SUMMARY. Risk Level *

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1 January 28, 2015 Liberty Global plc. Current Recommendation SUMMARY DATA NEUTRAL Prior Recommendation Underperform Date of Last Change 09/22/2013 Current Price (01/27/15) $46.67 Target Price $ Week High $ Week Low $38.49 One-Year Return (%) Beta 1.25 Average Daily Volume (sh) 2,423,038 Shares Outstanding (mil) 781 Market Capitalization ($mil) $36,428 Short Interest Ratio (days) 3.38 Institutional Ownership (%) 27 Insider Ownership (%) 5 Annual Cash Dividend $0.00 Dividend Yield (%) Yr. Historical Growth Rates Sales (%) 11.9 Earnings Per Share (%) Dividend (%) N/A using TTM EPS 74.1 using 2015 Estimate 30.1 using 2016 Estimate 40.2 Zacks Rank *: Short Term 1 3 months outlook 2 - Buy * Definition / Disclosure on last page SUMMARY Risk Level * (LBTYA-NASDAQ) Liberty Global reported mixed third-quarter 2014 financial results. Revenues failed to beat the Zacks Consensus Estimate while earnings surpassed the same. The company is gradually establishing a strong foothold in the European cable MSO market. We believe that the long-term fundamentals of the company are quite intriguing, primarily owing to strong demand for its digital cable-tv services, the acquisition of TV content producer All3Media, faster broadband and triple-play bundled offerings, strong cash flow and the growing popularity of Horizon TV services. However, stiff competition, saturated demand in European markets, high integration risks and mounting programing expenses may act as headwinds for Liberty Global. Also, the stock is fairly valued at current levels. Hence, we reaffirm our longterm Neutral recommendation on the stock. Below Avg., Type of Stock Large-Growth Industry Cable Tv Zacks Industry Rank * 221 out of 267 ZACKS CONSENSUS ESTIMATES Revenue Estimates (In millions of $) Q1 Q2 Q3 Q4 Year (Mar) (Jun) (Sep) (Dec) (Dec) ,768 A 3,162 A 4,371 A 4,468 A 14,769 A ,534 A 4,602 A 4,497 A 4,748 E 18,381 E ,104 E 5,142 E 5,156 E 5,297 E 20,699 E ,099 E Earnings Per Share Estimates (EPS is operating earnings before non-recurring items, but including employee stock options expenses) Q1 Q2 Q3 Q4 Year (Mar) (Jun) (Sep) (Dec) (Dec) 2013 $0.00 A $0.00 A $0.09 A $0.48 A $0.57 A $0.06 A $0.01 A $0.20 A $0.12 E $0.27 E 2015 $0.34 E $0.39 E $0.42 E $0.40 E $1.55 E 2016 $1.16 E Projected EPS Growth - Next 5 Years % N/A 2015 Zacks Investment Research, All Rights reserved S. Riverside Plaza, Chicago IL 60606

