Virgin Media 2010 Annual Report Download - page 2

Dear Stockholder,
2010 was a year of great achievement for Virgin Media as we
delivered our strongest ever nancial and operational performance.
Financially, we grew revenue by nearly 6% and operating income
more than doubled to £322m. We have also made signicant
strategic progress with the launch of a number of market leading
product developments which exploit our strategic advantages. In
June, we sold our non-core content business Virgin Media TV to
BSkyB and in July embarked on an initial £700m Capital Return
Programme, comprised of share repurchases, repayment of debt,
and other related transactions, following enhancements to our
capital structure.
We have established a leading position in next generation
broadband access in the U.K. We have rolled out a 50Mb
broadband product across our cable footprint, launched a 100Mb
service, upgraded our 20Mb service to 30Mb for new customers
and have recently announced the rst ever real life trial of a 1.5Gb
service. We have seen a strong demand for our high quality
broadband services with a fth of our broadband base now
subscribing to speeds of 20Mb or higher.
As convergence gathers pace, we are focusing on differentiating
our TV product and have become the rst major operator to launch
a “next generation” entertainment service combining our own
extensive video-on-demand library with a range of popular web-
based applications such as YouTube. As it evolves, Virgin Media TV
powered by TiVo, will make the promise of convergence a reality
by providing a fully integrated entertainment experience across a
wide range of xed and mobile devices. Early demand has been
promising and we anticipate that consumer demand will grow as
we accelerate our roll-out. We have also expanded our range of on-
demand content and launched 20 new HD channels.
We continue to leverage our mobile offering by marketing to our
cable customers and introducing a number of new high-end
handsets. As a consequence, our mobile contract base increased
by 27% to 1.2 million contract customers by the end of the
year. This helped Mobile revenue return to growth. Our “quad-
play” penetration which represents the percentage of residential
customers who subscribe to a broadband, TV, home phone and
mobile service has grown to approximately 12%.
The popularity of the Virgin brand, our industry leading products and
attractive bundles has helped drive strong revenue growth in our
Consumer segment. Whilst creating a fully-integrated, customer-
focused organization, we have maintained our focus on cost control
and are using the savings to invest in future growth. We increased
our network footprint by 177,000 homes in 2010 as part of our new
build programme to reach 500,000 more homes.
Our Business segment was rebranded in early 2010 to Virgin Media
Business. It has been re-energised with a new management team
who are focussed on leveraging its core strengths - the network
which provides economic access to 85% of UK businesses and
strong relationship management skills. The focus is to continue to
grow data revenues from services to medium and large companies
and public sector organizations. This has helped our Business
segment to return to revenue growth and we have subsequently
won two of the largest commercial contracts in our history.
We continued to be proactive in the capital markets in 2010. In
January, we issued £1.5 billion equivalent of senior secured bonds
to prepay a portion of our senior bank loans and in April, we closed
a new £1.9 billion senior bank facility. The renancing activity
was well received by the nancial markets and demonstrates
the condence investors have in our strategic plan and growth
opportunities.
In July we announced an initial £700m Capital Return Programme
with £375m of this targeted for share repurchases.
Since the year-end, we made some amendments to our senior bank
facility to increase the Company’s operational exibility and provide
additional options in accessing the capital markets. Following
this all three major credit ratings agencies upgraded the ratings
on our senior secured debt to “Investment Grade”. This is the rst
time such a rating has been achieved in the UK cable industry. We
subsequently issued approximately £957m equivalent aggregate
principal amount of senior secured notes due 2021, to prepay a
portion of our senior bank facility. As a result, other than nance
leases, we have no mandatory debt repayments due before 2015.
Virgin Media continues to play an active role in shaping the UK
government’s digital policy agenda by driving investment in next
generation infrastructure and working to free key content and
programming from restrictive and outdated distribution models that
limit consumer choice and hold back the UK’s digital development.
We are committed to demonstrating corporate responsibility across
all our business activities and our key priority is to ensure that our
customers can safely and condently enjoy the benets of our
products.
Lastly, we would like to pay tribute to the management team
and people of Virgin Media whose commitment, creativity and
enterprise has helped make 2010 a year of signicant progress for
the business. Thanks to their efforts, we have successfully built
upon the foundations laid in previous years, and executed against a
growth strategy that we believe will build momentum into 2011 and
enable us to continue to deliver superior stockholder returns.
James F.Mooney Neil A.Berkett
Chairman Chief Executive Ofcer
April 28, 2011
Virgin Media Inc.
NASDAQ
London Stock Exchange: VMED
www.virginmedia.com
Virgin Media Inc.
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