Report Overview

Virgin Media UK: Pain before gain

Virgin Media’s subscriber base fell again in Q4, although strong ARPU growth allowed a slight acceleration in cable revenue growth to 1.8%, and a deceleration in OCF decline to 1%

Liberty Global group OCF guidance of mid-single digit decline in 2020 is likely to be mirrored at Virgin Media, as regulatory pressure and market competitiveness continue to bite, and mass-market demand for ultrafast remains nascent

We continue to believe that the best way for Virgin Media to capitalise on full fibre rollouts is to use a wholesale deal with Openreach to expand its footprint to (eventually) nationwide

Contents

Subscribers flat, RGUs falling, despite Lightning …

… but ARPU and revenue growth much more solid

Out-of-contract notifications hit in February

New customer pricing weak into 2020

BT and Sky cross-wholesaling creates further pressure

2020 outlook thus remains challenged

Project Lightning … and beyond

Mobile recovers, but Group OCF still negative

Financial outlook: patience required

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 selected recent price changes

Figure 4: Virgin Media subscriber growth

Figure 5: Virgin Media UK cable revenue and operating statistics

Figure 6: Contract status of customers by provider

Figure 7: Proportion of revenue at risk if out-of-contract customers switched to …

Figure 8: Broadband entry-level dual-play pricing, new customers (£/month)

Figure 9: Broadband high speed pricing, new customers (£/month)

Figure 10: Premium sports monthly pricing and bundles

Figure 11: Project Lightning progress (000)

Figure 12: Project Lightning take-up by time since premises first passed

Figure 13: Virgin Media Group operating performance

Figure 14: Liberty Global 2020 guidance