2 OVERVIEW Denver, CO-based Liberty Global plc. (LBTYA) is the largest triple-play cable operator in the international market, providing video, voice, and Internet access in 14 countries, primarily in the European countries and Chile. The company owns a 100% interest in UnitedGlobalCom, which operates cable networks in Europe and Latin America. Its other subsidiary, UPC Holding, provides video, voice and broadband Internet services in 10 European countries and Chile. Through its indirect controlling ownership interest in Telenet, it provides broadband communications services in Belgium. The company also has interests in Liberty Cablevision in Puerto Rico and Pramer, a South American cable operator. REASONS TO BUY In the coming years, we believe Liberty Global s revenues will continue to benefit from a triple play of video, broadband, and telephone, as it signs up more bundled customers in Europe and Latin America. Liberty Global continues to offer download speeds in between 100 and 150 Mbps across most of its markets. Moreover, the company plans to enhance download speed further by deploying the DOCSIS 3.1 technology going ahead. Additonally, the board of directors of Liberty Global decided to authorize a $4.5 billion share buy-back program over the next two years. In order to improve its liquidity, Liberty Global agreed to sell its international content business, Chellomedia, to AMC Networks Inc. for nearly $1 billion. However, the company will retain ownership of its Film1 and Sports1 channels. The deal is expected to boost the company s free cash flow further. In the third quarter of 2014, Liberty Global generated $1,153.4 million of cash from operations compared with $1,103.2 million in the year-ago quarter. Free cash flow in the quarter was $305 million, up 72% year over year. Liberty Global acquired the remaining 20% stake in VTR, the largest cable operator in Chile, for nearly $422 million. The company purchased the outstanding shares of both VTR GlobalCom SpA and VTR Wireless SpA from a subsidiary of Corp Group Holding Inversiones Limitada. Liberty Global is also looking to gain full control of the Belgian cable TV operator, Telenet Group Holding NV. Currently, the company holds a 58.4% stake in Telenet. Telenet is an integrated telecom company offering TV, broadband and wireless services in the Dutch-speaking part of north Belgium. As of Sep 30, 2014, Liberty Global had approximately million subscribers, which constitute around million RGUs (revenue generating units). Of the total, million were video RGUs, million were broadband Internet RGUs and the remaining million were telephony RGUs. In the reported quarter, the company increased its subscriber base through the addition of 344,000 organic RGUs. In Sep 2014, after receiving regulatory approval, Liberty Global and Discovery Inc. together sealed the acquisition of TV content producer All3Media for $1 billion. In May 2014, Liberty Global formed a partnership with Discovery Communications to buy All3Media completely. Earlier, owned by its founders and Permira funds, All3Media comprised 19 production houses across Europe and the U.S. Last month, Liberty Global acquired around 6.4% of ITV plc, the largest commercial TV broadcaster in the U.K., from British Sky Broadcasting Group plc for a total consideration of GBP 481 million (around $824 million). Hence, we believe that such strategic buyouts will not only drive RGU but will also boost the company s subscriber base moving ahead. Comcast and Liberty Global Plc leading cable MSOs in the U.S. and Europe respectively have formed an agreement to offer the industry s first international WiFi roaming connectivity to their subscribers. The service will be offered commercially from Comcast has more than 3 million WiFi hotspots across the U.S. while Liberty Global has installed over 2.5 million WiFi home spots in various European countries like Belgium, the Netherlands, Ireland, Poland and Switzerland. Per the deal, Comcast subscribers will be able to avail high-speed broadband (Internet) connection Equity Research LBTYA Page 2

3 using Liberty Global s WiFi network while in Europe. Similarly, Liberty Global s subscribers can go online using Comcast s WiFi hotspots while staying in the U.S. Germany s third and fourth largest wireless operators, namely, Telefonica and Royal KPN are seeking regulatory approval for a merger between their German units. However, the European regulatory authority may ask the Telefonica-Royal KPN entity to divest some wireless customers and stores in order to eliminate monopolistic power. Hence, to increase its store count in Germany, Unitymedia (the German subsidiary of Liberty Global) is targeting these divested wireless subscribers and stores that will be put up for sale. Liberty Global also launched a hybrid IP video gateway called Horizon TV in the Netherlands, Germany, Ireland and Switzerland. This innovative IP gateway combines cable operators video services with web-based content through an integrated cable modem. Furthermore, customers can view TV programs on multiple screens such as computers, iphones and ipads. Horizon TV also features an in-build application store for YouTube, Wikipedia and Facebook. REASONS TO SELL The company is predominantly operating in Europe, which at present is economically the most vulnerable region. Ongoing debt crisis in several European countries may significantly affect the future prospect of Liberty Global. The company is gradually concentrating on western Europe and some Latin American countries. However, recessionary pressure is most severe in that region. A low per capita income may stall people from spending more on exorbitant high-speed bundled communications services and HD-DVR-based digital video services. The pay-tv market of Germany has become highly competitive. Vodafone group plc, a global telecom giant, is on the verge of acquiring Kabel Deutschland, the largest pay-tv operator in Germany. Germany is the fastest growing economy in Europe and its cable TV market is highly profitable. So any change in government policy may impact Liberty Global s subscriber growth. In 2011, Liberty Global took over Kabel Baden-Wuerttemberg GmbH & Co. KG, the third- largest cable operator in Germany. Moreover, in 2010, Liberty Global acquired UnityMedia GmbH, the second- largest cable operator in Germany. However, Vodafone s entry in the German pay-tv market will make it highly challenging. Liberty Global is currently trading at significantly higher multiples with respect to several valuation metrics compared with the industry average and the S&P 500. We believe that this high level of valuation may restrict above-market gain anytime soon. ln our view, Liberty Global s top line and EBITDA growth may remain volatile in the near future, or may be weighed down by the maturing Western European operations, which account for roughly 92% of the company s total revenue. Liberty Global is facing considerable foreign exchange rate fluctuations as the company operates in 14 countries outside the U.S. Persistent foreign exchange rate volatility may further diminish the company s earnings in the forthcoming quarters. Liberty Global exited the third quarter of 2014 with nearly $39.5 billion of debt. Regular share repurchases coupled with acquisition plans will not only undermine the company s cash flow but will also expand its leverage position, moving ahead. In addition, Liberty Global s plan to buy back shares worth nearly $3.1 billion between 2014 and 2015 and debt maturity of around $12 billion by 2019 will severely hurt the company s cash position. Moreover, the company s recent acquisitions may certainly give rise to integration risks. Further, the company plans to increase video service rates in Switzerland, which we believe may further expand its video subscriber churn. Moreover, costs associated with change in programming rates, inclusive of retransmission and copyright fees charged by the broadcasters, may further dampen margin growth. Equity Research LBTYA Page 3

