Virgin Media 2007 Annual Report Download - page 37

seek to challenge the amount of that tax basis or that we will be able to utilize such basis under
applicable tax law. As a result, although in accordance with applicable law we will seek to minimize our
U.S. tax liability as well as our overall worldwide tax liability, we may incur U.S. tax liabilities with
respect to repatriation of cash from our U.K. subsidiaries to the United States. The amount of the tax
liability, if any, would depend upon a multitude of factors, including the amount of cash actually
repatriated.
There is no assurance that new products we may introduce will achieve full functionality or market
acceptance.
Our strategy includes the roll-out of 50Mb broadband to our addressable market and we cannot
guarantee that this new service, or any other new products that we may develop in the future, will
perform as expected when first introduced in the market. Should these new products and services fail
to perform as expected or should they fail to gain market acceptance, our results of operations may be
negatively effected.
Virgin Mobile relies on T-Mobile’s network to carry its communications traffic.
Virgin Mobile relies on its long-term agreement with T-Mobile for voice, non-voice and other
telecommunications services we provide our mobile customers, as well as for certain ancillary services
such as pre-pay account management. If the agreement with T-Mobile is terminated, or if T-Mobile
fails to deploy and maintain its network, or if T-Mobile fails to provide the services as required under
our agreement with them and we are unable to find a replacement network operator on a timely and
commercial basis, if at all, we could be prevented from carrying on our mobile business or, if we found
a replacement operator, we may be able to carry on our mobile business only on less favorable terms
or provide less desirable services. Additionally, any migration of all or some of our customer base to a
new operator would be in part dependent on T-Mobile and could entail potential technical or
commercial risk. T-Mobile is also a customer of our business division. Any disagreements between
T-Mobile and Virgin Mobile may affect our other relationships with T-Mobile.
We rely on third parties to distribute our Virgin Mobile products and procure customers for our services.
Our ability to distribute Virgin Mobile products and services depends, to a large extent, on
securing and maintaining agreements with a number of third party distributors who sell our branded
handsets and service packs and prepay vouchers. These distributors also procure customers for our
competitors and, in some cases, themselves as well. In particular, Carphone Warehouse also sells its
own broadband and telephone services. They may also receive incentives to encourage potential
customers to subscribe to our competitors’ services rather than our own. They may at their discretion
decide to cease to distribute our products and services.
As part of our purchase of Virgin Mobile, we entered into an agreement with Virgin Retail
Limited to occupy a dedicated space in which to advertise and promote our products and services in
specified existing and future Virgin Megastores. In 2007, Virgin Retail Limited sold Virgin Megastores,
which has since been rebranded as Zavvi. We have no control over the number of stores that may be
opened or closed in the future by any of our distribution partners. If any of our distribution partners
were to close some or all of their operations, or we fail to maintain these key distribution relationships,
our revenue may decline.
In addition, in 2007, we opened our own Virgin Media-branded retail outlets. We plan on opening
more of our own retail outlets in the next few years to increase the sales of our products and services.
Our stores may not perform successfully.
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