Virgin Media 2013 Annual Report Download - page 18

I - 16
RISK FACTORS
In addition to the information contained in this annual report, you should consider the following risk factors in evaluating our
results of operations, financial condition, business and operations or an investment in our securities.
The risk factors described in this section have been separated into two groups:
• risks relating to our industry and our business; and
• risks relating to our financial indebtedness, taxes and other financial matters.
Although we describe below and elsewhere in this annual report the risks we consider to be the most material, there may be
other unknown or unpredictable economic, business, competitive, regulatory or other factors that could have material adverse
effects on our results of operations, financial condition, business or operations in the future. In addition, past financial performance
may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in
future periods.
If any of the events described below were to occur, our businesses, prospects, financial condition, results of operations and/
or cash flows could be materially adversely affected.
Risks Relating to Our Industry and Our Business
We operate in highly competitive markets, and there is a risk that we will not be able to effectively compete with other
service providers. The markets for digital cable, broadband internet, fixed-line telephony and mobile services in which we operate
are highly competitive and, in certain markets, we compete with established companies that hold positions of market power in
these and/or closely related markets. We face competition from these companies, other established companies and potential new
entrants. Technological advances may increase competition or alter the competitive dynamics of markets in which we operate.
For example, we face increasing competition from video services provided by, or over the networks of, the incumbent
telecommunications operator and other service providers. As the availability and speed of broadband internet increases, we also
face competition from over-the-top video content providers utilizing our or our competitors’ high-speed internet connections. In
addition, continued consolidation within the media industry may permit more competitors to offer “triple-play” bundles of digital
television, fixed-line telephony and broadband services, or “quad-play” bundles including mobile telephone services.
In order to compete effectively, we may be required to reduce the prices we charge for our services or increase the value of
our services without being able to recoup associated costs. We may also need to pursue legal and regulatory actions. In addition,
some of our competitors offer services that we are unable to offer. We expect the level and intensity of competition to continue to
increase from both existing competitors and new market entrants as a result of changes in the regulatory framework of the industries
in which we operate, advances in technology, the influx of new market entrants and strategic alliances and cooperative relationships
among industry participants. Increased competition may lead to a decrease in our revenue, increased costs, increased customer
churn or a reduction in the rate of customer acquisition, which could have an adverse effect on our business, financial condition,
results of operations and cash flows.
The markets in which we compete are subject to rapid and significant changes in technology, and the effect of technological
changes on our businesses cannot be predicted. Technology in the video, telecommunications and data services industries is
changing rapidly, including advances in current technologies and the emergence of new technologies. For example, advances in
current technologies, such as VoIP (over fixed and mobile technologies), 3D TV, mobile instant messaging, wireless fidelity, or
Wi-Fi, the extension of local Wi-Fi networks across greater distances, or Wi-Max, LTE, internet protocol television, or the emergence
of new technologies, such as white space technologies (which use portions of the old analog TV spectrum), or the availability to
our competitors of 4G spectrum and technology, may result in our core offerings becoming less competitive or render our existing
products and services obsolete. We may not be able to develop new products and services, or keep up with trends in the technology
market, at the same rate as our competitors (or at all). The pace of change may be such that we fail to seize opportunities to become
market disrupters or to adequately respond to market disrupters. A lack of market acceptance of new products and services which
we may offer, or the development of significant competitive products or services by others, could have an adverse effect on our
business, financial condition, results of operations and cash flows.
Our property and equipment additions may not generate a positive return. The video, broadband internet and telephony
businesses in which we operate are capital intensive. Significant additions to our property and equipment are required to add
customers to our networks and to upgrade our broadband communications networks and customer premises equipment to enhance
our service offerings and improve the customer experience, including expenditures for equipment and labor costs. Significant