Liberty Global: The Malone flywheel now hinges on Ziggo
SOTP base case $15.75 per share at a $9.23 share price. It rests on management’s Ziggo deleveraging path, with a 20% safety haircut.
In its Form 10-Q for the quarter to 30 June 2026, Liberty Global reports cash and cash equivalents of $2,418.6m [1]. That is just over three quarters of the market value of around $3.15bn [9] and sounds like a holding company whose cash almost carries the share on its own. Only $1,610.1m of it belongs to the holding company itself, however; the rest sits at Telenet and Virgin Media Ireland [1]. On 3 August, €1.0bn went to Vodafone [6].
Work through Liberty Global position by position against the Q2 figures and a clear discount remains. But it depends almost entirely on one variable: the path along which management intends to deleverage the new Ziggo Group by 2028.
My base case is $15.75 per share. At a share price of $9.23, Liberty Global trades roughly 41% below NAV after the holding-company discount. I value Ziggo Group on the deleveraging path management has set out to 2028, with a 20% safety haircut; management met its 2025 guidance across the board. VMO2 stands at zero on economic net debt and is now only an option. Without deleveraging, on today’s balance sheet, the value would be $13.38. Rating: EventDriven, with the Ziggo listing in mid-2027 and the 2028 deleveraging target as catalysts; for new positions I consider at most 3 to 5% defensible.
“The flywheel keeps turning. But it now hangs on a single wheel: Ziggo Group’s deleveraging path to 2028.”
1. What the holding company really owns: $469m net
After the VodafoneZiggo closing, the holdco has roughly $469m of net cash, not the $2.4bn the consolidated balance sheet suggests. The calculation starts from the holdco balance at 30 June and deducts the only known large payment since then:
| Step | $m | Source |
|---|---|---|
| Holdco cash 30.06.2026 | 1,610.1 | [1] |
| − VZ purchase price €1.0bn × 1.1414 | −1,141.4 | [6], [14] |
| + ABL facility once drawn (€300m) | +342.4 | [1] |
| − corresponding liability | −342.4 | [1] |
| = Holdco net cash | 468.7 |
Calculation: holdco cash − purchase price in $; the facility agreed in July, secured by part of the Wyre stake, was undrawn at the time of the 10-Q and is neutral when drawn. [own rough calculation]
Management’s own cash bridge works the same way: from the year-end 2025 balance it deducts around $1.2bn for the Vodafone stake and plans to rebuild the rest through distributions and disposals [15]. The holding company has no financial debt of its own; all debt sits at Telenet and VM Ireland [1]. I do not use the year-end target, since raised to around $2.0bn [2]. It includes the ABL loan [14], and each disposal only moves value from the growth line into the cash line.
The holding company lives off disposals, not off the business: in the first half its own adjusted FCF was −$153m, and the group’s −$469.7m after −$342.4m a year earlier [1][14].
2. VMO2: worthless on economic debt in the base case
The 50% stake in VMO2 is the position with the widest range. VMO2 itself reports two leverage metrics: 4.41x under the covenant definition and 5.89x including vendor financing, leases and excluded items [2]. The difference is £5,275.5m of debt that the covenant does not count [2]. Since year-end 2025, covenant net debt has risen from £16,704m to £17,152.7m [2][4].
| At 5.5x EV/EBITDA | Covenant basis | Inclusive basis |
|---|---|---|
| Adj. EBITDA Q2 2026 × 4 | £3,900.8m | £3,900.8m |
| Enterprise value | £21,454.4m | £21,454.4m |
| − Net debt 30.06.2026 | £17,152.7m | £22,428.2m |
| = Equity 100% | £4,301.7m | −£973.8m |
| LG share 50% in $ (1.3251) | $2,850.1m | 0 |
Calculation: EBITDA × multiple − net debt; a negative value becomes zero for LG because there is no obligation to inject further capital. [own rough calculation based on [2], [14]]
On the inclusive basis, equity only emerges above roughly 5.75x EBITDA. Vendor financing and leases are real payment obligations, so I consider the inclusive basis the economically correct one. The bond market sees it similarly: an unsecured VMO2 bond trades at around 61 cents [11]. I value VMO2 at zero in the base case and carry the covenant value as a bull-case option.
