Virgin Media 2009 Annual Report Download - page 33

There is no assurance that new products we may introduce will achieve full functionality or market
acceptance.
Our strategy requires that we roll-out new products and services, such as our introduction of
broadband download speeds of up to 50 Mbps across our network in 2009 and up to 100 Mbps in 2010
and 2011, our current trials of broadband download speeds of up to 200 Mbps and upstream speeds of
up to 10 Mbps in limited geographic areas and our development of a next generation set-top box and
related services with Tivo. We are also increasing the availability of content available via our mobile
telephony platform. There is no assurance that any new product or service that we may develop will
perform as expected or gain market acceptance, which could have a negative impact on our results of
operations.
We are subject to tax in more than one tax jurisdiction and our structure poses various tax risks.
We are subject to taxation in multiple jurisdictions, in particular, the U.S. and the U.K. Our
effective tax rate and tax liability will be affected by a number of factors in addition to our operating
results, including the amount of taxable income in particular jurisdictions, the tax rates in those
jurisdictions, tax treaties between jurisdictions, the manner in which and extent to which we transfer
funds to and repatriate funds from our subsidiaries, accounting standards and changes in accounting
standards, and future changes in the law. As we operate in more than one tax jurisdiction and may
therefore incur losses in one jurisdiction that cannot be offset against income earned in a different
jurisdiction, we may pay income taxes in one jurisdiction for a particular period even though on an
overall basis we incur a net loss for that period.
We have a U.S. holding company structure in which substantially all of our operations are
conducted in U.K. subsidiaries that are owned by one or more members of a U.S. holding company
group. As a result, although we do not expect to have current U.K. tax liabilities on our operating
earnings for at least the medium term, our operations may give rise to U.S. tax on ‘‘Subpart F’’ income
generated by our U.K. subsidiaries, or on repatriations of cash from our U.K. operating subsidiaries to
the U.S. holding company group. While we believe that we have substantial U.S. tax basis in some of
our U.K. subsidiaries which may be available to avoid or reduce U.S. tax on repatriation of cash from
our U.K. subsidiaries, there can be no assurance that the Internal Revenue Service, or IRS, will not
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.
We also pay value added tax, or VAT, on our revenue generating activities in the U.K. From time
to time, the U.K. tax authorities review the basis upon which we assess our VAT liability with respect to
our activities. We are currently engaged in a dispute with the tax authorities over two of these reviews.
See ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations—
Consolidated Results of Operations—Consolidated Results of Operations for the Years Ended
December 31, 2009 and 2008—Contingent Losses.’’
Acquisitions and other strategic transactions present many risks, and we may not realize the financial and
strategic goals that were contemplated at the time of any transaction.
From time to time we have made acquisitions, dispositions and have entered into other strategic
transactions. In connection with such transactions, we may incur unanticipated expenses, fail to realize
anticipated benefits, have difficulty integrating the acquired businesses, disrupt relationships with
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