4 RECENT NEWS Third Quarter of Fiscal 2014 Financial Results Nov 6, 2014 Liberty Global Q3 Earnings Beat Estimates, Revenues Miss Liberty Global reported adjusted earnings per share of $0.20 beating the Zacks Consensus Estimate of $0.14. Earnings were also up an impressive 122.2% year over year on strong subscriber growth, robust ARPU and net positive foreign currency. Quarterly total revenue of $4,497.2 million was up 5.2% year over year but lagged the Zacks Consensus Estimate of $4,508 million. The year-over-year increase was driven by solid performance in the U.K, Germany and Belgium. Other Financial Information Cost of operations was $3,793.5 million, up 1% year over year. However, operating income came in at $703.7 million, up 35% year over year. Operating margin was 15.6% compared with 12.2% in the yearago quarter. In the third quarter of 2014, Liberty Global generated $1,153.4 million of cash from operations compared with $1,103.2 million in the year-ago quarter. Free cash flow in the quarter was $305 million, up 72% year over year. At the end of the quarter, Liberty Global had $954.9 million of cash and cash equivalents and $39,463.8 million of outstanding debt on its balance sheet compared with $2,701.9 million and $43,680.9 million, respectively, at the end of Subscriber Statistics As of Sep 30, 2014, Liberty Global had approximately million subscribers, which constitute around million RGUs. Of the total, million were video RGUs, million were broadband Internet RGUs and the remaining million were telephony RGUs. In the reported quarter, the company increased its subscriber base through the addition of 344,000 organic RGUs. Total Single-Play customer count touched million, down 6.3% year over year. Total Double-Play customer count was million, up 1.1% year over year. Total Triple-Play customer count stood at over million, up 6.9% year over year. At the end of the reported quarter, the company had approximately 770,000 Horizon TV subscribers in the Netherlands, Switzerland, Ireland and Germany. Liberty Global had around 2.4 million TiVo Inc. (TIVO) platform based video subscribers. The company added 261,000 next-generation video subscribers in the quarter. Segment-wise Results Total revenue at the European Operations division was $4,187.5 million, up 6.1% year over year. Within this segment, revenues from Western Europe were $3,873 million, up 6.5% year over year. Revenues from Central and Eastern Europe came in at $279.8 million, up 0.3% year over year. Revenues from Central and other operations were $34.7 million, up 3.9% year over year. VTR Chile revenues were $223.7 million, down 8.6% year over year. Corporate and other revenues totaled $95.3 million, up 2% year over year. Equity Research LBTYA Page 4