3. Ziggo: management’s path with a safety haircut
I value Ziggo Group on the path management has set out for 2028 and deduct 20% from it. Ziggo Group owns 100% of VodafoneZiggo and 100% of Telenet; Telenet owns 66% of the fibre network Wyre, is selling half of it and will keep 33% [15]. Together, VodafoneZiggo (€1.8bn adj. EBITDA) and Telenet excluding Wyre (€0.7bn adj. EBITDAaL) come to around €2.5bn, both after lease costs [15]. The target: 4.5x leverage and €500m of free cash flow by 2028, confirmed in July [14][15].
The track record argues for taking this path seriously. In 2025 all subsidiaries met their revenue and EBITDA guidance, and the cash flow targets also landed within their ranges [15]:
| FY 2025 | Actual | Guidance |
|---|---|---|
| Telenet adj. FCF | −€176m | −€180m to −€150m |
| Corporate adj. EBITDA | −$129m | ~−$150m |
| VMO2 distributions | £378m | £350–400m |
| VZ distributions | €224m | €200–250m |
VodafoneZiggo’s 7.0% EBITDA decline in the first half of 2026 [2] is also within guidance of a mid- to high-single-digit decline. It includes an announced one-off investment of €50m in network resilience; for 2027 and 2028 management expects EBITDA to grow again [15].
| Management path 2028 | Value |
|---|---|
| Adj. EBITDA (VZ + Telenet excl. Wyre) | €2,500m |
| × 6.5 = Enterprise value | €16,250m |
| − Net debt at 4.5x | €11,250m |
| = Equity 100%, of which LG 90% | €4,500m |
| in $ (1.1414) | $5,136.3m |
| discounted two years at 10% | $4,244.9m |
| × 0.8 safety haircut | $3,395.9m |
Calculation: (EBITDA × multiple − 4.5 × EBITDA) × 90% × FX ÷ 1.1² × 0.8. EBITDA 2028 set at the 2025 level. [own rough calculation based on [15], [14]]
I apply the 20% haircut to all management guidance. Here it has three concrete reasons. The path assumes an EBITDA turnaround that is not yet visible. Part of the deleveraging is to come from disposals of towers, property and half of the Wyre stake [15]. If they do not close at the planned prices, more debt remains. And the definition of the 4.5x is not published; for Telenet, management explicitly refers to gross debt [15].
Q2 2026: the path becomes more concrete
The Q2 strategy update delivers three building blocks against which I measure the path [2][14]. The structure is in place: the Belgian competition authority has approved the fibre cooperation with Proximus, which allows Telenet and Wyre to be separated financially, and Ziggo Group’s management has been named. The deleveraging is funded: a $5.0bn Wyre financing allows repayment of a $2.3bn Telenet loan, proceeds from the partial Wyre sale are to repay $2.5bn of Telenet debt maturing in 2028, and disposals of €1.2 to €1.4bn are under way. And the business is turning: VodafoneZiggo had its best consumer broadband quarter in six years, Telenet its fifth consecutive quarter of growth, and 2026 guidance was confirmed.
What has not yet arrived is the EBITDA turnaround itself; VodafoneZiggo’s EBITDA was 7.0% below the prior year in the first half [2]. That is why my 20% haircut stays. The synergies, which management now estimates at more than €1bn NPV [14], are part of the path and do not appear as a separate line in the model.
Today’s balance sheet provides the floor. On an economic basis, IFRS EBITDA of €2,973.2m against €16,904.9m of net debt including leases and Wyre [2], Ziggo Group stands at 5.69x. At 6.5x, LG’s share would be around $2,386m; at 6.0x only around $936m [own rough calculation]. The difference to management’s path is the bet on deleveraging.
“On today’s balance sheet, Ziggo equity is a thin residual on a large pile of debt. Only the deleveraging path turns it into a position.”
