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Investor & Analyst Day
           London
      November 13, 2008
Forward-looking statements

 “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:

 Various statements contained in this document constitute “forward-looking statements” as that term is defined under the Private Securities
 Litigation Reform Act of 1995. Words like “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expects,” “estimates,” “projects,” “positioned,”
 “strategy,” and similar expressions identify these forward-looking statements, which involve known and unknown risks, uncertainties and other
 factors that may cause our actual results, performance or achievements or industry results to be materially different from those contemplated,
 projected, forecasted, estimated or budgeted, whether expressed or implied, by these forward-looking statements. These factors, among others,
 include: (1) the ability to compete with a range of other communications and content providers; (2) the ability to manage customer churn; (3) the
 continued right to use the Virgin name and logo; (4) the ability to maintain and upgrade our networks in a cost-effective and timely manner; (5)
 possible losses in revenues due to systems failures; (6) the ability to provide attractive programming at a reasonable cost; (7) the ability to
 control unauthorized access to our network; (8) the effect of technological changes on our businesses; (9) the reliance on single-source
 suppliers for some equipment, software and services and third party distributors of our mobile services; (10) the ability to achieve our business
 plans; (11) the ability to fund debt service obligations through operating cash flow; (12) the ability to obtain additional financing in the future and
 react to competitive and technological changes; (13) the ability to comply with restrictive covenants in our indebtedness agreements; (14) the
 extent to which our future cash flow will be sufficient to cover our fixed charges; and (15) general economic conditions.

 These and other factors are discussed in more detail under “Risk Factors” and elsewhere in Virgin Media’s Annual Report on Form 10-K for the
 year ended December 31, 2007, as filed with the Securities and Exchange Commission, or SEC, on February 29, 2008, as amended, and Virgin
 Media’s Quarterly Reports on Form 10-Q for the quarter ended March 31, 2008, as filed with the SEC on May 8, 2008, for the quarter ended
 June 30, 2008, as filed with the SEC on August 7, 2008 and for the quarter ended September 30, 2008, as filed with the SEC on November 10,
 2008. Virgin Media assumes no obligation to update forward looking statements to reflect actual results, changes in assumptions or changes in
 factors affecting these statements.




                                                                                                                                                            1
Neil Berkett – CEO
Agenda

2:30   Neil Berkett: Strategy for Growth and Performance to Date
       –     Why Virgin Media is best positioned in a new converging digital world
3:15   Mark Schweitzer: Consumer Growth Initiatives
3:35   Q&A
3:55   Break
4:10   Howard Watson: Network Strength
       –   Technical and competitive advantages of our network now and in the future
       Building a Customer Focused Organization
       –     Proposed operational transformation program
4:35   Q&A
4:50   Charles Gallagher: Financial Structure & Flexibility
       –     Non-consumer assets
       –     Financial implications of operational transformation
       –     Investing for growth
       –     Flexible capital structure


5:10   Neil Berkett: Regulatory Progress and Summary
5:20   Q&A
5.35   Close



                                                                                       3
Management


                                        Neil Berkett
                                           CEO




                                                   Howard Watson
  Andrew Barron            Mark Schweitzer                               Charles Gallagher
                                                 Chief Transformation
Chief Customer and         Chief Commercial                                 Senior Vice
                                                 & Technology Officer
 Operations Officer              Officer                                 President Finance




                 Elisa Nardi            Bryan H. Hall           Malcolm Wall
             Chief People Officer      General Counsel          CEO – Content




                                                                                             4
5
Align operating model with strategy

   Building a customer focused organization able to respond
        effectively to fast moving changes in the market,
               technology and consumer demands

• Expect proposed new operating model will deliver significant improvements in
  – Customer focus, product management/delivery, and clearer accountabilities
    leading to streamlined decision-making
• Supported by better processes with a view to achieving annualized P&L
  savings of over £120m by 2012
• Strategic growth initiatives mean capex expected to be at top end of 13-15%
  guidance range
  – Targeting 10Mb growth, intelligently expanding our network, strengthening
    TV, DPI, behavioural advertising, leveraging mobile

                                                                                 6
The world is changing!

                                                                                                                                               UK penetration of integrated PVRs, VOD
                                                    Forecast global consumer IP traffic 2005-2011
                                                                                                                                                            & HD services
            Consumer IP traffic will quadruple in 4 years driven by video
TB/mo
                                  8 Exabytes/mo                                                   Web 3.0          Video to STB & TV
                                                                                                                                                                           PVR   VOD        HD
                                                                                                                                            100%
                                                                                                                   Switch to HD delivery
                                                                                                                   IPTV                      90%
                                                                                                                   Core to Casual MMOG
                                                                                                                                             80%
                                                                                                                   DVD Digital Retail
Global consumer IP traffic




                                                                                                                                             70%
                                                                                                                   Rise of Streaming
                                                                                                                   Multimedia enabled UGC
                                                                                                                                             60%
                                                                                                                   Broadcasters go online
                                                                                                                                             50%
                                                                                                                                             40%
                                                                                                                   MMOG
                                                                                                                                             30%
                                                                                                                   UGC sites e.g. YouTube
                                                                                                                   Social Networking
                                                                                                                                             20%
                                                                                                                   SaaS – Salesforce.com
                                  2 Exabytes/mo                        Web 2.0
                                                                                                                                             10%
                                                                                                                   Broadband Adoption
                                                   Web 1.0                                                                                    0%
                                                                                                                   eCommerce e.g. Amazon           2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
                                                                                                                   Web-based email
                             1970       1980   1990     2000   2005   2006   2007   2008   2009   2010      2011   Yahoo! & Google emerge
                                                                                                                   Netscape Browser
                             Source: Cisco, 2008                                                                                             Source: 3reasons ltd, spring 2008


                             •      Changing habits of consumption
                             •      Overall traffic per user is growing rapidly across the world
                             •      Consumer IP traffic will quadruple by 2011 driven by video – Cisco estimate (see graph)
                                    –     UK faces unique iPlayer issues
                             •      Ofcom suggest 400% increase in VOD in next three years
                             •      Virgin Media broadband customers’ average data consumption up 81% from 4.7 to 8.6Gbytes per month in 18 months

                                                                                                                                                                                                            7
Application strength is key

• Levelling the linear content playing field versus Sky
   – Possible regulatory intervention from Ofcom Market Investigation
      – Economic wholesale access to premium
      – Access to Premium HD
   – Return of Sky Basics
      – Largely funded through increase in VMtv licence payments
   – Plan to add linear HD channels
• Content increasingly delivered quot;over the topquot;
   – iPlayer online
   – Studio movies/TV increasingly delivered over internet
   – You Tube, Google Video, iTunes etc
• Consumers increasingly demanding On-Demand content

             IP and TV world converging; Virgin Media best placed to exploit
                                                                               8
Our priorities

                    Refocus growth strategy on leveraging our network advantage

 Strategic
 Strategic
                                                                  Leverage mobile as the 3rd
              Lead next generation        Lead on-demand TV
                  broadband                    revolution            screen in the home


                                       No.1 priority reducing churn

                                        Billing system migration
                                  Improve product quality and reliability
Operational
Operational
                                            Customer service
                                           Address backbook
                                        Develop analytical tools
                        to enhance understanding of the market and our customers


                                     Addressing our capital structure
 Financial
 Financial                           Capture 0perational efficiencies


