Virgin Media 2012 Annual Report Download - page 5

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PART I
ITEM 1. - BUSINESS
OVERVIEW
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 believe
our advanced, deep fiber access network enables us to offer faster and higher quality broadband services than our
digital subscriber line, or 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. As of December
31, 2012, we provided services to 4.9 million residential cable customers on our network. We are also one of the
U.K.'s largest mobile virtual network operators by number of customers, providing mobile telephony service to 1.7
million contract mobile customers and 1.3 million prepay mobile customers over third party networks. In addition, we
provide a complete portfolio of voice, data and internet solutions to businesses, public sector organizations and service
providers in the U.K. through Virgin Media Business.
Our reporting segments are based on our method of internal reporting and the information used by our chief executive
officer, who is our chief operating decision maker, or CODM, to evaluate segment performance and make capital
allocation decisions. We have two reporting segments, Consumer and Business, as described below:
• Consumer (83.7% of our 2012 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 over third party mobile networks.
• Business (16.3% of our 2012 revenue): Our Business segment includes the voice and data telecommunication
and internet solutions services we provide through our cable network and third party networks to businesses,
public sector organizations and service providers.
For financial and other information on our segments, refer to note 15 to the consolidated financial statements of Virgin
Media Inc. included in Item 8 of this annual report on Form 10-K.
RECENT DEVELOPMENTS
Merger agreement with Liberty Global, Inc.
On February 5, 2013, we entered in to a Merger Agreement with Liberty Global, Inc., or Liberty Global, and certain of
its direct or indirect wholly-owned subsidiaries, or the Merger Subsidiaries. Under the terms of the Merger Agreement,
we have agreed, through a series of intermediate steps and transactions, to be acquired by Liberty Global and merge
into one of the Merger Subsidiaries. If consummated, the merger will result in both Liberty Global and Virgin Media
becoming directly owned by a new U.K. public limited company, or the Ultimate Parent, listed on NASDAQ, the common
stock of which will in turn be held by Liberty Global and Virgin Media Shareholders. We will continue to operate under
the Virgin Media brand in the U.K..
Under the Merger Agreement, we have agreed to use our reasonable best efforts to carry on our business consistent
with past practice and preserve intact our business organization and commercial goodwill from the date of the Merger
Agreement until either the merger is consummated or the Merger Agreement is terminated. In addition, during this
period we have undertaken covenants that place certain restrictions on us, and our subsidiaries', ability to, among
other things, dispose of material properties or assets, make unbudgeted capital expenditures, acquire substantial
assets, make substantial investments, increase the salary of certain of our employees or directors, pay certain bonuses
or incentive compensation, grant new equity or non-equity based compensation awards, hire new employees, redeem
common stock or other equity interests, declare or pay dividends or make other distributions in respect of our capital
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