4. SOTP valuation: $15.75 per share
| Component | Method | Value $m | Key assumption |
|---|---|---|---|
| VMO2 (50% JV, UK) | EV/EBITDA 5.5x · incl. ND | 0 | Inclusive net debt 30.06.2026 [2] |
| Ziggo Group (90%, NL+BE) | Management path 2028 × 0.8 | 3,395.9 | 6.5x on €2.5bn EBITDA, 4.5x leverage [15] |
| Virgin Media Ireland (100%) | EV/EBITDA 5.0x | 0 | Covenant leverage of 5.45x exceeds the multiple [2] |
| Liberty Growth portfolio | Fair market value | 2,852 | Management fair value at 30.06.2026 [14] |
| Corporate cash (net) | Balance after VZ payment | 468.7 | Section 1; no holdco debt [1] |
| SOTP NAV before discount | 6,716.6 | ||
| Holdco discount (20%) | Governance-structural | −1,343.3 | |
| NAV after discount | 341.09m shares [1] | 5,373.3 | $15.75 per share |
Base case calculation: (0 + 3,395.9 + 0 + 2,852 + 468.7) × 0.8 ÷ 341.09m shares = $15.75. [own rough calculation]
For Virgin Media Ireland the calculation is short: with covenant debt of 5.45x EBITDA [2], nothing is left for equity at 5.0x EV/EBITDA. Its credit facility, maturing in 2029, alone amounts to $1,027.3m [1].
Cross-check: management arrives at $37–40
In its Q2 presentation Liberty Global arrives at $37–40 per share [14]. That includes around $12 of Sunrise shares that shareholders have held since 2024. For a buyer of LBTYA up to $28 remains; before the holding-company discount, my base case comes to $19.69.
| Per LG share | Management [14] | My base case before discount |
|---|---|---|
| Ziggo Group | up to $14 | $9.96 |
| Corporate cash | $6 | $1.37 |
| Liberty Growth | $8 | $8.36 |
| VMO2, VM Ireland | $0 | $0 |
| Total buyable today | up to $28 | $19.69 |
Management per footnote 5: 90% × €500m adjusted FCF 2028 ÷ 10.5% FCF yield ÷ 341m shares; cash and growth as the expected position after the spin-off. My column: SOTP components ÷ 341.09m shares. [own rough calculation]
The gap of just over $8 has two sources. For Ziggo, management calculates without discounting and without a haircut; without both I would arrive at $12.45, close to the $14. For cash, the $6 corresponds to the year-end target of $2.0bn, which includes the ABL loan and future disposals. In my model the sale proceeds sit in the growth line, and a loan is not an asset.
Scenarios
Ziggo: deleveraging fails, today’s balance sheet at 6.0x
Growth portfolio −20% to $2,281.6m
Holdco discount 25%
Ziggo: management path 2028, 6.5x, 20% haircut
Growth portfolio $2,852m
Holdco discount 20%
Ziggo: management path fully achieved, 7.0x
Growth portfolio $2,852m
Holdco discount 15%
Probability-weighted, the value is $17.05 per share, 85% above the share price. Each half turn on the Ziggo multiple along management’s path moves the base case by $1.99. A move of 0.05 in EUR/USD shifts it by around $0.35.
Expected return and my 15% p.a. hurdle
| Realisation by | Years from 30.09.2026 | Return p.a. (Base) |
|---|---|---|
| End of 2027 | 1.25 | 53.4% |
| End of 2028 | 2.25 | 26.8% |
| 15% p.a. hurdle reached until | ~3.8 | 15.0% |
Formula: ($15.75 ÷ $9.23)^(1/years) − 1. [own rough calculation]
The hurdle holds as long as the discount closes within roughly 3.8 years, i.e. by mid-2030. After that the thesis expires. The Ziggo listing, planned for mid-2027 [10], and the 2028 deleveraging target both fall within this window.
5. The flywheel: strong execution, mixed value creation
The capital allocation of John Malone and Mike Fries follows a closed cycle: buy, build value, sell high, buy back shares, spin off. The Ziggo story shows it in one table [8]:
| Transaction | Year | Liberty cash flow | Vodafone cash flow | Details & structure |
|---|---|---|---|---|
| Ziggo toehold | 2013 | −€1.45bn | — | 57m shares at €25.37 blended, partly financed via margin and collar loans (~€1.08bn) [8] |
| Ziggo full acquisition | 2014 | −€1.60bn cash + €3.3bn LG shares | — | Remaining ~72% (143m shares) at €34.53. TEV €10bn = 11.3x EBITDA 2013; blended incl. toehold 9.3x syn. 2014E [8] |
| VodafoneZiggo JV formation | 2016 | +€2.70bn | +€0.9bn | LG: €1.4bn recap + €0.8bn equalisation + €0.5bn Ziggo cash. New JV debt €10bn [8] |
| VZ consolidation · Vodafone exit | 2026 | −€1.00bn cash + 10% equity to VF | +€1.0bn cash + 10% equity retained | Implied EV 7.1x EBITDA 2025 [5]. Closed on 03.08.2026 [6] |
| Net cash position 2013–2026 | 13 yrs | −€1.35bn net | — | −€3.05bn (purchase) + €2.7bn (JV) − €1.0bn (VZ), excluding VZ distributions 2017–2025 |
The €1.35bn is the pure cash calculation. The economic outlay was higher, because the 2014 takeover also included around €3.3bn in LG shares; conversely, the VZ distributions for 2017–2025 are missing, around €600m a year for the whole JV in good years.