 Regulatory              Address imperfections in the Regulatory Framework
 Regulatory
                                                                                               9
Cable has a clear technical advantage


         Virgin Media                                  BT
                                                     Network
           Network
                                           LLU

                          Hub             Exchange


                                                     Copper to the Cabinet
   Fiber to the Cabinet                               (POTS & ADSL2+)


                            Cabinet    Cabinet
    Coax to the Home
  (DVB-C & DOCSIS 3)
                                                      Copper to the Home
                                                       (POTS & ADSL2+)
   Copper to the Home
 (POTS & VDSL2 capable)

    2, 10, 20, 50 Mb/s                                 >20 Mb/s to <5%
                                Home   Home
    Plus DTV & VOD                                    Includes any IPTV
                                                                             10
Delivering the 3rd Screen with TV,
Broadband and Mobile
                         Entertainment                                          Communication and social networking
                                                                     •   Plan to launch ‘Free instant Windows Messenger’ for
•   Mobile portal and Virgin TV programme collaborations
                                                                         customers with compatible handsets
    –   Sarah Connor Chronicles, Most Haunted
                                                                     •   Instant Messenger expected to attract customers with
•   Mobile Portal and TV Video On Demand collaborations –                higher usage profiles
    joint music campaigns e.g., Jack Johnson artist takeover         •   Mobile access to Virgin broadband e-mail addresses
    simultaneously on both TV and Mobile platforms                       provides always-on mail, home or away
                                                                     •   New mobile portal launching Dec offering customer access
•   Cross portal and sponsorship programmes – V Festival
                                                                         to social networking on mobile – quick access to Facebook,
    content, mobile gig list application, with live TV footage via
    Channel                                                              My Space, Bebo, Yahoo!, new Yahoo! search engine




                         Web browsing                                                    Handsets and pricing
•                                                                    •   More 3G devices with larger touch screens to support
    Currently use Motricity for platform / search
•                                                                        internet / video use
    Provides simple mobile access to popular mobile web sites,
    e.g., BBC, e-Bay, Amazon                                         •   Simple, affordable pricing
•   Redesigned mobile portal to promote games, music, TV
                                                                         –   Daily unlimited usage rate of 30p from early December
    highlights,
•                                                                        –   Monthly data inclusive packages in 2009
    Cross platform advertising delivered via 4 screens




                                                                                                                                      11
We have the best broadband economics
Giving us a real competitive advantage

                                                                                                       In-franchise share of revenue indexed to share of
       Total & in-franchise share of broadband subscribers
                                                                                                                          subscribers
               In-franchise market share                National market share

  48.7%                                                                                                        161

                                                                                                                                             106
                                                                                                     101                           96
         23.2%
                       22.2%                                                                                                                           66
                                              17.9%
                                 11.2%                                                                                   45
                                                        12.0%
                11.3%                                             6.9%
                                     10.8% 8.0%
                                                    6.5%      3.4%

     Virgin        BT Retail           Sky         Talk Talk         Tiscali         Orange         Virgin   BT Retail   Sky    Talk Talk   Tiscali   Orange
     Media                                                                                          Media

                                                                                                •     Our unique broadband proposition creates a
       Average cost per subscriber relative to Virgin Media
                                                                                                      uniquely profitable combination:
                                                                                                      – High share, strong ARPU and leading cost
                       248
                                                                                                        base
                                                                                          217
                                                                       210
                                                       193
                                       179
                                                                                                •     DSL competitors face an unenviable choice
      100
                                                                                                      – Growing market share, but with low
                                                                                                        revenues on a high cost base (Sky)
     Virgin        BT Retail           Sky         Talk Talk         Tiscali         Orange           – Falling market share, with high revenues
     Media
                                                                                                        on a high cost base (BT Retail)

                                                                                                                                                               12
Source: Oliver & Ohlbaum Analysis, October 2008; Costs weighted for LLU / Non LLU split
Strategic growth objectives

      Consumer strategy                                    YTD progress


                          •   4Mb to 10Mb upgrade completed in Sept 08
                          •   Supported wireless router launched
     Lead next
      Lead next           •   Migrating 20Mb customers onto Docsis 3.0 will improve service quality and
generation broadband
generation broadband          speed for all tiers
                          •   Preparing for 50Mb launch (Q4)



                          •   First and only TV platform to launch iPlayer
 Lead on demand TV        •   Approx 12m iPlayer views per month, 1/3 of all iPlayer views
 Lead on demand TV
                          •
     revolution               96% growth in VOD views from Q3-07 to Q3-08
      revolution
                          •   Increased DVR (V+) penetration from 6% to 14% year-on-year




                          •   Record contract cross-sell to cable base in Q3-08
 Leverage position in     •   Renegotiated wholesale voice and data rates with T-mobile
 Leverage position in
                          •
       mobile                 Launched mobile broadband in October
       mobile
                          •   Mobile sales integration

                                                                                                          13
Customers are paying for quality

    On-net broadband tier mix (‘000s / % of total)          Tier mix at point of acquisition
                                                             quot;Mquot; 2Mb   quot;Lquot; 10Mb   quot;XLquot; 20Mb
             quot;Mquot; 2Mb   quot;Lquot; 10Mb   quot;XLquot; 20Mb

           3,308                      3,626
                                                             4%
            6%                        10%                                             12%           Average ARPU uplift
                                                            19%
            18%
                                      19%                                                           –   L to XL + £8
                                                                                      35%
                                                                                                    –   M to L + £3


            76%                                             77%
                                      71%

                                                                                      53%




           Q3-07                      Q3-08                 Q3-07                     Q3-08
•    Huge success in driving upsell to higher speed, higher priced broadband at point of sale
•    Upsell is central to our broadband strategy, given high market penetration but low penetration of high speed
     –    Higher ARPU
     –    Lower churn
     –    Increased differentiation versus competition
                                                                                                                       14
The on-demand world is here

                                              VOD views per user                  iPlayer/BBC views (m)
       Monthly VOD views (m)

                         45                                    27
                                                                                                   11.9

                                                                                   9.1
                                              17
        23




                                                                                  Q2-08            Q3-08
       Q3-07            Q3-08                Q3-07           Q3-08

•   VOD usage is continuing to grow – nearly half of our TV homes use this service monthly
    – Catch-up TV, music and TV on demand are the most viewed products
•   VOD reduces churn
•   Leverage growing usage through VOD advertising capability
    – 3 month trial underway in North London
    – Adverts from Kellogs, John Lewis and Royal Mail are being inserted around selected on-demand
      programs from VMtv, Channel 4 and Warner TV
•   Opportunity to further improve user interface through personalisation, search, visuals,
    recommendations etc.
                                                                                                           15
Strong operational trends since
merger
              Broadband subscribers (000s)                                   Mobile contract subscribers (000s)

                                          3,502 3,563 3,626                                                                      579
                              3,308 3,414
                        3,192
            3,059 3,146                                                                                                  492
2,902 2,980                                                                                                     436
                                                                                                          376
                                                                                                329
                                                                                       299
                                                                               246
                                                                      192
                                                               121



Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08   Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08


              Percentage of calls abandoned                                               Fault rates

                                                                         DTV          Broadband       Phone         Combined
20%                                                           14%
                                                              12%
15%                                                           10%
                                                              8%
10%
                                                              6%
                                                              4%
5%
                                                              2%
0%                                                            0%
      Q1-07   Q2-07   Q3-07   Q4-07   Q1-08   Q2-08   Q3-08          Q1-07    Q2-07     Q3-07     Q4-07     Q1-08     Q2-08    Q3-08


