are focused on improving our cost efficiency in the manner in which we run the business.
So we did not have any of those in place last year and those take some time to put in place of course. So I think you are going to see some of the benefits accruing in the second half of the year from our cost efficiency.
Look, we do the best we can to forecast revenue and customer growth. Nobody has a crystal ball.
But we feel pretty good about the momentum we can see forward reasonably well. And I think especially in markets like the UK where the new build program, with another 400,000 homes are going to build this year, has demonstrated that we are hitting the mark on customer acquisition and growth.
Some of those things are pretty easy to project. So I mean I can't give you a lot more detail than that but I will tell you that we have at least a more aggressive new build program, 1.5 million homes that we know are going to benefit us as we build those homes out.
And secondly, we have a greater emphasis focus and a greater and a much more concrete delivery schedule on the Liberty Go efficiency plans that in last year's markets were just really -- last year as a result were just really in the planning phase. So those are two variables or two levers that I feel pretty good about.
Operator
We’ll take our next question from Vijay Jaynat with Evercore ISI.
Vijay Jaynat
Hi Mike. Just a couple questions.
First, can you just help us on understanding sort of what is that rate increase we saw? You've done a lot of it in the quarter and that can be key driver of the top line.
If you can help us just sort of isolate that on a broad number, what sort of range it is? Second, just trying to understand structure on your comments about possibly doing a distribution of LiLAC shares as a tracker.
So given that it’s still a tracker, would you do more M&As before a hot spin or can we expect another transaction similar to the one you have right now with Cable & Wireless where Liberty global is a part of the equity story there? And finally just a housekeeping question please.
On the BASE integration costs, can you help us understand what that was?
Michael Fries
Sure. Charlie, why don’t you put some thoughts on the BASE integration, costs together.
On the rate increases, I don't -- I can't remember if we make these very clear in the market or not but if you go around Europe, those increases are ranging from 2.5% to 5%, in the UK is over 5%, in Ireland was over 5%, in Switzerland more like 3.5%, Austria more like 3.5%, in Germany in the mid 2s, Belgium, Chile, Holland in the mid 2s. So it's really a range and it has a lot of issues -- a lot of factors that determine that, what’s the competition doing, what did we do last year?
What improvements to the product have we made, that’s the key driver. We've increasing speed so.
But those are not dissimilar from prior years and we were maybe a little more aggressive at Virgin last year. Of course we had a different type of price increase in Germany last year that was more focused on the acquisition portfolio.
Belgium was a little higher last year so it's going to be mixed but I think for the most part -- I don't know that we have an aggregate figure for you if Charlie has one, he can pull out but those are sort of the key markets and what we've done. Good question on the M&A, in Latin America.
And you can bet we are both thoughtful about that issue and I think one of the reasons for distributing the tracking stock if we choose to do that, that's held by Liberty Global would be to have a more fully distributed publicly listed entity. That would be able to stand on its own two feet so to speak with respect to being a public vehicle.
So I would think it's highly unlikely that we would issue shares or do a transaction with another candidate down there that looks like the Cable & Wireless deal. I have to be careful when to say that.
We never say never. But on the other hand I am and we are all quite sensitive to the pros and cons of the structure we just completed.
And I think the one of the reasons for distributing that tracking stock is to try to unwind a little bit and give people both the flexibility to do what they want with their shares and for those who want to own what I think is going to be an extremely attractive business, to give them a more fully liquid security. So I think that's the right answer to that question.
I'll just repeat that we are highly attuned to the point, to put it that way. Charlie, any thoughts on the third question?
Charles Bracken
Just on the pricing point, I think we built the budget. We saw a net price increase of $2, $2.5 About half of that comes from price increases net of usage decline.
So the household increases, roughly half of that, between the balancing coming from up selling. On the BASE integration cost, I am not going to answer that question, because I want to make assure the public disclosure from the phone from the Telenor side is, but the OpEx integration costs that are hitting this year's number at Telenor.
So let me revert to you the exact number that we have –
Bernard Dvorak
Charlie, it’s Bernie. In the quarter there is 4 million external costs in the quarter.
Charles Bracken
With BASE acquisition.
Operator
We’ll take our next question from Jason Bazinet with Citigroup.
Jason Bazinet
And sort of a technical question regarding -- I think there's going to be about $5 billion f Liberty Global stock to Cable & Wireless shareholders who will, and if you do end up distributing the LiLAC shares that you own, $5 billion of LiLAC supply that could come to the market. And I was just wondering if you could share with us in other instances, maybe VMED where you have issued equity.
