Report Overview

Virgin Media UK – Fibre questions remain

Virgin Media’s Q1 financial performance was in line with its subdued outlook, with its key problem being a lack of demand (yet) for the ultrafast services that only it can widely provide

CV-19 has delayed the marketing of ultrafast services from competitors, likely suppressing demand more generally; in the longer term however, the working-from-home experience will likely help drive adoption

Virgin Media still has to solve the problem of alleviating the long-term threat of full fibre builds negating its network advantage; we believe that the best answer is to expand to a nationwide service via wholesale, and the merger with the nationwide O2 reinforces this

Contents

Some things change, others do not

Subscribers continue to fall

Revenue growth robust, but under pressure

Pricing weak in the quarter, stronger thereafter

OCF growth dips as expected

Project Lightning … and beyond

Financial outlook still challenged, but not more so

A merger of convenience

List of charts/tables

Figure 1: UK cable revenue growth and group OCF growth

Figure 2: Virgin Media UK consumer cable operating performance

Figure 3: Virgin Media subscriber growth

Figure 4: Virgin Media UK cable revenue and operating statistics

Figure 5: Virgin Media selected recent price changes

Figure 6: Broadband entry-level dual-play pricing, new customers (£/month)

Figure 7: Broadband high speed pricing, new customers (£/month)

Figure 8: Virgin Media Group operating performance

Figure 9: Project Lightning progress (000)

Figure 10: Gigabit-capable footprint coverage

Figure 11: Liberty Global 2020 guidance

Figure 12: Mobile service revenue growth

Figure 13: Change in customer lifetime contribution due to converged bundle