                                                                                                                                       16
Strong operational trends since
merger (cont’d)
                                          Triple play¹                                                                                  RGUs² (millions)

                                                                                    53.1% 54.7%                                                                                  12.2
                                                                                                                                                                          12.0
                                                                                                                                                                  11.9
                                                                          51.3%                                                                        11.7
                                                                49.5%                                                                           11.4
                                                                                                                               11.2     11.2
                                          45.2% 47.0%                                                                 11.0
                                                                                                              10.9
                                42.9%
                     40.6%
 37.1% 38.7%




  Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08                                                 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08


                                 Cable RGU / customer                                                                           Monthly on-net cable churn

                                                                                               2.38
                                                                                     2.36                            1.8%                    1.8%
                                                                                                                             1.7%                   1.7%
                                                                           2.32                                                       1.6%
                                                                  2.29                                        1.5%                                                               1.5%
                                                        2.26                                                                                               1.4%
                                           2.23                                                                                                                           1.3%
                                 2.20                                                                                                                              1.2%
                       2.17
             2.14
   2.12




  Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08                                                 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08

1 Triple play is percentage of on-net customers who   take all three cable TV, phone and broadband services
                                                                                                                                                                                        17
2 RGUs include on-net, off-net and contract mobile
Financial improvement since merger

                                            SG&A (£m)                                                                                            OCF margin³ %

                                                                                                                                                             33.9%                   33.6%
       267                  267
                                                                                                                                                                                             32.8%
                  258                                                                                                                                                        32.4%
                                       245                                                                                                     31.7%
                                                              238                                             31.0%
                                                                                              230                                                                    30.6%
                                                                                   223                                              29.9%
                                                                        217
                                                   211
                                                                                                                         28.9%




     Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08                                                    Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08


                                                                                                                                                  Net debt4 (£m)
                                  OCF¹ less Capex² (£m)


                                                                                   225                     5,905
                                                                                              218
                                                              209
                                                   204                                                                                      5,816
                                                                        199                                                      5,794
                                                                                                                      5,741                            5,736             5,732
       184                             182
                                                                                                                                                                                         5,677
                                                                                                                                                                 5,637
                                                                                                                                                                                 5,597
                  155       153




     Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08                                                 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08
1   OCF is operating income before depreciation, amortization, goodwill impairment and restructuring and other charges and is a non-GAAP financial measure
2   Capex is purchase of fixed assets and purchase of intangible assets
3   OCF margin is OCF divided by revenue
                                                                                                                                                                                                     18
4   Net debt is a non-GAAP financial measure; See appendices for reconciliations of non-GAAP financial measures to their nearest GAAP equivalents
Growth and value drivers

              Volume                               ARPU                             Tenure / Churn
•   Broadband penetration            •   Reduce backbook premium          •   Fault reduction
                                         whilst protecting ARPU and
•   Product differentiation                                               •   Product depth / quality
                                         margin
    (50Mb BB, V+, VOD, mobile)                                                (50Mbs BB, V+, VOD, mobile)
                                     •   Driving up-sell and cross-sell
•   Sales and marketing efficiency                                        •   VFM enhancements via
                                     •   Improving depth and range            cross-sell / up-sell to reduce
    –   Segmentation
                                         of products                          backbook premium
    –   Channel strategy
                                     •   Price rises                      •   Becoming more customer
    –    Maximizing customer                                                  centric and improving Net
                                     •   Manage telco usage decline
        touchpoints                                                           Promoter Score (NPS)
•   Building on Virgin brand
•   Bundling drives RGU/customer
•   Intelligently expanding our
    footprint




              Embedded key customer value metrics across the organization
                                                                                                               19
Influences on revenue and ARPU

                               Telephony usage           Potential market
        Backbook                    decline                 pressure




                         Revenue and ARPU




                   New customers
    Upsell                                  Cross-sell               Price rises

Upsell, cross-sell and new customer growth underpinned by superior broadband,
                         VOD in TV and contract mobile
                                                                                   20
Backbook unwind slowing
Mitigated by up-sell/cross-sell


                                                      Breakdown of quarterly rate of migration from Back to
           % Customers on backbook pricing
                                                                    Front Book pricing (%)

100%                                                    Price migrate to Frontbook
                                                        Reduced by success of up-sell/cross-sell offers
 90%   Q2-07 backbook unwind estimate
                                                                        Up-sell to Frontbook
 80%
                                                                        up-sell offers used to migrate customers
 70%
                                                                                   Cross-sell to Frontbook
 60%                                                                               Cross-sell offers used to migrate
                                                                                   customers; improved profitability of
                                                                                   offers in 2008
 50%

 40%

 30%

 20%

                     Q3-08 backbook unwind estimate
 10%

 0%
       Apr-07
       Jun-07
       Aug-07




       Apr-08
       Jun-08
       Aug-08




       Apr-09
       Jun-09
       Aug-09
       Feb-07




       Oct-07
       Dec-07
       Feb-08




       Oct-08
       Dec-08
       Feb-09




       Oct-09
       Dec-09




                                                          2007                 2008                       2009
                                                                                                                          21
Sources for sustained revenue growth

  Next generation broadband subs (10Mb or more)                            Contract mobile subs

                                    4.0m
                                                                                                  1.6m




                                                                   0.6m
        1.05m



        Q3-08                      Q4-12                           Q3-08                          Q4-12




                                       Average monthly VOD views

                                                              100m




                                     45m




                                    Q3-08                     Q4-12
                                                                                                          22
Intelligently expanding our cable
footprint
                      Significant low cost New Build opportunity

• New homes can be cabled for £200 or less per home
• Could add 40-50k per annum when house build market returns
• Strong take up in New Build areas with average penetration reaching 40% within 6 months
• 5 year payback and significant ongoing value generation
   – through up-sell and cross-sell
• Developing relationships with national and regional developers to pitch Virgin Media’s
  vision and negotiate favourable commercial agreements
• Opportunities of near-net infill and analogue overbuild also being investigated
• Accommodated within existing capex budget




                     New build program scales up on success basis
                                                                                            23
National household opportunity

                        Non-cable coverage split between LLU and Non-LLU
Opportunity to expand
 our cable footprint
                                  All UK - 5,500 exchanges
                                                                               •   C&W wholesale deal
                                       (25.8 m homes)
                                                                                   gives us better cost
                                                                                   structure
                                                                               •   Enhanced products and
                                                                                   improved pricing
                                                                               •   Billing systems migration
                                                   Wholesale LLU (C&W)             now completed
                Cable on-net network               11m HH of which 4.3m
                                                     homes incremental
                12m marketable homes
                                                         to on-net             •   BT and BT Wholesale
                                                                                   products are only
                                                                                   competition to Virgin
                                                                                   Media
                                                                               •   WLR and NLA cut out
                                                                                   BT relationship
                              BT Wholesale Network




  • We are the only major provider who can bundle with mobile
  • Better opportunity to capture cable “movers”
  • We currently have low off-net penetration (<3%), meaning we can be more aggressive for growth
                                                                                                               24
Reasons customers will choose Virgin

                     Can watch what I         Great value
                     want when I want           bundles
                     with 000’s of hours   customized for my
 Fastest and most
                                                                 Customer friendly
                           of VOD                needs
reliable broadband




