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back to article Virgin Media revs up for Liberty Global merger

Virgin Media - which is imminently set to be scooped up by US cable giant Liberty Global - reported a good start to its financial year this morning. It told the City that revenue had climbed to £1.04bn for the three months ended 31 March 2013 - up 3.6 per cent from £1.01bn for the same period a year earlier. The telco said it …

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Could be good

Joined in the ntl days, left over three years ago. It's a good thing, and much needed for VM - the asset has been sweated to a quite ridiculous level, as the whole shooting match has been up for sale for a long time. First it was Networks, then Business and Networks, and now it seems the whole company.

The potential landmine is the age of the fibre core - much of it dating back to the original cable companies, which VM is basically made up of. A lot of the fibre is very old, and not capable of carrying the DWDM necessary to meet the growth demands placed upon the network.

So it remains to be seen whether Liberty will actually do something with it, or just continue the circle of cash-starving the network and milking the customers.

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Anonymous Coward

Re: Could be good

They've just finished a complete nationwide overhaul of their fibre, upgrading everything to DOCSIS3 and replacing hardware across the board - that's where a huge chunk of their debt comes from.

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Re: Could be good

Ah okay, I stand corrected.

I'm three years out the loop on it.

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Silver badge

Re: Could be good

No, their huge chunk of debt came from the original civils work to build out the network which they 'bought' when they went shopping for the individual franchises, oh and and running at a loss for years.

NTL's issues over the years have been legion, core network capacity was rarely if ever a problem. They don't actually operate ftth, they have a hybrid optical system with the last section to the home being something like rg6 (depending on region, age and any specific issues with that property). They have had issues with last mile equipment, supplier disputed and customer care levels, but their core network has capacity and they continue to trial and upgrade.

Even if their core network were about to croak a significant amount of their value is in the civils already done street to street. That last mile connection, even as rg6 instead of FO, is worth a pretty penny. They could offer 1gbps/100mbps tomorrow, they would have to do some serious resegmenting and upgrading of backhaul to hub sites if many people took them up on it, but could BT do that without ftth? Thats where the value is.

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Re: Could be good

"upgrading everything to DOCSIS3"

If you are a residental user.

All my neighbours have docsis3, I'm on business cable, so I'm not.

20/1 is the max I can have, where as 30/3 appears to be the lowest my neighbours can get.

I get 10/.768 atm, that's £60 a month..

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Re: Could be good

The upgrades are not fully done, most areas are.

Also, there is a lot of Non-DS3 equipment in customer homes. VM put up a notice on the accounts page and once people read it then DS3 equipment is sent out for self-install. Some customers will not get the notice nor be able to self install until they speak to accounts as (for some unknown reason) old accounts can not be "autmagically" upgraded.

There are still customers out there who were not upgraded from the 2010/2011 upgrade cycle, I have requested an update on that and been told that they are not sure what areas are yet to be completed!

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Re: Could be good

"So it remains to be seen whether Liberty will actually do something with it, or just continue the circle of cash-starving the network and milking the customers."

Yup. Stand by for the letters to customers to inform them of this, explaining how it's such good news and that they will benefit from it, and that it means there will be a price increase to ensure they continue to provide the level of service customers expect**. Or something like that.

** It all works. Except when it doesn't.

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Unhappy

Re: Could be good

"So it remains to be seen whether Liberty will actually do something with it, or just continue the circle of cash-starving the network and milking the customers."

Mmm. Yankee billionaire. Wonder if he got rich by doing things for customers, or just pillaging assets?

And looking at the VM results, they only just scraped a profit this year, with the defining influence on their earnings being interest rate on the vast debt and tax allowances. For Liberty Global to make money, they need to increase revenue per customer and (further) cut costs. That means price increases and even shittier service, I regret to say as an existing VM customer.

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Anonymous Coward

Re: Could be good

"That means price increases and even shittier service"

This would be difficult to do. Most customers are on 2 year contracts. If you look at the article, you'll see their subscriber growth is sluggish - you're talking hundreds of thousands in a good year, on a total customer base of some 4 million. That's at least half, and more like 3 quarters of your customers who can just up sticks and switch at any time. With BT now offering decent fibre services and good TV, there are genuine alternatives. Price increases and a shittier service would be a risky, risky way to improve their financial position. What's more likely IMHO is Liberty using their global financial clout to refinance the debt (interest rates are super low right now) and to get much better deals on content.

"VM put up a notice on the accounts page and once people read it then DS3 equipment is sent out for self-install..."

This is exactly what happened to me. We got a Tivo box on launch as a second STB, and the engineer noticed we had an out-of-date modem, so gave us a Superhub out of the back of his van. This led to us never receiving the "You should upgrade!" notice, as the network saw a superhub and assumed we'd had it. Ended up stuck on 50Mbit service, rather than the 100Mbit I should've been getting, for the best part of a year before I gave them a ring and had them upgrade the account - which for some reason involved sending out a new superhub for self-installation.

On the plus side I've now got two superhubs. But I'm not sure that's actually a plus side.

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Re: Could be good

At least you should get a better SLA than the "we'll fix it when we get around to it" you get on residential service.

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FAIL

Any concrete figures on how much Virgin Media pays Virgin Group for the use of the "brand"? I was told it was 10% of revenue, making a nifty little £100m tax-free earner for Beardie.

If I was Liberty the first thing I would do is change the name (get away from all that bad publicity) and operate under the name Liberty ("Liberty gives you unlimited broadband" etc - the marketing opportunities are endless), and save a shed load of cash with which I can invest in the company.

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Not as much as that. From memory it was a fixed annual fee arranged when ntl:Telewest bought Virgin Mobile.

Rebranding I think would be a long way off - it cost a fortune then, and despite the internal naysayers it was a very positive thing. Overnight the bad old names and images of ntl: and Telewest were gone. Even business customers, who should have known better, suddenly expected everything to be better because of the big red badge.

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WTF?

"Earnings before interest, taxes, depreciation and amortisation and other one-time charges rose from £376.5m last year to £398.5m.

"Virgin Media boss Neil Berkett, who will exit the telco with £42m"

So after Virgin pay their taxes and other costs, the boss will be taking almost 20% of the entire comapnies profit. Nice work if you can get it.

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Having been part of the team that sold the business for current share price + 24% I doubt many of the companies owners will complain.

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