Things in the market may not be thinking of abut they can mitigate sort of that supply i.e. people sometimes hang on to the shares.
If it's over a period of time or you could freeze your buyback cadence in a way to sop up that extra supply just any sort of color. Would be helpful.
Michael Fries
Yeah very good question, Jason. There are options here.
You don't have to distribute the shares all at once. I think that you can distribute them in three or six or nine month period.
I think the problem with that is and you create this overhang. That those who want to own LiLAC are wondering you know when it’s coming, when our shares more hitting the market.
We like the idea of a clean simple one step transaction which undoubtedly creates a little bit of maybe uncertainty who will hold or who will not hold, what will happen – remember, most of the stuff, Cable & Wireless shareholders will not be particularly large shareholders of Liberty Global. So when the LiLAC shares are distributed to Liberty Global, they won't be a particular part of it.
Our numbers aren’t at the top of my hand but a little bit of it. So I don't think you should assume that every share that gets – just handed to the Cable & Wireless shareholders, there is going to find the market because many of them will hang on most of their shares, 95% of their value is still going to be in Liberty Global shares.
If that's what you're asking about, with respect to LiLAC. So on the LiLACfront, look, it’s all about marketing and telling the story.
What we have to do is good a job or better with the LiLAC story and the LiLAC message and opportunity so that people decide they want to own it but for those who don't want to own it, it creates opportunity for the rest of us that do. So it's a normal and ordinary course moment, I guess, I would say and there may be a slight bit of dislocation but we're hopeful that that this location creates opportunity for some and Liquidity for others and we move on down the road.
Does that answer your question?
Jason Bazinet
It does.
Operator
We’ll take our next question from Justin Funnell with Credit Suisse.
Justin Funnell
Thank you. Yes, some – just two questions please.
I guess Project Lightning so far so good, in the meantime VT is sort of tied down with off comm and common situations, so there’s an opportunity to perhaps go a bit bigger in the UK. Any thoughts about that, can you expand your footprint plans in UK substantially.
Second, in Germany, churn I guess when topping Q1 with a cheesy price increase in prior years, trends come back down again in Q2. It's a normal level, are you seeing a similar pattern this year?
Michael Fries
Tom, you want to address the UK program point, and I don't know if -- address at Germany point?
Tom Mockridge
Thank you, Mike. [indiscernible] is very much on proving the case we have which is going very successfully.
We mentioned earlier that we've got a target of over 500,000 in additional premises this year. And there indicate a more – and we’ve got over 300,000 premises in the build program at this moment.
This time last year that number was 30000. So we’re definitely building that momentum.
But we've got to deliver that over 500,000 this year and then lift to something approaching 1 million next year. So far we're getting the penetration that we wanted in many respects exceeding it.
And we’re getting the ARPU. I believe we’d certainly prove that kind case but ultimately be up to the judgment of Mark on the board of Liberty Goggle whether or not the target goes beyond the account program of 4 million premises.
Michael Fries
Yeah, look, I think we are -- I mean as we demonstrated and as you will see, a new-build is the single biggest contributor to the value creation we’re anticipating here. It's not without as I said, not without cost, not without complexity.
But as we -- every quarter that goes by here as we hit the numbers and see the results, I think we become more and more confident more and more emboldened. Arguably to continue beyond the 7 million because there's more like 10 plus million available and/or to accelerate -- the beauty of a new-build program is we can speed it up or slow it down.
Based upon what we're seeing and what it's costing, are we hitting the mark. So it’s a really terrific source of value creation for us with lots of flexibility and the ability to control.
What we're doing in terms of Germany, I don’t know if Lutz Schüler you want -- But in terms of Germany if you look at our – well, if you look at our prior year the second quarter is certainly better than our first quarter. Last year our first quarter was more or less like this first quarter.
And the second quarter we were able to pick it up, and Lutz – I mean sorry, Diederik, you want to add anything to that?
Diederik Karsten
Yes, the only thing I'd add is that there will still be a tail end of the churn related to the video losses because some of customers were confronted with a price increase is relatively late in the first quarter. But by and large indeed like you said, Mike, most of the churn comes from cat fee.
So basic TV churn, so we should have seen most of that in Q1, tail end in Q2 and then indeed a phasing out of the effect of that in the remainder of the year? And with the Q3 more net adds in the total video domain, so that’s a total story.
Operator
And we’ll take our next question from Michel Morin with Morgan Stanley.
Michel Morin
On LiLAC, Puerto Rico saw bit of a slowdown this quarter. Was wondering if you can comment on that how much of that is due to macro or was there any disruption related to kind of the rebranding?
