Virgin Media Insources Home Engineers and Sign £500m Build Deal

Cable ISP Virgin Media UK has today announced that they’ve awarded a series of new regional build contracts for their gigabit-capable broadband and TV network to 6 national partners (worth £500m per year). On top of that they’ve also brought more than 700 customer-facing engineers back in-house to improve customer service.

At present Virgin Media’s mix of Hybrid Fibre Coax (HFC) and Fibre-to-the-Premises (FTTP) based infrastructure covers around 15 million premises, although they’re continuing to expand this under their £3bn Project Lightning build (currently 2.1 million premises completed). On top of that they’re also upgrading to the latest DOCSIS 3.1 standard, which will make 1Gbps+ speeds available across their network by the end of 2021 (here).

As part of the above VM’s new 5-year contracts worth £500m annually are said to manage both the delivery and maintenance of their gigabit capable broadband network (this covers numerous business areas like Project Lightning and Consumer). All of this forms part of an effort to “reform their partnership model” in order to provide a “one-stop-shop for the planning, expansion and maintenance.”

The new structure mentioned above will thus be implemented from April 2020 with 6 national partners delivering a variety of civil engineering tasks across nine key regions in the United Kingdom, which we’ve summarised below.

Contracted partners and regions:
Kier: Scotland + South London, South Coast & South East
Actavo: Northern Ireland
Avonline: North East + South West & South Wales
NMCN: North West & North Wales + Yorkshire & East Midlands
Comex: West Midlands
Kelly: North London, Homes Counties & East Anglia

On top of that all visits to homes and businesses will now be carried out by a Virgin Media employed engineer (previously some in-home visits were carried out by contracted partners). In practice what this means is that the operator will increase its directly employed engineer workforce by more than 700, taking its total number to 1,800.

Apparently this will “provide new and existing customers with a much improved experience when they have their services installed or issues fixed that require an engineer visit,” which could also be read as suggesting that the previously outsourced team of domestic focused engineers weren’t as good at their job as VM would have liked.

Rob Evans, VM MD of Network Expansion, said:

“These changes are great news for our customers, great news for partners and ultimately fantastic news for the UK as we really focus on building out our gigabit network to more locations.

This new regional model gives our partners the certainty, scale and transparency they need and provides Virgin Media with the teams equipped to deliver high-quality build efficiently and effectively with the support of local authorities and communities.”

Severina Pascu, Deputy CEO and CFO of VM, added:

“Bringing our customer-facing installation teams and engineers into Virgin Media will improve the service and experience our customers get from Virgin Media. Understandably, with our brand and superior network, our customers expect the best from us and we’re continuing to invest to deliver on those expectations and become the most recommended brand in the sector.”

At this point it may be worth remembering that Virgin Media originally pledged that their Project Lightning network expansion would reach an extra 4 million premises by the end of 2019 (inc. 2 million via FTTP), which could have taken their total coverage to 17 million premises (c.60% of the UK).

However at the end of last year they had only completed roughly half of their original build target and the problems here began in 2017, after the operator realised that they had been erroneously overstating their build progress. But we can take some comfort from today’s announcement that they’re continuing to build for the next 5 years, even if we can’t say quite how far they’ll actually get.

The big unknown in all of this is how it will impact Liberty Global’s (Virgin Media’s parent) ambition to establish a new alternative network – Liberty Networks, which could potentially serve the UK’s other 10 million premises – outside of VM’s existing network area (here) – with FTTP. In keeping with that we’re also waiting to see if VM opens their existing network up to wholesale access (here), either directly or by splitting it off under Liberty Networks.