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Virgin Media Records Strong Quarterly UK Broadband Growth

Tuesday, August 4th, 2020 (7:42 am) - Score 1,447
virgin media uk

Broadband and TV provider Virgin Media (Liberty Global) has today published their Q2 2020 results, which saw them add +39,200 new UK internet customers in the quarter (up from +8,200 last quarter) to total 5,318,400. At the same time their network coverage grew by 93,000 premises (unchanged).

At this point it’s probably fair to say that VM have had an extremely busy quarter. The biggest development, by far, has been the agreement to merge with mobile operator O2 (here) and they’ve separately decided to shut all of their remaining outlets on the high street (here). On top of that they’ve also made their 516Mbps plan more widely available and will upgrade their Ultimate Oomph TV bundle to 600Mbps (here).

Elsewhere the operator has worked with Cisco to deploy OpenRoaming WiFi technology in part of London (here), started to roll-out Remote Phy (R-PHY) to boost network performance (here) and then there’s the on-going deployment of their DOCSIS 3.1 (Gig1Fibre) network upgrade, which pushes top download speeds to 1Gbps and today went live across Leeds, Bradford and Glasgow (here); with many more D3.1 areas to follow.

In theory these results, which run to the end of June, should have been the one worst affected by COVID-19 but instead Virgin Media’s sudden growth in broadband subscribers suggests that they’ve benefited as home workers went looking for better connectivity during lockdown. After all, in many urban areas Virgin Media is still the fastest widely available provider.

On the flip side we note that their phone and TV / video customer base is continuing to decline. The latter will be a particular concern for VM, which has long prided itself on offering a premium TV service but these days there’s a lot more competition from cheaper streaming providers (Amazon, Netflix, NOW TV etc.).

VM UK Customer Figures for Q2 2020
5,318,400 Internet – (up from 5,279,200 in Q1 2020)
4,553,800 Phone / VoIP – (down from 4,579,100)
3,268,100 Mobile – (up from 3,220,400)
3,589,300 Video / TV – (down from 3,621,800)

As usual the results also included an update on 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) but is now expected to take much longer. Overall they added 93,000 extra premises to their UK network coverage (unchanged from 93K in the previous quarter) and this makes for a total of 2.3 million UK premises since 2015/16.

As it stands Virgin Media has contracts that will see their build continue for the next few years and they’re clearly not in a rush to reach the original 17 million premises target. We should point out that the COVID-19 crisis will have had an impact here, even though they did continue with their deployment.

Project Lightning Rollout Since 2017
Q2 2020 = 93,000 Premises (impacted by COVID-19)
Q1 2020 = 93,000 Premises (some impact from COVID-19)
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: The previous cost per premises estimate was c.£620 and they’re achieving 30-35% penetration after 3 years. Virgin’s UK network currently covers a total of 15,072,600 UK homes passed.

On the financial front Virgin Media reported total quarterly revenue of £1,234.2m (down from £1,266.3m in the previous quarter), although the full impact of COVID-19 is not yet known.

Lutz Schüler, CEO of Virgin Media, said:

“This will certainly be a quarter that none of us will forget and Virgin Media has performed well. The endless dedication of our teams to keep our customers and the country connected at this important time is something I’m very proud of. It reaffirms our mission to become a national connectivity champion that is committed to helping Britain boom once again.

Despite the challenges of Covid, we kept pushing forward to adapt as a business and give our customers more; this included creating more than 1000 UK customer service roles. These efforts, and the essential role of our services, are really clear in these results. We’ve seen the best Q2 cable additions since 2016 and record mobile contract subscriber growth for the quarter, alongside positive improvements in customer satisfaction with increases in network use and TV viewing.

Financially, we have continued to grow Operating Free Cash Flow but clearly factors such as the suspension of live sport and a reduction in handset sales due to COVID have slightly dampened revenue. These factors had a negligible impact on margins due to associated cost savings.

This was all coupled with continued investment to bring next-generation speeds to more of our network and expand our footprint to new areas of the country. Virgin Media now has the UK’s largest gigabit network as we switch on these speeds in more locations, and 2.3 million premises are now able to take Virgin Media services when they couldn’t just a few years ago. The Government is clear that it wants shovel-ready projects to help level-up the economy – the truth is Virgin Media has never put its shovel down and will keep pushing forward to play our role in these tough times.