                                                                 Makes the digital
 iPlayer on my TV!
                                                                  world simple




                                                                 Then only place I
Great value mobile                                                can get mobile,
                                              My favourite
  with my cable                                                  landline, TV and
                                            content across all
     services                                                    broadband in one
                     Simple single bill
                                           3 screens - TV, PC      great package
                                               and mobile

                                                                                     25
Consumer Growth Initiatives



Mark Schweitzer – CCO
Lead Next Generation
Broadband
  Goal: 4m next generation broadband
       subscribers by end 2012
The consumer broadband market
today
•     Continued growth in overall broadband market (though slowing)
•     Continued pricing pressure at low end; pricing and cost pressures likely to drive consolidation over time
•     Cable to retain and deepen differentiation at the top end
      – Virgin Media & Sky the only major players basing tiers on speed; others differentiate by usage caps
      – Our unlimited fibre optic proposition will remain unique for foreseeable future

                     Consumer broadband market (000s)                                                   Consumer broadband market share

                                                                                                                                  Other
                          Virgin Media                      BT
                                                                                                                                  7%
                          Carphone Warehouse                Tiscali                                              Orange                   Virgin Media
                          Sky                               Orange                                                  7%                    23%
                          Other DSL & LLU
    16,000
    14,000
                                                                                                             Sky
    12,000
                                                                                                             11%
    10,000
     8,000
                                                                                                              Tiscali
     6,000
                                                                                                                12%                         BT
     4,000
                                                                                                                                            22%
     2,000
                                                                                                                          Carphone
         0
                                                                                                                              18%
               Q1-     Q2-     Q3-      Q4-     Q1-   Q2-   Q3-   Q4-   Q1-   Q2-
               06      06      06       06      07    07    07    07    08    08
Source: Company reports and Virgin Media research                                   Source: Company reports and Virgin Media research

                                                                                                                                                         28
Opportunity and strategic initiatives in
broadband
                                     Characteristics                    Our positioning           Opportunity

                              •                                •
                                  Growth driven by price &         Lowest unit cost operator
                                  bundles
    Low tier broadband


                              •                                •
                                  Significant up-sell              10Mb cable offering superior
                                  opportunity                      to 16Mb DSL (latter reaches
    Mid tier broadband
                                                                   only 10% of UK homes)

                              •                                •
                                  Speed & quality important        Sustainable competitive
                              •   Application driven               advantage vs. ADSL
    High tier broadband



•    Our 2, 10, 20, 50Mb tier structure drives upsell and better value acquisitions
     –   increasing share of broadband profit pool
•    50Mb drives upsell and wider appreciation of our ultra-fast broadband capability
•    2009 will focus on 10Mb, using Docsis 3.0 to dramatically reinforce our QoS and speed leadership
•    Will launch a market-leading package of Value Added Services
•    Plus ground-breaking new services, enabled by increased network intelligence
•    Relaunch of virginmedia.com, enhancing quality of offering & customer experience

                                                                                                                29
Leading in broadband speed delivery

  Virgin Media continue to lead the market in broadband speed delivery, leading the
        ADSL ISP’s in a number of key benchmarking studies throughout 2008
               Virgin Media now tops the latest Point Topic research in the ratio of advertised speed to reported speeds
               above 2Mb, leading Tiscali, Sky, BT, Car Phone Warehouse and Orange (Jan – July 2008)

               Virgin Media have now comprehensively taken the crown for the Fastest broadband provider away from O2
               who have held the position all year (Sept 2008)


               With an average reliability of 50.5%, cable broadband continues to be far more reliable than ADSL as a
               whole – which scored an average of only 38.8%. Broadband Choices also reported our 2Mb service
               delivering 81.5% of headline speed, far superior to any ADSL providers 2Mb service (Aug 2008)


               Virgin Media 20Mb average throughput is 3 times faster than the top speeds offered by BT, AOL, Tiscali,
               Talk Talk and Pipex (Sept 2008)


               Top 10 Broadband 2008 Awards: Virgin Media won the title of Best Broadband Bundle – “The award for
               best broadband bundle went to Virgin Media whose range of fast, unlimited, cost-effective bundles stood
               out from the crowd” (2008)


               Recently the BACC, the body responsible for the clearance of TV adverts prior to transmission, have
               cleared our 50Mb launch advertising which claims our 50Mb product is the ‘Fastest’ Broadband available in
               the UK. This is a first time ever that the body has approved a ‘superlative’ speed claim for an ISP and
               reinforces our dominant speed positioning in the UK market (Oct 2008)
                                                                                                                           30
Launch of 50Mb: the next generation
of UK broadband
•   The best, fastest broadband product – by a mile!             A tripling of Virgin Media’s cable network capacity
    –   Unbeatable speeds
    –   Broadband with robust VAS package                     DOCSIS 1.0 network              DOCSIS 3.0 network
    –   Packaged with wireless kit                              3.7 m customers                    Next Generation
                                                                    in 2008

•   50Mb will be priced to drive premium user demand
    –   Targeted at power users & ‘premium purchasers’
    –   A compelling upsell price point
                                                                   38     38               50        50       50       50
    –   Currently in final trials, launch late Q4                 Mbit/s Mbit/s           Mbit/s    Mbit/s   Mbit/s   Mbit/s


•   DOCSIS 3.0 a huge ‘halo’ for all customers
    –   DOCSIS 3.0 the largest UK network build since the
        original launch of the cable network
    –   4 new D/s channels on top of today’s 2 D/s
    –   The new home for our 10-20-50 customers
                                                              Each D1 modem can             Each D3 modem can view
    –   Statistical gain of channel bonding deliver massive
                                                              view one D/s channel             all 4 D/s channel.
        speed capability                                                                      Theoretical capacity
                                                                                                   200 Mbit/s
    –   Dramatic reductions in cost of capacity


                                                                                                                               31
Lead on Demand Television
Revolution
Goal: 100m VOD views per month by
           end of 2012
The TV market today

• Growing share for “multi-channel” viewing driven by free-to-air DTT (Freeview)

• VOD is still a relatively new development, but iPlayer is driving growing usage

• Sky keeping churn low through Sky+ and other incremental services

• BT recently entered market with BT Vision (TV over ADSL)

                        Digital TV market growth (000s)                                                     Digital TV market share at Q2-08

                         Sky                        Freeview          Virgin Media
                                                                                                                               Free Sat
                         Free Sat                   TV over ADSL                                                                    4%
  25,000
                                                                                                         Virgin Media
                                                                                                                 15%
  20,000
                                                                                                                                           Freeview
  15,000                                                                                                                                   43%

  10,000

   5,000

                                                                                                                        Sky
         0
                                                                                                                        38%
               Q1-     Q2-     Q3-      Q4-     Q1-     Q2-    Q3-   Q4-   Q1-   Q2-
               06      06      06       06      07      07     07    07    08    08
Source: Company reports and Virgin Media research                                      Source: Company reports and Virgin Media research

                                                                                                                                                      33
Opportunity and strategic initiatives in
TV
                                   Characteristics                 Today’s positioning    Opportunity

                            •                               •
                                Low growth                      Poor content economics
      Premium TV                                                                           Limited
                            •                               •
                                Heavy investment                Sky owns c.80% market

                            •                               •
                                Decent growth                   VOD to all
      Basic pay-TV
                            •                               •
                                Choice / price driven           Setanta in XL TV tier