5 VALUATION Liberty Global is currently trading at 30.1x our fiscal 2015 earnings estimate. This is at a significant premium to the S&P 500 but at a discount to the industry average. We believe that the primary reason for this valuation premium is the company s acquisition of Kabel Baden and its decision to divest Austar. Integration of UnityMedia and Kabel Baden s operations with Liberty Global has created a formidable cable-tv player in the market in order to compete with its larger peers. The acquisition of Virgin Media will become a long-term positive for the company. We believe that Liberty Global is currently fairly valued. We, therefore, retain our recommendation at Neutral with a target price of $49, based on 31.6x our fiscal 2015 earnings estimate. Key Indicators F1 F2 Est. 5-Yr EPS Gr% P/CF 5-Yr High 5-Yr Low LIBERTY GLBL-A (LBTYA) Industry Average S&P LIBERTY GLBL-B (LBTYB) TIME WARNER CAB (TWC) DISH NETWORK CP (DISH) ROGERS COMM CLB (RCI) TTM is trailing 12 months; F1 is 2015 and F2 is 2016, CF is operating cash flow P/B Last Qtr. P/B 5-Yr High P/B 5-Yr Low ROE D/E Last Qtr. Div Yield Last Qtr. EV/EBITDA LIBERTY GLBL-A (LBTYA) Industry Average S&P Equity Research LBTYA Page 5

6 Earnings Surprise and Estimate Revision History Equity Research LBTYA Page 6

7 DISCLOSURES & DEFINITIONS The analysts contributing to this report do not hold any shares of LBTYA. The EPS and revenue forecasts are the Zacks Consensus estimates. Additionally, the analysts contributing to this report certify that the views expressed herein accurately reflect the analysts personal views as to the subject securities and issuers. Zacks certifies that no part of the analysts compensation was, is, or will be, directly or indirectly, related to the specific recommendation or views expressed by the analyst in the report. Additional information on the securities mentioned in this report is available upon request. This report is based on data obtained from sources we believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. Because of individual objectives, the report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed herein are subject to change. This report is not to be construed as an offer or the solicitation of an offer to buy or sell the securities herein mentioned. Zacks or its officers, employees or customers may have a position long or short in the securities mentioned and buy or sell the securities from time to time. Zacks uses the following rating system for the securities it covers. Outperform- Zacks expects that the subject company will outperform the broader U.S. equity market over the next six to twelve months. Neutral- Zacks expects that the company will perform in line with the broader U.S. equity market over the next six to twelve months. Underperform- Zacks expects the company will under perform the broader U.S. Equity market over the next six to twelve months. The current distribution of Zacks Ratings is as follows on the 1114 companies covered: Outperform %, Neutral %, Underperform 6.4%. Data is as of midnight on the business day immediately prior to this publication. Our recommendation for each stock is closely linked to the Zacks Rank, which results from a proprietary quantitative model using trends in earnings estimate revisions. This model is proven most effective for judging the timeliness of a stock over the next 1 to 3 months. The model assigns each stock a rank from 1 through 5. Zacks Rank 1 = Strong Buy. Zacks Rank 2 = Buy. Zacks Rank 3 = Hold. Zacks Rank 4 = Sell. Zacks Rank 5 = Strong Sell. We also provide a Zacks Industry Rank for each company which provides an idea of the near-term attractiveness of a company s industry group. We have 264 industry groups in total. Thus, the Zacks Industry Rank is a number between 1 and 264. In terms of investment attractiveness, the higher the rank the better. Historically, the top half of the industries has outperformed the general market. In determining Risk Level, we rely on a proprietary quantitative model that divides the entire universe of stocks into five groups, based on each stock s historical price volatility. The first group has stocks with the lowest values and are deemed Low Risk, while the 5 th group has the highest values and are designated High Risk. Designations of Below-Average Risk, Average Risk, and Above-Average Risk correspond to the second, third, and fourth groups of stocks, respectively. Equity Research LBTYA Page 7