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Virgin Media Adds 154,000 Premises to UK Ultrafast Network UPDATE

Thursday, February 13th, 2020 (10:46 pm) - Score 2,431

Cable ISP Virgin Media UK (Liberty Global) has published their Q4 2019 results, which reveals that their “gigabit capable” broadband and TV network was extended to another 154,000 premises in the quarter (up from 119K in Q3) and their total broadband base now stands at 5,271,000 (up by 1.9K in Q4 vs 2.4K in Q3).

The main development for Virgin Media since the last update has been the on-going expansion of their 1Gbps (Gig1Fibre) capable DOCSIS 3.1 network upgrade (here), which has now reached Reading (inc. surrounding areas), Greater Manchester, Southampton and is due to cover their entire network by 2021. The operator also opened a new HQ building in Reading and they gave those on slower packages a free upgrade to 108Mbps (here).

Outside of that there hasn’t been much to report in the last quarter and we continue to await news of Liberty Global’s ambition to establish a new alternative network (Liberty Networks) in the UK, which could potentially serve the UK’s other 10 million premises – outside of Virgin Media’s existing network area (here) – with FTTP. In keeping with that we’re also waiting to see if Virgin Media opens their existing network up to wholesale access (here).

Sadly today’s results didn’t include any major surprises, but in terms of their latest customer figures the results are as follows.

VM UK Customer Figures for Q4 2019
5,271,000 Internet – (up from 5,269,100 in Q3)
4,605,500 Phone / VoIP – (down from 4,633,600)
3,179,500 Mobile – (up from 3,137,000)
3,687,400 Video / TV – (down from 3,765,000)

Meanwhile today’s results reveal that the pace of their Project Lightning network expansion, which originally aimed to add 4 million extra premises by the end of 2020 (2 million via FTTP), has increased a little during the quarter (Q4 is generally always a strong one). Overall they added 154,000 extra premises to their UK network coverage (up from 119K in the previous quarter) and this makes for a total of 2.1 million UK premises since 2015/16.

As it stands Virgin Media has contracts that will see their build continue until at least 2023 (here) and so at the very least they’re not in a rush to reach the original 17 million premises target.

Project Lightning Rollout Since 2017
Q4 2019 = 154,000 Premises
Q3 2019 = 119,000 Premises
Q2 2019 = 130,000 Premises
Q1 2019 = 102,000 Premises
Q4 2018 = 144,000 Premises
Q3 2018 = 109,000 Premises
Q2 2018 = 118,000 Premises
Q1 2018 = 111,000 Premises (likely impacted by heavy snow)
Q4 2017 = 159,000 Premises
Q3 2017 = 147,000 Premises
Q2 2017 = 127,000 Premises
Q1 2017 = 102,000 Premises

NOTE: Q1 is traditionally a slower quarter for build due to various issues (weather, holidays etc.). The last cumulative cost per premises estimate was c.£690 (just the build costs would be £660) and this was achieving 30-35% penetration after 3 years. Virgin’s UK network currently covers a total of 14,894,400 homes.

On the financial front Virgin Media reported quarterly revenue of £1,331.7m (up from £1,281.7m in the previous quarter), although as above they’re clearly still struggling to add new customers and this is likely to be a concern for the operator given their current roll-out programme. On the other hand their new Project Lightning build areas seem to be the ones generating new customers, which is a positive indicator.

Mike Fries, CEO of Liberty Global, said:

“2019 was a transformational year on many fronts. In July, we sold our operations in Germany, Hungary, Romania and the Czech Republic to Vodafone for over $21 billion. We are now geographically concentrated in five attractive Western European markets, while enjoying substantial financial firepower with over $11 billion of total liquidity.

Technologically, we continued to push the boundaries of our fiber-rich HFC networks by accelerating our gigabit broadband rollouts to more European homes and businesses. As a result, millions of our customers currently have access to 1 gigabit download speeds, far surpassing what our competitors are able to offer across the vast majority of our footprint.