                            •                               •
                                Many subs dissatisfied          “Free TV + VOD” bundled
        Free DTV
                                and want more choice            with other products

•   Creating linear parity following the return of Sky basics

•   Exploit our VOD superiority

•   Grow penetration of our best-in-class DVR service

•   Build our HD offering

•   Enhance the TV interface

•   Regulatory progress on premium offers significant opportunity
    – Today less than 20% TV subs take premium at negative margin
                                                                                                        34
VOD content

                 Virgin Media offers over 4,600 hours of on-demand content
                                                                                                          Cost
             •   Huge selection of shows from the last 7 days from: BBC, 4oD, LIVING, Bravo, Virgin1      Free
Catch Up
             •   Includes 350 hours from BBC iPlayer
   TV
             •   ITV and Channel 5 are the only terrestrial channels missing on catch-up

             •   Over 2,000 comedy, drama, entertainment, factual, kids and sci-fi shows                M&L–
             •
TV Choice        80 hours HD content                                                                   £7/month
                                                                                                       XL – Free

             •   Over 2,000 music videos                                                                M&L–
             •
  Music          Karaoke, playlists and concerts                                                       20p/video
             •   Adds a live music component                                                           XL – Free

             •   Over 500 films – blockbusters, cult classics, family favourites                         Pay Per
             •
 Movies          30 HD movies                                                                             View:
                                                                                                       £1.50-£4.50

             •   Current TV, Teachers TV, Real Estate TV, Baby Channel, New You                           Free
More Free
TV (Niche)


             •   Bollywood movies: from £2 per view                                                      Various
More On
             •   Adult on demand: £5 per view; £6 HD per view
Demand
             •   Late night 24/7: 18 rated but not “Adult” rated, from £2.49

       More to follow: catch-up, live music, enhance SVOD with premium TV content and expand HD VOD                  35
Improving the interface


       DVD cover navigation   Advanced search




                                                36
Growing V+ penetration and
enhancing HD
 PVR penetration in Sky and cable digital TV homes   •   Significant DVR growth opportunity with
                (as at 30 Sept 08)
                                                         only 14% V+ penetration
         46%
                                                     •   Our V+ box superior to current Sky+ box
                                                         – 3 tuners, 160GB storage, HD capable

                                                     •   V+ customer churn is 57% lower than non
                                                         V+ TV customer churn

                                                     •   Plans to enhance HD content
                                     14%

                                                         – Will add HD broadcast channels

                                                         – Continue to grow on-demand HD
                                                           content
         Sky                      Virgin Media




                                                                                                   37
Telephony
Goal: 1.6m contract mobile customers by end
                     of 2012
Defending the cash cow

         UK residential market call volumes (billions of minutes)
                                                                                   On-net telephone net adds (000s)
                     and year-on-year decline (%)

                                                                                       39
    32                                                              22%
              29.8                                                                                29
    30                                                              20%
                                                    17.8%
                         26.8
    28                                                              18%                                                      15
                                        26.3
             15.3%                                   25.1   25.1                                               6
    26                                                              16%
                       15.6%                                15.4%
    24                                                              14%
                                       14.4%
                                                                            (1)
    22                                                              12%
             Q1-07      Q2-07          Q3-07        Q4-07   Q1-08         Q3-07       Q4-07      Q1-08       Q2-08      Q3-08
Source: OFCOM Telecommunications Report, Oct 2008


                                                                             On-net telephone customers by type (millions)
•        UK residential market call volumes declined 15% y-o-y
         in Q1-08                                                                     Metered            Unmetered

                                                                          2.10                                               2.10
•        Mitigate impact of usage declines through:                                                          2.07
                                                                                      2.04
                                                                                                  2.02
         –    Continued focus on migration to flat rate
                                                                                                  2.04
         –    Bundling fixed line with broadband and TV
                                                                                                             1.99
                                                                                      1.99                              1.98
         –    Mobile cross-sell and bundling initiatives e.g.
              bundle landline / mobile minutes
                                                                          1.89
         –    Potential for line rental price increase
         –    Continued innovation e.g. Talk Anywhere                     Q3-07      Q4-07       Q1-08       Q2-08      Q3-08
                                                                                                                                    39
Key strategic initiatives in mobile

            Contract mobile customers (000s)                   Lower mobile churn by VMED cable customers
                                                579

                                     436                    VMED
                                                                                                                 82.4%
                          329                             customers
               246
     121

                                                          Non-VMED
                                                                                                  56.4%
                                                          customers
    Q3-06     Q1-07      Q3-07       Q1-08     Q3-08

                                                                          Mobile subscribers retained at 12 months

•   Fully integrate Cable / Mobile

•   Drive higher contract penetration more aggressively into Cable base

•   Exploit new T-Mobile wholesale rates to grow mobile data usage to handset

•   Mobile broadband – opportunity to bundle with fixed broadband

•   Mobile TV / Video is a growth opportunity, leveraging our existing TV platform

•   Cross-sell and bundle with offnet more aggressively
                                                                                                                         40
Becoming More Knowledge
Driven
Developed customer insight tools which
help us understand the market…

                    Household
                                                                    Usage
   Gives us a comprehensive picture of a total
  household’s use of communication services,
                                                          Gives us a clear and detailed
 allowing us to segment the entire UK market to
                                                        picture of how our customers use
    identify “must succeed with” segments and
                                                       our services and provides valuable
 help us understand how to win in these spaces
                                                           insights into household and
                                                                subscriber lifestyle


              Value

   Ensures we understand the
differences between our highest                               Subscriber
and lowest value customers and
                                                Gives us a comprehensive picture of the
are able to utilise this information
                                              consumer and segment the UK market to help
           operationally
                                                  us understand the mapping between
                                                    household and individual needs
                                                                                            42
Our customer segment strategy
                                                                                          Aspiring               Thriving           Realigning
                                                                               Young    Young     New     Growing Teenage Nearly   Older    Older    Empty
                 1                                                                                                                                             Greys
                            Utilise our quad play product                      Single   Couple   Family   Family Family   There    Single   Couple   Nesters
   Actively             superiority, brand image and service
                                                                                                                 1
                                                                  Doing Well
                         reliability to dominate the Thriving                                    2                                      2
  orient our                         Family Market                Doing OK
 services to
 the highest                                                      Making Do
                 2      Exploit the natural “halo effect” from
                                                                                                                     2
value part of                                                       Single
                         our new focus to drive significant        Parents
 the market             growth in the shoulder segments –
                          Surviving, Aspiring, Realigning
                                                                                                                         Surviving              Retiring
                                                                             Emerging                Nesting

                                                        Rather than leading on speed for the launch of 50Mb Broadband, position as the
 Utilise a variety of
                                                        only broadband services that will support fast simultaneous usage for multiple
levers to implement                                                                    family members
     the strategy
                                                          Provide clear reassurance on product reliability through guarantees, meeting
                                    Ensure
                                                             customer care concerns through clear communication of service levels
                                      we
    Marketing
                                   address
                                                         Communicate parental control levels available and clear instructions on how to
                                  the needs                                                 apply
   Proposition                      of our
                                  “bulls eye”           Provide integrated mobile and landline propositions which give clear benefits for
                                                        having family members on Virgin Mobile network (free calls to landline, reduced
                                   segment
   Commercial                                                                 calls between family members etc)