Net −€0.35bn cash
50% of VZ retained
Fibre
Germany, CEE
$25bn proceeds
at 30.06.2026
no holdco debt
950m → 335m shares
Ziggo planned for mid-2027
On execution, this management team’s record is exceptional. The Sunrise spin-off ran as announced in November 2024 [7], and so did the VodafoneZiggo closing in August 2026 [6]. Transactions failed where third parties blocked them: the first attempt to sell UPC Switzerland to Sunrise in 2019 failed because a major Sunrise shareholder opposed it [13]. For Ziggo this is the relevant risk class, with Vodafone as a 10% shareholder and Fluvius as a minority owner in Wyre.
On value creation the verdict is more mixed. The buybacks can be read as arbitrage: sold at 8–11x EBITDA, bought back at an implied 4–5x. That only holds if the EBITDA behind the low multiple holds. But VodafoneZiggo lost 7.0% of EBITDA in the first half [2], and VMO2 lost 4.5% of revenue in the second quarter [1]. Part of the seemingly cheap buyback price was an anticipation of that decline.
The share count: 2.8x more Ziggo per share
With roughly 341m instead of 950m shares, every remaining shareholder receives around 2.8 times as many Ziggo shares in the Ziggo spin-off as without the buybacks, paid for with the sale proceeds of past years. Whether that was a good trade is decided by the price at which Ziggo trades in 2027. The buyback path came to a halt in 2026. In the 2024 Sunrise spin-off, shareholders received 1 Sunrise Class A ADS for every 5 LG Class A and Class C shares, and kept their LG shares [7].
6. Governance explains only part of the discount
The voting structure remains a genuine reason for the discount. Class A (LBTYA) carries one vote per share, Class B (LBTYB) ten votes and sits mostly with Malone and Fries, and Class C (LBTYK) has no voting rights [3]. Activists cannot win a proxy contest, and funds with governance mandates exclude the stock. Once Ziggo Group lists separately on Euronext [5], fund managers can hold the stake directly, as with Sunrise.
Governance does not explain the whole discount, however. With unsecured VMO2 bonds at 61 cents [11], shrinking EBITDA at VMO2 and VodafoneZiggo and a group that burned $469.7m of adjusted FCF in the half-year [1], the market is also pricing debt and operating weakness. Management spells it out itself: at $11 the share traded 20% below the value of cash and the growth portfolio, leaving nothing for the telecom business [14]. My 20% holding-company discount covers only the governance part; the debt sits in the component values.
Forced sellers: passed. The dual-class structure excludes governance funds, and after the Ziggo spin-off index funds and US investors are likely to sell shares of an Amsterdam listing. Insider ownership: passed; Malone and Fries hold control via Class B. Hidden value: passed. The discount to NAV is 41%, and my 15% p.a. hurdle holds for about 3.8 years.
Opportunities and risks
On tax: whether German custodian banks will treat the Ziggo shares as a tax-neutral demerger under § 20 (4a) sentence 7 EStG or as a taxable distribution in kind is open. The best guide is how they booked the 2024 Sunrise spin-off. I am not a tax adviser; this needs professional clarification.
In brief
Towers. Liberty Global is selling the Dutch towers for €669m at 16.2x EBITDA, closing in early 2027 [10]. The sale is part of the deleveraging path and is therefore captured in the base case via the 4.5x, not as a separate line.