In the U.K., our largest market, our focus on fixed-mobile convergence drove record mobile subscription growth in 2019. Last fall, we announced a transformational MVNO deal with Vodafone, which will allow Virgin Media to launch 5G mobile speeds. Combined with our fixed-line gigabit broadband speeds, our cutting-edge FMC bundles place us in an enviable position as we continue to extend the reach of our network with Project Lightning.

And while we expect some unavoidable headwinds in 2020, we believe the medium-term outlook in the U.K. remains attractive, especially as we evaluate strategic options for value creation. From a leadership perspective, we recently appointed Severina Pascu as CFO and Deputy CEO of Virgin Media, and expect her depth of operating expertise to make a significant impact over the coming years.”

The brief mention of how Liberty Global continues to “evaluate strategic options for value creation” (in the UK) means that they have yet to reach a final agreement on their plans for Liberty Networks. At this stage it’s unclear what the hold-up is, although attempts to get Sky (Sky Broadband) on-board as an ISP partner appear to still be on-going.

UPDATE 14th Feb 2020 – 2:33pm

Liberty Global has this afternoon published a copy of the presentation that they used after the results were released, which sets out – we think for the first time in an official capacity – what they’re exploring for their future network strategy with respect to Liberty Networks. Broadly it’s the same as we’ve been reporting for the past few months but it’s nice to have them confirm that.

virgin_media_liberty_networks_fttp_proposals_2020

On top of that we also got some updated details about the strong take-up in Project Lightning areas and the related cost per premises coming down.

virgin_media_project_lightning_feb_2020

Leave a Comment
22 Responses
  1. Avatar Roger_Gooner

    VM’s TV business is in decline, so you could say that its strategy of being an aggregator of content isn’t working. However the forthcoming Sky Cinema and Sky Sports in 4K will make a difference. It’s the broadband business which in increasing and of course there are people who use it for streaming content from non-STB devices such as streaming sticks, laptops, tablets, mobile phones and smart TVs.

  2. Avatar A_Builder

    It would be interesting to understand any rates of customer bleed from VM -> full fat FTTP and why that has occurred/is occurring.

    There are now some very overlapped areas both with Alt Net and OR so this will start to be real at some point. OK, given human inertia there has to be a reason to move – price, Quality of Service, or general positive/negative sentiment so the move will not be quick.

    • Avatar Roger_Gooner

      There’s still only a small amount of overbuilding so any loss to FTTP rivals is very small. Furthermore by the end of 2021 VM should have rolled out DOCSIS 3.1 across its UK network,so gigabit speeds should be available to any subscriber with a hub 4.

    • Avatar A_Builder

      Oh, I don’t doubt any of that.

      But the network Is going but the subscriber base isn’t.

      Which as @FibreBubble points out below is odd.

      So something in VM’s offer is not quite hitting the sweet spot.

    • Avatar simon

      I was a VM/NTL customer for 15 years and just moved to BT FTTP. Saved a fair bit of money as BT are discounting heavily in the Fibre First cities. Vodafone/Cityfibre are digging up the street of Leeds so won’t be long before I’ll have a choice of three provider.

    • Avatar Ferrocene Cloud

      Openreach are building fibre just outside my catchment area, if they put FTTP in I’d switch in a heartbeat. My speeds are fine on Virgin Media, but I don’t like the latency and jitter I get from the DOCSIS service and Virgin’s network. Continental traffic can also have pretty high latency spikes. Compared to BT’s FTTC the performance is much worse.

      I can also use my own equipment on FTTP connected to the ONT instead of being forced to use Virgin Media’s hub. And before someone tries to be smart, I know I can use modem mode with the hub, but that doesn’t solve issues with the Puma chip, and don’t really consider “run an extra device” to be a particular valid solution.

      But admittedly that’s not going to be typical, all most people care about is whether it’s fast enough to allow them to download the occasional large file, or they can stream a HD movie while the kids get the latest Fortnite patch or something.

    • Avatar Vince

      @Ferrocene Cloud

      You contradict your own argument.

      You don’t like the extra bit of equipment over your router, yet both Openreach FTTP and Virgin Media require you to have that extra bit of kit in some form…

  3. Avatar FibreBubble

    Either take up in lightning areas is extremely low or they are haemorrhaging in large numbers in established areas. Or possibly both.

