VodafoneZiggo: is an IPO doable?

 KPN:

• Market cap: EUR 13.14b
• Net debt at 22Q2 (incl. leases): EUR 6.21b
• EV: EUR 19.35b
• Adj. EBITDA AL TTM: EUR 2.38b
• Multiple: 8.13x

VodafoneZiggo:

• Assumed multiple: 8.13x
• Adj. EBITDA TTM: EUR 1.91b
• EV: EUR 15.53b
• Net debt at 22Q2 (incl. leases): EUR 13.28b
• Market cap: EUR 2.25b

VodafoneZiggo:

• Assumed market cap: EUR 0
• Net debt at 22Q2 (incl. leases): EUR 13.28b
• EV: EUR 13.28b
• Adj. EBITDA TTM: EUR 1.91b
• Multiple: 6.95x

VodafoneZiggo requires a multiple of (way) over 7x for an IPO. Otherwise, looming for Liberty Global and Vodafone Group is a sale of VodafoneZiggo for EUR 1 (and the buyer taking over the unit's debt), similar to:

• T-Mobile sells Sprint fiber assets to Cogent for $1.
• ProSiebenSat.1 buys Warner Bros. Discovery out of Joyn for €1.

In Belgium, all listed majors (Proximus, Telenet, Orange Belgium) are currently valued at around 4x. A higher multiple in the Netherlands is plausible (no newcomers, fibre upgrades are carried out, regulation is not a worry) vs. Belgium (uncertainty over Orange/VOO deal, two newcomers in mobile, questions over how Telenet will go nationwide). VodafoneZiggo's multiple would likely be somewhere betwen KPN (8x) and 'Belgium' (4x).

Not selling the unit carries the risk of underinvesting and undermining the longer term value. Alternatively, heavy investments could pay off. Or possibly any hidden value in assets, such as the HFC network (assuming that Ziggo will lease it back) and the mobile base stations, could be monetised.

All in all, any sale is currentky unlikely. Cash flow generation is sufficient to pay all the bills, including dividends. The longer term risks are:

• falling revenues, from dropping market shares (esp. from Delta and ODF overbuilding) and/or
• rising costs, from interest (or even promotions)