CMA review. The UK competition authority is reviewing nexfibre/Netomnia with a deadline of 15.12.2026; the case is in an accelerated Phase 2 [14]. The effect on VMO2 equity is not clearly positive.
Liberty Growth. The exit from EdgeConneX brought $604m at an IRR above 30%; around $900m has been sold since the start of the year [2]. New money goes mainly into AI-related holdings [14].
Next checkpoint. The Q3 results on 03.11.2026 are the first reporting date after the VodafoneZiggo closing. I expect a holdco cash bridge, Telenet’s net debt excluding Wyre and a first reading on the way to 4.5x.
- Management path: EBITDA 2028 at the 2025 level (€2.5bn). Management expects a recovery after 2026 but does not quantify it. The definition of the 4.5x is not published.
- The 33% stake in Wyre is not valued. LG’s shareholder receivables from VodafoneZiggo ($1,036.3m [1]) sit within the equity value on management’s path, because the 4.5x is likely to cover third-party debt only.
- Bear case on today’s balance sheet: Wyre EBITDA (€509m) from the US GAAP segment reporting [1], less the third not owned by Telenet.
- VZ distributions of around €600m p.a. in good years read as a whole-JV figure.
- The 25/50/25 scenario weighting, the 20% haircut on management guidance and the growth-portfolio haircut in the bear case are my own assumptions.
Conclusion
Liberty Global remains an investment in a philosophy of capital allocation whose returns come in discrete, uncertainly timed events. Today the thesis rests on three points.
First: the discount is real. $15.75 in the base case compares with a $9.23 share price. Second: the holding company is not a cash vault but a seller of assets with roughly $469m of net cash and no financial debt of its own. Third: value stands or falls with the deleveraging of Ziggo Group. Between a failed path (bear) and a fully achieved path (bull) lie around $4,370m for Liberty Global, more than today’s entire market capitalisation.
Anyone buying today is not buying a margin of safety made of cash, but a reasoned bet that a management team with a strong execution record keeps to its deleveraging path, plus a free option on VMO2. The test begins with the Q3 results, comes by mid-2027 at the latest, and the thesis expires in mid-2030. Position sizing: at most 3–5% for new positions.
Update log
- 30.09.2026 — Revaluation based on the 10-Q to 30.06.2026 and the Q4 2025 and Q2 2026 investor presentations. Base case $15.75 (previously $32.25), bear $8.10, bull $28.60. Holding-company cash is now separated from consolidated cash, VMO2 stands at zero on economic debt, and Ziggo is valued on management’s deleveraging path with a 20% haircut. Rating EventDriven, thesis deadline 30.06.2030. Q2 strategy update added.
- 05.09.2026 — Editorial revision to house style, list of sources added; figures and valuation unchanged.
- 04.09.2026 — Update to the Form 10-Q to 30.06.2026 (SOTP model v3.7): corporate cash in the model from $1,500m to $1,700m, Liberty Growth portfolio from $3.4bn to $2.9bn, NAV before discount $13,579m, base case $32.25 on 336.8m shares; VZ closing of 03.08.2026 incorporated; price basis $10.69 (03.09.2026).
- 18.02.2026 — First publication based on the Q4 2025 figures of Liberty Global and VMO2 and the VodafoneZiggo transaction announced the same day.