                                                      Utilise understanding of different TV preferences across family to produce family TV
                                                      channel pack (Sport for Dad, Celebrity / Soaps for Mum / Cult USA viewing and films
    Operations
                                                                             for teens / CBeebies etc for children)
                                                                                                                                                                       43
Q&A
Network Strength


Howard Watson – CTTO
Network Strength

• Video usage is now driving network bandwidth . . . all
  usage trends are up
• Hybrid Fibre Coax remains extremely well placed to serve
  this demand
• UK market has unique characteristics which favour cable




                                                             46
Our network advantage 2008


        Virgin Media                              BT
                                                Network
          Network                         LLU
                         Hub            Exchange

                                                   Copper to the Cabinet
 Fibre to the Cabinet                                (POTS & ADSL2+)


                           Cabinet    Cabinet
  Coax to the Home
 (DVB-C & DOCSIS 3)

                                                   Copper to the Home
 Copper to the Home
                                                     (POTS & ADSL2+)
(POTS & VDSL2 capable)

  2, 10, 20, 50 Mb/s                                 >20 Mb/s to <5%
                               Home    Home
  Plus DTV & VOD                                    Includes any IPTV
                                                                           47
Our network advantage 2012


        Virgin Media                               BT
                                                 Network
          Network                        LLU ?
                         Hub            Exchange


 Fibre to the Cabinet                              Fibre to the Cabinet

                           Cabinet    Cabinet
  Coax to the Home
 (DVB-C & DOCSIS 3)
                                                   Copper to the Home
 Copper to the Home
                                                     (POTS & VDSL2)
(POTS & VDSL2 capable)

Capable of 200 Mb/s                                Max Speed 40Mb/s
                               Home    Home
 Plus DTV & VOD                                    Includes any IPTV
                                                                          48
Our spectrum advantage

   BT VDSL2                 Copper spectrum used for VDSL2 is 12 or 30MHz
Copper Spectrum

 Virgin Media
                       Coax spectrum is a min of 650MHz with c80% at >750MHz
Coax Spectrum




    Broadband will          Analog TV               Digital TV              VOD
   use up to 48MHz        approx 240MHz          approx 216MHz         approx 72MHz
    after DOCSIS 3        will be freed up       used By DVB-C         used by DVB-C
   rollout completed       with switch off         for linear TV       for on-demand




          Spectrum freed up from ATV provides plenty of scope for further
              growth in Broadband, Linear DTV (SD & HD) and VOD
                                                                                       49
A superior quality of experience


       You don’t lose                        If you want to
     Broadband speed                       watch iPlayer on
      when you watch                       your TV in full TV
      on-demand TV                         quality – you can




                      +                      +
       Broadband              Digital TV               VOD

The independent spectrum allocations for Broadband, DTV and VOD mean
  that each one can be engineered to deliver the right simultaneous QoE   50
Expansion into mobile broadband


                    Virgin Media
             Communication & Entertainment



                                  Virgin Mobile
       Virgin Media
                                      MVNO
         Network


        DTV & VOD                              Mobile
                               Mobile
                Broadband                    Voice & TXT
 Telephony                   Broadband

            The UK’s leading Communication
                & Entertainment network                    51
Looking into the future …

                                                            Existing
        Existing
                                                    Linear & On-Demand TV
 Ultra-fast Broadband
                                                            (DVB-C)
     (DOCSIS 3.0)



    Home
                                  Home
                                 Gateway

                          IP Home Network
                  PC or            ipSTB           Portable
                 Laptop              TV             Device

            Bring both halves of our powerful access network together
          into an integrated next generation entertainment experience
                                                                            52
…next generation entertainment

 Broadcasters & Advertisers
   will be able to create an
  entertainment experience
 which can move effortlessly
between all of their TV assets
  and all of their web assets




                                      Its not about putting the
                                   Internet on your TV nor about
                                     putting the TV on your PC.
                                 Its about enabling broadcasters
                                 to create the next generation of
                                 entertainment for whenever and
                                   wherever you want to enjoy it53
Building a Customer Focused
Organization
2008 – 2012 operational
transformation review
                     •       To create a new operating model for our organisation which delivers significant improvements in:
                             – Customer focus
                             – Product delivery and management
    Our vision
    Our vision
                             – Clearer accountabilities leading to streamlined decision making
                     •       Supported by better processes, making considerable savings


                                               Proposed key initiatives

                         •   Refocus organization on product delivery
                         •   Invest in holistic approach to sales channels supported by “customer insight”
                         •   Converge mobile and cable marketing
 Customer growth
 Customer growth
                         •   Drive efficiencies across operations
                         •   Further cable and mobile operational integration

                         •   Call volume reduction through removal of root cause quality issues
                         •   Focus on first call resolution
 Customer service
 Customer service        •   Improve resource management – work scheduling and despatch
                         •   Supply chain transformation

                         •   Transformation of IT support
                         •   Rationalization of property portfolio
 Support functions
 Support functions
                         •   Review support functions: Transaction services


                                        Total annual P&L savings by 2012                                       >£120m
      Goals
      Goals
                              Net reduction in roles in the organization by 2012                                 2,200
                                                                                                                                55
2008 – 2012 operational transformation:
Proposed new operating model

                                                                                        Customer

                                                                                                                                                                            Provide Platform
                                                                                                                                                                              Operations
                                          Customer Contract Management




                                                                                                                                    Research and Consumer Insight
                                                                                            Sales & Marketing




                                                                                                                                                                            TV / On Demand


                                                                                                                                                                                                Broadband


                                                                                                                                                                                                            Telephony
                                                                                            Develop Proposition
                                                                                  Integrated Product
                                                                Work
                                                                                       Strategy
                                                 Install &




                                                                                                                development
                                                             Management
        Shared Services




                                                  Repair




                                                                                                                  Product
                                                                 and
                          Operations Delivery




                                                                                  Product Proposition
                                                Connection
                                                              Scheduling              & Pricing

                                                                                  Product Planning &
                                                                                    Implementation


                                                                                  Operations Delivery

                                                                                 Network Planning
                                                                                                                                                                               Network
                                                                                                                                                                             Monitoring and
                                                                                                                                                                                 Fault
                                                                         Provision & Maintain Core Network
                                                                                                                                                                             Management




                                                                                                        Operations Support

       Programme                                                                                People & Org                                                                                 Procurement &
                                                   IT           CTO            Facilities                                 Finance                                   Legal
          office                                                                                Development                                                                                   Supplier Mgt


                                                                                                                                                                                                                        56
Strategic objectives for growth

                                                                             •    Guides our people and
                                                                                  customer experiences
                                                        Brand is front
                                                                             •    Drives our cultural
                                                         and centre
                                                                                  development


                                                                                                                   Build growth
        Manage our
                                                                                                                   plans around
       business more
                                                                                                                      segment
         effectively
                                                                                                                     strategies

                                                                                                         •   Insight and knowledge led
•   Integrated planning and performance
                                                Excite and delight people with
    management                                                                                           •   Based around customers needs
                                                 our easy to use, irresistible                               and wants from acquisition through
                                                                                                             the full customer journey
                                                 customer propositions that
                                                   drive profitable growth


                                                                                                                 End to end P&L
            Execute
                                                                                                                  and Product
           brilliantly
                                                                                                                  Management