    Very poor numbers for cash spent digging in a lot of fibre tubes (albeit shoddy and shallow build)

    • Avatar CarlT

      Hello Partial!

      Hope working with the copper is keeping you busy.

      Churn in legacy areas. Lightning uptake is satisfactory, build is open ended.

    • Also added that to the news above. Even early take-up shortly after build completion seems to be generating strong take-up, enough to justify and focus on it.

    • Avatar NE555

      Yes, but to build to 154,000 new properties for a net gain of only 1,900 broadband subscribers – and a net loss of TV subscribers – that’s got to hurt.

    • Avatar CarlT

      Not really. They explain why the loss and it makes sense. Not engaging in such aggressive price cuts to retain customers and leaving other operators to take the margin hit on special offers.

      Temporary phenomenon. Better for profitability not to go insane with retentions deals. Pointless keeping a customer if you aren’t making anything from them.

      They know the TV product is going to carry on dropping exactly as it is for cable companies worldwide as people cut the cord and use OTT video services.

    • Avatar Lightnot

      Suggests they’re losing customers in existing areas, as they are gaining in the new areas, not good overall if it continues.

      Personally I don’t understand why they haven’t been quicker to launch a basic broadband and telephone product targeted at the middle to lower end of the market. The millions of households that don’t care about sky high bandwidths in the hundreds of MBs at premium prices with TV packages, but just want say 20Mbs at a fair price for surfing, checking emails and watching the odd show on Iplayer.

      A basic offer to that less demanding but more price sensitive segment of the market, an alternative to ADSL or the bottom FTTC tiers but using the VM network.

    • Avatar CarlT

      Easy. Barely costs them any less to provide a basic, low speed tier than higher ones across a year of contract.

      No profit in trying to be the TalkTalk of cable.

      Profit is what they are driving for as a company, not just revenue.

    • Avatar A_Builder

      I’m slightly in the mIddke in this.

      I don’t think VM are in a disaster situation equally I don’t think things are going swimmingly.

      And I do think there is a real threat to VM from wide scale FTTP roll out especially urban as round SW18 I don’t know anyone with VM who can get Hyperoptic or Comminity Fibre.

      Both CF and Hyper are cheaper and more robust as well as symmetric. I’m not a gamer but those who are swear by the performance uplift.

      I’m open minded but I do think VM are going to have to do at least a full 3.1 roll out and maybe more.

  4. Avatar FibreBubble

    Not sure they are gaining in new areas. Lightning has not been around long enough to prove the wildly optimistic projections they have published in their spin.

    Share price is a tanking despite big buyback announced in results. Ideal time for Mark and Carl to put their money where their mouth is.

  5. Avatar FibreBubble

    Not sure they are gaining in new areas. Lightning has not been around long enough to prove the wildly optimistic projections they have published in their spin.

    Share price is a tanking despite big buyback announced in results. Ideal time for Mark and Carl to put their savings in.

    • Avatar CarlT

      Those aren’t projections. They are what they are seeing.

      Still if you know better I look forward to the investigation by the SEC as lying in official results is a massive issue.

    • Avatar CarlT

      Just FYI Lightning was officially announced in June of 2015 and earlier infill build was rolled into the programme.

      The 57 month horizon mentioned is the takeup from the build pre-announcement.

      I know they were building before the announcement because I live in an area they were building in.

      You should be a huge fan of the older build. It was hybrid so copper coated steel, full size ducts, excavations, etc, rather than the lower cost, lower maintenance microducts from FTTP, built by VM, CityFibre, Openreach, etc, you so loathe.

    • Avatar CarlT

      Lastly regarding shares tanking despite the buyback announced in the results: results were released after market close. Stock price slightly up in after-hours trading. Bit soon to tell impact of results.

      So apart from those few minor inaccuracies spot on.

      Will leave you to the deeply buried, maybe ideally Cold War era copper. There’s some solid construction, deep underground to resist nuclear groundburst.

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