Virgin Media 2010 Annual Report Download - page 45

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
The following discussion should be read in conjunction with our financial statements and notes thereto
included in this report.
We are a leading entertainment and communications business, being a “quad-play” provider of broadband
internet, television, mobile telephony and fixed line telephony services that offer a variety of entertainment and
communications services to residential and commercial customers throughout the U.K. We are one of the U.K.’s
largest providers of residential broadband internet, pay television and fixed line telephony services by number of
customers. We owned and operated cable networks that pass approximately 13 million homes in the U.K. and
provided service to approximately 4.8 million customers on our cable network as of December 31, 2010. We
believe our advanced, deep fiber access network enables us to offer faster and higher quality broadband services
than our DSL competitors. As a result, we provide our customers with a leading next generation broadband
service and one of the most advanced TV on-demand services available in the U.K. market. We are also one of
the U.K.’s largest mobile virtual network operators by number of customers, providing mobile telephone service
to 1.9 million prepay mobile customers and approximately 1.2 million contract mobile customers over third party
networks. As of December 31, 2010, approximately 63.0% of residential customers on our cable network were
“triple-play” customers, receiving broadband internet, television and fixed line telephone services from us, and
approximately 11.8% were “quad-play” customers.
In addition, we provide a complete portfolio of voice, data and internet solutions to leading businesses,
public sector organizations and service providers in the U.K. through Virgin Media Business (formerly
ntl:Telewest Business).
Our internal reporting structure and the related financial information used by management, including our
chief operating decision maker, reflect changes we have made after the announcement of the sale of Virgin
Media TV. Following this announcement, we have two reporting segments, Consumer and Business, as described
below:
•Consumer (84.6% of our 2010 revenue): Our Consumer segment includes the distribution of
television programming over our cable network and the provision of broadband and fixed line
telephone services to residential consumers, both on and off our cable network. Our Consumer segment
also includes our mobile telephony and mobile broadband operations, provided through Virgin Mobile.
•Business (15.4% of our 2010 revenue): Our Business segment includes the voice and data
telecommunication and internet solutions services we provide through Virgin Media Business to
businesses, public sector organizations and service providers.
For further discussion of our business, please refer to Item 1 of this document.
Financing
On January 19, 2010, we issued approximately £1.5 billion equivalent aggregate principal amount of senior
secured notes in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities
Act of 1933, as amended, or the Securities Act, and outside the United States to certain non-U.S. persons
pursuant to Regulation S under the Securities Act. The notes were issued by our wholly owned subsidiary Virgin
Media Secured Finance PLC in two tranches: $1.0 billion of 6.5% senior secured notes due 2018 and
£875 million of 7.0% senior secured notes due 2018, collectively referred to as the Senior Secured Notes. The net
proceeds from the issuance of the Senior Secured Notes were used to prepay a portion of the outstanding loans
under our senior credit facility, reducing the outstanding amounts due under our senior credit facility to
approximately £1.6 billion equivalent as of January 29, 2010.
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