And then obviously you're still delivering. OCF growth there, how much more room is there for cost savings and synergies to come through?
And just to clarify on potential distribution, maybe I missed this, but do we know the share classes that -- the LiLAC share classes, that Liberty Global will have and will of potentially distribute you.
Michael Fries
Yes, on the LiLAC distribution, it’s highly likely that we would simply mirror the share classes that in the distribution that exist at the Liberty Global level. Brian if I got that wrong jump in but I think that's right.
And then with the second, Puerto Rico I am not sure that falls on but the macro issues there of course are obvious and apparent. And we're seeing probably the most significantly people leaving the island now.
Fortunately we're in the midst of an integration and the synergy -- there are still continued synergies to be realized and the product we’re offering is highly competitive and attractive. So we still forecast good growth out of Puerto Rico, we haven't changed our long range plan on that business, or mid range plan, so we expect it to be an important contributor to the LiLAC growth that we budgeted or guided to this year, 7% to 9% OCF of growth in 2016.
Unidentified Company Representative
Yes, Mike, as you say, I think that we see a slight decrease in churn versus last year, mainly related to people leaving the island as you said. But operationally we are having a good control on churn.
And despite price increases that we implemented last month we don't see a spike in churn. On the other hand, the integration of Choice is ongoing as planned.
We are executing on the cost side, and on the other side, increasing the awareness with the rebranding to Liberty Global across the island. So they are – the concern is that with the macro but I think that on the operational side we are managing the situation quite closely and the results are still in a good shape.
Operator
We’ll take our next question from Jonathan Band [ph] with Royal Bank of Canada.
Unidentified Analyst
Could you help me square at your fixed slowdown in German broadband adds and then Deutsche Telekom re-introducing regional discounting. I had assumed that was as a response to your success in sort of urban cable areas?
Michael Fries
Well, I think look at Deutsche Telekom and Diederik, you can jump in on this as well. Deutsche Telekom is our competitor and they have definitely started to find their niche if you will with their bundle and in particular with the mobile part of the bundle.
But we still added 40,000 broadband subs in the first quarter to their 62,000 and we’re in three states. So while we're always thoughtful and careful about what they're doing and how they do it, cable in particular and I would add, Kabel Deutschland and Telekom into that mix, it is still doing 175,000, 180,000 net adds every quarter, 2 to 2.5 times more than Deutsche Telekom is doing.
So now they're getting better at it, certainly finding their way in video and mobile bundles helping a bit. But it's really a boxing match like it is in other markets So I'm not sure I can provide any more color to what they're doing this week versus next week apparently, but perhaps Diederik, did you want to jump in, if you can.
Diederik Karsten
Yes, just to add to that Mike, that their first quarter performance was lower than last week performance. Ours was such in absolute term better than last year.
So like you say it is a boxing match. But particularly with a triple play and now also to move to quad play.
They are a strong kind of contender over there.
Operator
And we’ll take our final question today from Matthew Harrigan with Wunderlich Securities.
Matthew Harrigan
Thank you. Two questions and I know Lutz is on the call but there are reports that you're doing a 1.5 million hotspots in Germany – idea of growth and also, dual digital, looks like you’ve got lot of initiatives going on in that market, sort of a Harbinger 3.0 or Go as you now refer to it.
And I know it's a little distorted with the net activity versus gross mathematically in a light activity quarter, it looks like Eastern Europe was about 47% of your net adds, and only 90% of your homes passed, so clearly kind of knocking the cover off the ball. I know it's lower ARPU customers -- but what's going on there?
I mean just was the product okay as you introduced or is there something that doesn't meet your eye immediately?
Michael Fries
Well I’ll let Diederik chime in, Central and Eastern Europe – if you look at just raw volume quite a large business there and a little bit of innovation, a little bit of product development, a little bit of price goes a long way in that particular part of the world. I think we've also found – and this is more of a broad secular state, for a long period of time Central and Eastern Europe was highly highly competitive, it's still competitive.
But I think the ARPU rose, the price is already quite low. So a little bit of product, a little bit of marketing really goes a long way in a market that had seen years of price erosion.
So we think there's upside in that market for sure. I remember calls when we were talking about Romania and now it's growing 9% in the quarter, so it is possible that that particular part of the world had seen not the bottom but close to the bottom which means that it's all more we can do in product innovation and in marketing here could be upside that.
Diederik, do you want to add anything to that?
Diederik Karsten
Yes, we also see the first effects of the new build that's what's driving. part of the net add as well.
