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Virgin Media Admits Overstating its UK Cable Network Expansion Progress

Wednesday, Mar 29th, 2017 (7:52 am) - Score 3,083
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A new regulatory filing has revealed that yesterday’s executive reshuffle (here) by the top brass at Virgin Media was a response to an internal review, which confirmed that the operator had overstated the roll-out progress of their ultrafast broadband and TV network expansion by 142,000 premises.

Readers may recall how the operator’s results for the final quarter of 2016 (calendar) reported (here) that their on-going £3bn Project Lighting network expansion, which aims to cover 17 million UK premises by 2019 (i.e. 4 million extra premises [2 million via FTTP] – boosting UK coverage to around 60-65%), had reached 250,000 premises in 2015. Since then they claim to have added 70,000 during Q1 2016, then 85,000 in Q2, followed by 95,000 in Q3 and now 215,000 during the final quarter of last year.

At the time Virgin Media reported that, during 2016, they had spent £377m in total as part of their Network Expansion Program, which includes build costs of approximately £290m related to the 465,000 premises passed during the calendar year.

Crucially the 465K figure included 142,000 premises in many UK locations where VM “understood construction to be essentially complete, but which still required power, headend capacity upgrades and/or physical connection activities (Inactive Premises)“.

Virgin Media Statement (Regulatory Filing)

These Inactive Premises were expected to become Connected Premises during the first quarter of 2017. In addition, we previously reported that we expect to connect a total of approximately 1.4 million premises to networks attributed to the Liberty Global Group during 2017, including up to 800,000 premises connected pursuant to Project Lightning.

In late February 2017, the Company discovered that the construction work necessary to connect a substantial number of the Inactive Premises had not progressed as originally understood. The Company then initiated a review of the records underlying the construction status of the Inactive Premises and the circumstances that led to the overstatement of their construction progress.

Our review found that the completion status of a number of Inactive Premises had been misrepresented … The Company has determined that most of the Inactive Premises did not meet the prescribed requirements for inclusion in that category as of year-end 2016. We expect that all of these Inactive Premises will be connected before June 30, 2017.

The good news is that Virgin Media does “not believe” that the shortfall in their deployment progress will have any impact on the total number of premises that they expect to add pursuant to the overall Project Lightning program. However it will affect their results for the H1 2017 (calendar) period and it’s possible that this might also put more pressure on their 2019 completion goal, which has already been pulled forward from the original expectation of 2020.

As a result of this review, four of Virgin Media’s employees have been “suspended and removed” from their posts and employment investigations are ongoing. The operator anticipates that further disciplinary action may also need to be taken against employees, including dismissal.

Aside from reshuffling the management, Virgin Media has further responded to the incident by “providing additional resources” to manage increased volumes of construction and planning activity in the UK, including increased focus on wayleaves and easements. Naturally the operator promised that they would “no longer include Inactive Premises in the Added Premises figures that we report in future periods.”

We should point out that the small print in Virgin Media’s previous results did in fact mention the 142,000 premises figure for “inactive premises“, although clearly these should NOT have been included in the main progress total until fully completed. We’ll be keeping a close eye on the operator to see if they’re able to reach their original end of 2017 goal for “up to” 800,000 extra premises passed (good thing they used “up to“).

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By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook and .
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