We enter the second half of the year with our head held high. Despite there being uncertainty as we ease out of lockdown, we are focused on where we’re heading. We’ll keep delivering for our customers and making sure the country has the connectivity it needs and deserves.”

Meanwhile a question remark remains over Liberty Global’s previous hints about the possibility of establishing a new alternative network (Liberty Networks) in the UK, which could potentially serve the country’s other 10 million premises (with FTTP) – beyond VM’s existing network area (here) – and may even offer wholesale access to rival ISPs (here).

We suspect that the O2 merger may be taking priority over any plans for wholesale or a network split, but if they’re serious about all this then they’ll ideally need to do something before the Government (BDUK) begins procurement for their £5bn gigabit programme in January 2021. However, much may depend upon whether a major ISP, such as Sky Broadband, is willing to support this.

Likewise, we’re equally curious about VM’s planned deployment of IPv6, which last year appeared to be sent back to the drawing board (here) and we haven’t heard anything new since then.

 

Leave a Comment
12 Responses
  1. Avatar A_Builder says:

    @MJ

    “ On the financial front Virgin Media reported total quarterly revenue of £1,234.2m (own from £1,266.3m in the previous quarter),“

    Maybe should read ‘down’?

  2. Avatar Mark says:

    I’m hoping that this Liberty project will capture and finish off homes missed by the recent Project Lightning rollouts. There are random streets left out because they either don’t conform with the way the VM network is deployed, or perhaps it’s budget related.

    Or can we just assume that this is mainly for more remote areas miles away from existing VM infrastructure. Let’s hope we get more on this soon.

  3. Avatar Alex says:

    “Virgin Media’s sudden growth in broadband subscribers suggests that they’ve benefited as home workers went looking for better connectivity during lockdown”

    Or it suggests that if you don’t decide to take extra precautions to protect your engineers and the public from a pandemic, you can make a quick buck whilst others do…

    1. Avatar Qq says:

      Well, no VM techs nor customers contracted Covid from an engineer visit, so all in all it seems as if they were taking all steps to ensure safety.

    2. Avatar JitterPinger says:

      Worth noting that a lot of Virgin connections now are self install with any work needing to be done being external.

  4. Avatar Mary says:

    @MJ

    What is the source for: VM UK Customer Figures for Q2 2020: 5,318,400 Internet – (up from 5,279,200 in Q1 2020)?

    1. Mark Jackson Mark Jackson says:

      As the article says, their financial results (that’s also the UK only figure, excluding Ireland).

      https://www.libertyglobal.com/wp-content/uploads/2020/08/Virgin-Media-Fixed-Income-Q2-2020-Release.pdf

  5. Avatar FibreBubble says:

    Virgin had new install market to themselves as Openreach were safeguarding staff and customers during the lockdown.

    1. Avatar qqq says:

      As did VM, Engineers were provided safety gear such as Masks, Gloves and hand sanitiser, customers were made take Quickstart if available instead of Engineer visit and if a visit was required it was confirmed via Text and a call asking if anyone is Shielding/suffering from symptoms, upon arrival they’d check external and if it was absolutely necessary would enter the property and ask the customer to stay in another room closeby just-in-case anything was needed such as to check the devices or such.
      Surprisingly all precautions were taken, they just had faith in their staff. And it evidently paid off.
      Granted I was a bit pissed my TV box required a manned install and I had to wait until recently for it to be installlled, but whatever it got installed.

    2. Avatar telecom Engineer says:

      True. Got complaints of engineers taking on 3rd box install in houses, contractors on nonessential fits told no work no pay… Virgin had faith in customers desire for product above safety and capitalised on no competition from BT or Sky who ceased internal work and prioritised essential services.

      A text wont stop you catching covid.
      “Faith” wont protect staff.

      Results bourne from selfish behaviour of profiteers, customers desire to zoom more than protect their families and threats to engineers livelihoods should not be celebrated. Disgraceful.

  6. Avatar Matthew says:

    Well in fairness it’s probably not that surprising that Virgin is losing TV Customers they aren’t really pushing that area and missed out on a few of the biggest tv shows of last few years. If anything BT TV with the NowTV integration is giving them a solid contender as it has red button support etc now.

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