Sources
- Liberty Global Ltd., Form 10-Q for the quarter ended 30.06.2026, SEC, accession 0001570585-26-000109. Shares at 17.07.2026 (176,722,235 A, 12,968,658 B, 151,396,673 C); consolidated cash $2,418.6m, of which $1,610.1m outside the borrowing groups; ABL facility of €300.0m / $342.4m, not yet drawn; VodafoneZiggo JV Receivables; debt table (Note 9) incl. VM Ireland Credit Facility of $1,027.3m; adjusted FCF H1 −$469.7m (prior year −$342.4m); Wyre segment EBITDA; VMO2 JV revenue Q2. → https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001570585&type=10-Q
- Liberty Global Ltd., “Liberty Global Reports Q2 2026 Results”, press release (Ex-99.1), 24.07.2026. Credit updates for VMO2 (covenant reconciliation, net debt £17,152.7m, 4.41x and 5.89x, adj. EBITDA Q2 £975.2m), VodafoneZiggo (adj. EBITDA H1 €816.0m, −7.0%) and the Telenet group including Wyre, VM Ireland 5.45x, VMO2 revenue Q2 −4.5%, year-end cash target ~$2.0bn, Ziggo spin-off as early as mid-2027, approval of the Belgian fibre cooperation, EdgeConneX sale of $604m, disposals of ~$900m year to date. → https://libertyglobal.gcs-web.com/news-releases/news-release-details/liberty-global-reports-q2-2026-results
- Liberty Global Ltd., Form 10-K for fiscal year 2025 and Q4 2025 results release, February 2026. Share classes and voting rights, share count development. → https://www.sec.gov/Archives/edgar/data/1570585/000157058526000060/lbtya-20251231.htm
- Virgin Media O2, Q4 and Full Year 2025 Earnings Release, February 2026. Covenant net debt at 31.12.2025 £16,704m. → https://news.virginmediao2.co.uk/wp-content/uploads/2026/02/Virgin-Media-O2-Q4-2025-Earnings-Release.pdf
- Liberty Global Ltd., “Liberty Global to Acquire Vodafone's Stake in VodafoneZiggo and Transfer Regional Benelux Assets into New Company Called Ziggo Group”, press release, 18.02.2026. Purchase price €1.0bn plus 10% equity, implied multiple 7.1x, Euronext listing, Vodafone sell right. → https://www.libertyglobal.com/liberty-global-to-acquire-vodafones-stake-in-vodafoneziggo-and-transfer-regional-benelux-assets-into-new-company-called-ziggo-group/
- Liberty Global Ltd., “Liberty Global Completes Buyout of VodafoneZiggo as it Prepares for 2027 Ziggo Group Listing”, press release, 03.08.2026. Closing, payment in EUR, tax treatment of the demerger for US shareholders. → https://www.libertyglobal.com/liberty-global-completes-buyout-of-vodafoneziggo/
- Liberty Global Ltd., “Liberty Global Announces Completion of Sunrise Spin-Off Transaction”, press release, 08.11.2024. Allocation of 1 Sunrise Class A ADS per 5 LG Class A and Class C shares. → https://www.libertyglobal.com/liberty-global-announces-completion-of-sunrise-spin-off-transaction/
- Liberty Global, historical transaction announcements and annual reports 2013–2019: Ziggo toehold 2013, Ziggo acquisition 2014, formation of VodafoneZiggo 2016, disposals in Germany and CEE.
- Market data (stockanalysis.com): LBTYA share price $9.23 (24.09.2026), price history.
- Liberty Global, press release on the sale of the Dutch towers, 08.09.2026. Price €669m, 16.2x EBITDA 2025, closing in early 2027; statement on the Ziggo listing in mid-2027.
- VMO2 bond prices, senior unsecured ~61 cents, as at September 2026.
- European Central Bank, monetary policy decisions of 10.09.2026. Increase of all three key interest rates by 25bp.
- Sunrise Communications / Liberty Global, termination of the UPC Switzerland sale, 2019.
- Liberty Global, Q2 2026 Investor Call Presentation, 24.07.2026. Value split per LG share of $37–40 with assumptions, targets of 4.5x leverage and €500m FCF in 2028, disposals of €1.2–1.4bn, synergies above €1bn NPV (slide 7, footnotes 4 and 5); commercial performance VodafoneZiggo and Telenet (slides 8–9); $5.0bn Wyre financing and Telenet repayment plan (slide 20); Netomnia in Phase 2 (slide 6); AI focus in Growth (slide 13); Liberty Growth fair value $2,852m (slide 18); exchange rates at end of June EUR/USD 1.1414 and GBP/USD 1.3251 (slide 20); adjusted attributed FCF H1, Liberty Corporate −$153m (slide 24).
- Liberty Global, Q4 2025 Investor Call Presentation, 18.02.2026. Holdco $2.2bn cash and $0 debt (slide 4); 2025 revenue and EBITDA guidance met (slide 8); 2025 guidance table and 2026 cash bridge (slide 10); Ziggo Group structure with 33% of Wyre, EBITDA VZ €1.8bn and Telenet €0.7bn, targets of 4.5x and €500m FCF by 2028 (slide 17); VZ outlook with €50m one-off investment and deleveraging levers (slide 19); Telenet target of 4.5x gross leverage (slide 20).