Initiation on VMED O2 UK Holdings

Whether or not the bonds provide enough yield over the next year comes down to an offset between the cash generative nature of the business vs. the high leverage it carries in a highly saturated UK market for mobile and its focus on the roll-out of the 5G program. The Virgin Media/O2 merger is part of a trend across Europe to put Mobile and Cable assets together, providing a stable cash-generating business with a significant debt stack and 18-months into a 5-year synergy programme so there are still a lot of moving parts. We have some caution due to the shareholder structure, even as our approach is as ever bottom-up.