                                                                                                         •   Manage product P&Ls
•   Multi-skilled growth contact centres
                                                                                                         •   Drive strategy, innovation, delivery
•   Integrated customer journey and interface
                                                       Strengthen our                                        and customer experience
    with Care
                                                           delivery                                      •   Clear accountability
•   Multi-channel distribution
                                                          capability
•   Invest in Online experience                                          •       Faster deployment of
                                                                                 products and services                                              57
2008 – 2012 operational transformation
review: Customer growth

                          •   Focus on high value channels: invest in on-line channel
                          •   Maximize demand through multi-distribution approach
 Optimize sales channel
 Optimize sales channel   •   Segment intelligence based approach to reduce subscriber acquisition costs
                          •   Maximize complimentary channel approaches (e.g. Telesales scheduling lead closing visit)



                          •   Operate multi-skilled, in-house call centres
                          •   Review possible off shoring high volume, low complexity enquiries
      Call centres
      Call centres
                          •   Maximize revenue at each customer touchpoint



                          •   Leverage brand: Deliver Virgin customer experience at all customer touchpoints
                          •   Focused, integrated approach across all products: Media and Mobile
       Marketing
       Marketing
       efficiency         •   Optimize marketing spend change to reflect awareness and consideration gains and focus
       efficiency
                              on high value segments


                          •   Combined reward structures
                          •   More integrated channel approach to selling e.g. field selling mobile with targets embedded
   Cable and mobile
   Cable and mobile           in commission plans
     integration
      integration
                          •   Increased bundling and maximize upsell through segmentation and contact strategy work
                          •   Use Cable Broadband leadership to deliver complementary Mobile Broadband growth




                                                                                                                            58
Strategic objectives for Customer
Service
                                                           Customer touch points:
                                        Take control of    •   Call centres
                                         our customer      •   Install and service
                                          experience       •   Network


        Reduce costs
                                                                                          Improve product
       through better
                                                                                             reliability
       processes and
          systems

•   Supply Chain                                                                      •   Reduce defect rate
                                    Enable growth through
•   Customer self service                                                             •   Equip staff
                                   providing a service to our
•   Consolidation
                                  customers that is always on
•   Automate
                                  and being unbelievably easy
•   Service levels
                                      to do business with

                                                                                            Understand
      Manage change
                                                                                           segment and
        brilliantly
                                                                                          customer value


                                                                                      •   Differentiate service:
•   Multi-skilling
                                                                                      •   Higher value customers
•   Product introduction
                                        Get things right                              •   Complexity of customer contact
•   Invest in Online experience
                                                           •   Customer education
                                           first time
                                                           •   Review our suppliers
                                                           •   Staff multi-skilling                                        59
Customer Service
Proposed operating model vision

                                                                                                              Self Care
                                                        Serve:
              in house      in house
outsource                                                                                         Offshore         onshore         In
                multi-                                                               1st
                             service                                                                                             house
                                                Will work closely with
  install                                                                           line
               skilled
                                                                                                       INDICATIVE MIX                    Tiered Customer
                                                Product to agree and
                                                                                                                                         Care delivering
           in house                            ensure delivery of target                   2nd
                                                                                                                               In        95% first contact
                                                                                                   Offshore   onshore
                                                                                           line
          multi-skilled                                                                                                      house
                                              NPS set by Proposition team                                                                resolution
       Network / Business
                                                                                         5% case
            in house                                                                    management
                                               Work closely with Sales
        Data specialists
                                                 and Marketing to
 Multi-skilled engineering teams
                                                cross sell and up sell
  Delivering end to end service
to customers in geographic units

                                                                                                             Activate &
                                                    Single Service and fault management                       Operate
    Field Resource & Supply Chain                     function responsible for network
                                                                                                              Network
             Management                             management and outage screening to
                                                      improve network responsiveness
   Forecast                        Despatch
                     Schedule                                                                                Planning and Provisioning
   Demand

                                                           Single end to end planning
                                                                and provisioning                                                           Build
                                                                                                     Plan               Design
                                                                  responsibility
  Resource planning and despatch services
     across regional field organisation




    Working closely with Technology to drive down obsolescence and continuously improve performance                                                   60
2008 – 2012 operational transformation
review: Customer Service

                         •   Call reduction through simplification of billing and pricing
                         •   Improve 1st call resolution through investment in product reliability
 Reduce call volume
 Reduce call volume      •   Provide and promote self service on-line
                         •   Redefine install process and reduce defects


                         •   Integrate activities through multi-skilling first line agents
 Improve inbound call
  Improve inbound call   •   Differentiate high value, high complexity calls
      experience
      experience         •   Review outsourcing and off-shoring of lower value, lower complexity calls


                         •   Schedule and support teams to provide improved customer appointment times
                         •   Fewer hand-offs as schedule and support team own customer contact once job is
  Improve resource
   Improve resource          scheduled to field
     management
     management          •   Field delivery – take control of customer activity
  and field delivery
   and field delivery
                         •   “Perfect visit” initiative to improve efficiencies and customer experience
                         •   “Premium install” initiatives to differentiate service to higher value customers

                         •   Consider consolidation of warehouses
                         •   Improved control of CPE and recovery of assets
     Supply chain
      Supply chain
    transformation       •   Review efficiency of suppliers and purchasing
     transformation



                         •   Improve planning process to update inventory systems with network asset data
 Planning & network
 Planning & network
                         •   Integrate outage surveillance to improve network responsiveness to customer impacting
    management
     management
                             faults                                                                                  61
2008 – 2012 operational transformation
review: Support functions

                          •   Reduced volume through improved prioritization and efficiency
                          •   Consider transformational outsourcing of tech services
 Transform IT support
  Transform IT support
                          •   Review duplication of functions e.g. local tech teams, program mgt
 and technical delivery
 and technical delivery
                          •   Improved permanent: contract staff ratio


                          •   Consider consolidation of multiple sites
                          •   Property strategy developed alongside growth and customer operations plans to maximise
 Rationalize property         benefit
 Rationalize property
      portfolio
       portfolio          •   Consider home-working solutions with meeting facilities at local sites where possible
                          •   Increase quality and utilization of biggest regional offices


                          •   Review of support functions: Finance, HR, Corporate Function
                          •   Introduce new integrated shared services function
    Review support
    Review support
                          •   Consider outsourcing certain transaction services
      functions
       functions
                          •   Create a single employee service group




                                                                                                                       62
Q&A
Non-Consumer Assets,
Financial Structure and
Flexibility

Charles Gallagher – SVP Finance
Overview


• Valuable non-Consumer assets


• Seeking significant cost savings from Operational Transformation

• Sensibly investing for growth


• Successfully secured senior credit facility amendment


• Strong cash flow generation




                                                                     65
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virgin media.london_nov132008