So should stay strong for maybe two quarters from that point of view.
Michael Fries
I think that was – is that the last question, operator?
Matthew Harrigan
I asked about the German hotspots as well if you don't mind.
Diederik Karsten
Balan, you want to address it or –
Balan Nair
So as Michael indicated early on we're increasing the number of hotspots from the whole. We experimented as well, with a number of hotspots out in the public areas.
At this point we haven't made a decision to continue on with that. But for sure we will expand on the hotspots from within the hall, we will probably hit about 10 million across Europe by the end of the year.
Operator
We will take our next question from Ben Swinburne with Morgan Stanley.
Ben Swinburne
Mike, thanks for squeezing me in. Two questions for -- one for Tom, one for you.
Tom, you guys have had a lot of success with the TiVo platform and generally in video in the UK. Sky has their new I think Q box that’s come out.
What are you guys planning to do on the set top side? You alluded in the press release to a new box; is that TiVo or Horizon or something, so any color you can give us and where you’re taking the product?
And then Mike, you mentioned keeping the 5.5 billion fixed cost base flat in Liberty Go. What are you thinking around headcount in marketing?
Is marketing something you think you have savings in, you think headcount goes down, just wanted to sense for the levers inside that?
Michael Fries
Well I think there's no question that -- when you forecast flat indirect costs at that level there's going to have to be some things that go up and some things that go down. It can't get everything stay the same.
A lot of what we're doing in Liberty Go is focused on efficiencies. So for example the technology organizational changes I referenced will clearly result in we think fewer headcount and a more efficient delivery of the technology services that we're providing.
There are other areas where we -- the metrics that we put in place is indicating that we can do things differently and more efficiently. So there's no question that headcount is part of that but it's not just headcount.
And I gave you three or four examples on -- it's got lots of other variables that we're focused on. And then our goal -- because as I said 60% of that value is coming into revenues, we have to keep pushing the RGU growth and we have to keep the marketing machine moving.
So unlike perhaps some of our peers who sort of just pick a number and try to hit it we're actually being much more thoughtful about what needs to rise and what needs to fall in terms of our investment and clearly marketing and sales is an area, especially as we focus on our customers more than we have in the past. That marketing and sales have to be an area where we stay aggressive.
Because we can't achieve the growth in B2B and the growth in mobile, the growth in our residential fixed base if we just sit back and cut costs. So I think we will provide more color on that as quarters go on.
But it's the right question and perhaps offline we can give you a bit more color. On the TiVo, Tom should certainly chime in, it's largely a technical issue, I will let Balan also address it.
But EOS is a set top we intend to roll out everywhere at some point, including in that market and it’s certainly – that we already have a TiVo interim plan or a medium range plan in the UK but perhaps one of those two guys I'm sure who feels more willing and able to answer that question but I'll let you guys chime in.
Tom Mockridge
I will just say we are committed in the second half of this year to deploy in the United Kingdom, we put some TiVo software on it, but that will give us a lot more functionality for our customers. We're very confident with the TV relaunch, we have been coming through this year that we remain very competitive with Sky.
So far we've seen very little impact from the Sky TV which is expensive corridor. And we're very focused on improving – and EOS is going to be a big part of that.
Balan Nair
Yeah, I’d say, exactly as Tom indicated to us that this new box is going to be 4K box. It’s pretty high powered box that will get a refreshed TiVo UI on it later this year.
And then in the following years, our goal is to get Horizon across all of Europe. And EOS box is this new 4K box that’s going to be the engine for the next generation video for Liberty.
End of Q&A
Michael Fries
All right. I think that's probably it.
We're five or six past the hour. Thanks for sticking with us if you have.
I guess I'll just say look at we have – and we sensed it in your questions and the right questions -- we set the bar very high for ourselves and that's how we like it. So we need to when we are motivated as I said and ready and able to try to hit those numbers and hit those goals.
So you should expect that from us. I am particularly excited about Cable & Wireless.
I want to welcome if there's any shareholders on this call from Cable & Wireless, welcome you and look forward to working together. It’s going to a great opportunity for us and we will be thoughtful as I said about how we structure, capitalize and grow in that part of the world as I indicated and we had a good start to our second quarter, so appreciate everybody's support and commitment and we'll speak to you very very soon.
Thanks very much.
Operator
Ladies and gentlemen this concludes Liberty Global first quarter 2016 results investor call. As a reminder, a replay of this call will be available in the investor relations section of Liberty Global website at www.libertyglobal.com.
There you can also find a copy of today's presentation materials.