  • 1. Investor & Analyst Day London November 13, 2008
  • 2. Forward-looking statements “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Various statements contained in this document constitute “forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995. Words like “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expects,” “estimates,” “projects,” “positioned,” “strategy,” and similar expressions identify these forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements or industry results to be materially different from those contemplated, projected, forecasted, estimated or budgeted, whether expressed or implied, by these forward-looking statements. These factors, among others, include: (1) the ability to compete with a range of other communications and content providers; (2) the ability to manage customer churn; (3) the continued right to use the Virgin name and logo; (4) the ability to maintain and upgrade our networks in a cost-effective and timely manner; (5) possible losses in revenues due to systems failures; (6) the ability to provide attractive programming at a reasonable cost; (7) the ability to control unauthorized access to our network; (8) the effect of technological changes on our businesses; (9) the reliance on single-source suppliers for some equipment, software and services and third party distributors of our mobile services; (10) the ability to achieve our business plans; (11) the ability to fund debt service obligations through operating cash flow; (12) the ability to obtain additional financing in the future and react to competitive and technological changes; (13) the ability to comply with restrictive covenants in our indebtedness agreements; (14) the extent to which our future cash flow will be sufficient to cover our fixed charges; and (15) general economic conditions. These and other factors are discussed in more detail under “Risk Factors” and elsewhere in Virgin Media’s Annual Report on Form 10-K for the year ended December 31, 2007, as filed with the Securities and Exchange Commission, or SEC, on February 29, 2008, as amended, and Virgin Media’s Quarterly Reports on Form 10-Q for the quarter ended March 31, 2008, as filed with the SEC on May 8, 2008, for the quarter ended June 30, 2008, as filed with the SEC on August 7, 2008 and for the quarter ended September 30, 2008, as filed with the SEC on November 10, 2008. Virgin Media assumes no obligation to update forward looking statements to reflect actual results, changes in assumptions or changes in factors affecting these statements. 1
  • 4. Agenda 2:30 Neil Berkett: Strategy for Growth and Performance to Date – Why Virgin Media is best positioned in a new converging digital world 3:15 Mark Schweitzer: Consumer Growth Initiatives 3:35 Q&A 3:55 Break 4:10 Howard Watson: Network Strength – Technical and competitive advantages of our network now and in the future Building a Customer Focused Organization – Proposed operational transformation program 4:35 Q&A 4:50 Charles Gallagher: Financial Structure & Flexibility – Non-consumer assets – Financial implications of operational transformation – Investing for growth – Flexible capital structure 5:10 Neil Berkett: Regulatory Progress and Summary 5:20 Q&A 5.35 Close 3
  • 5. Management Neil Berkett CEO Howard Watson Andrew Barron Mark Schweitzer Charles Gallagher Chief Transformation Chief Customer and Chief Commercial Senior Vice & Technology Officer Operations Officer Officer President Finance Elisa Nardi Bryan H. Hall Malcolm Wall Chief People Officer General Counsel CEO – Content 4
  • 6. 5
  • 7. Align operating model with strategy Building a customer focused organization able to respond effectively to fast moving changes in the market, technology and consumer demands • Expect proposed new operating model will deliver significant improvements in – Customer focus, product management/delivery, and clearer accountabilities leading to streamlined decision-making • Supported by better processes with a view to achieving annualized P&L savings of over £120m by 2012 • Strategic growth initiatives mean capex expected to be at top end of 13-15% guidance range – Targeting 10Mb growth, intelligently expanding our network, strengthening TV, DPI, behavioural advertising, leveraging mobile 6
  • 8. The world is changing! UK penetration of integrated PVRs, VOD Forecast global consumer IP traffic 2005-2011 & HD services Consumer IP traffic will quadruple in 4 years driven by video TB/mo 8 Exabytes/mo Web 3.0 Video to STB & TV PVR VOD HD 100% Switch to HD delivery IPTV 90% Core to Casual MMOG 80% DVD Digital Retail Global consumer IP traffic 70% Rise of Streaming Multimedia enabled UGC 60% Broadcasters go online 50% 40% MMOG 30% UGC sites e.g. YouTube Social Networking 20% SaaS – Salesforce.com 2 Exabytes/mo Web 2.0 10% Broadband Adoption Web 1.0 0% eCommerce e.g. Amazon 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Web-based email 1970 1980 1990 2000 2005 2006 2007 2008 2009 2010 2011 Yahoo! & Google emerge Netscape Browser Source: Cisco, 2008 Source: 3reasons ltd, spring 2008 • Changing habits of consumption • Overall traffic per user is growing rapidly across the world • Consumer IP traffic will quadruple by 2011 driven by video – Cisco estimate (see graph) – UK faces unique iPlayer issues • Ofcom suggest 400% increase in VOD in next three years • Virgin Media broadband customers’ average data consumption up 81% from 4.7 to 8.6Gbytes per month in 18 months 7
  • 9. Application strength is key • Levelling the linear content playing field versus Sky – Possible regulatory intervention from Ofcom Market Investigation – Economic wholesale access to premium – Access to Premium HD – Return of Sky Basics – Largely funded through increase in VMtv licence payments – Plan to add linear HD channels • Content increasingly delivered quot;over the topquot; – iPlayer online – Studio movies/TV increasingly delivered over internet – You Tube, Google Video, iTunes etc • Consumers increasingly demanding On-Demand content IP and TV world converging; Virgin Media best placed to exploit 8
  • 10. Our priorities Refocus growth strategy on leveraging our network advantage Strategic Strategic Leverage mobile as the 3rd Lead next generation Lead on-demand TV broadband revolution screen in the home No.1 priority reducing churn Billing system migration Improve product quality and reliability Operational Operational Customer service Address backbook Develop analytical tools to enhance understanding of the market and our customers Addressing our capital structure Financial Financial Capture 0perational efficiencies Regulatory Address imperfections in the Regulatory Framework Regulatory 9
  • 11. Cable has a clear technical advantage Virgin Media BT Network Network LLU Hub Exchange Copper to the Cabinet Fiber to the Cabinet (POTS & ADSL2+) Cabinet Cabinet Coax to the Home (DVB-C & DOCSIS 3) Copper to the Home (POTS & ADSL2+) Copper to the Home (POTS & VDSL2 capable) 2, 10, 20, 50 Mb/s >20 Mb/s to <5% Home Home Plus DTV & VOD Includes any IPTV 10
  • 12. Delivering the 3rd Screen with TV, Broadband and Mobile Entertainment Communication and social networking • Plan to launch ‘Free instant Windows Messenger’ for • Mobile portal and Virgin TV programme collaborations customers with compatible handsets – Sarah Connor Chronicles, Most Haunted • Instant Messenger expected to attract customers with • Mobile Portal and TV Video On Demand collaborations – higher usage profiles joint music campaigns e.g., Jack Johnson artist takeover • Mobile access to Virgin broadband e-mail addresses simultaneously on both TV and Mobile platforms provides always-on mail, home or away • New mobile portal launching Dec offering customer access • Cross portal and sponsorship programmes – V Festival to social networking on mobile – quick access to Facebook, content, mobile gig list application, with live TV footage via Channel My Space, Bebo, Yahoo!, new Yahoo! search engine Web browsing Handsets and pricing • • More 3G devices with larger touch screens to support Currently use Motricity for platform / search • internet / video use Provides simple mobile access to popular mobile web sites, e.g., BBC, e-Bay, Amazon • Simple, affordable pricing • Redesigned mobile portal to promote games, music, TV – Daily unlimited usage rate of 30p from early December highlights, • – Monthly data inclusive packages in 2009 Cross platform advertising delivered via 4 screens 11
  • 13. We have the best broadband economics Giving us a real competitive advantage In-franchise share of revenue indexed to share of Total & in-franchise share of broadband subscribers subscribers In-franchise market share National market share 48.7% 161 106 101 96 23.2% 22.2% 66 17.9% 11.2% 45 12.0% 11.3% 6.9% 10.8% 8.0% 6.5% 3.4% Virgin BT Retail Sky Talk Talk Tiscali Orange Virgin BT Retail Sky Talk Talk Tiscali Orange Media Media • Our unique broadband proposition creates a Average cost per subscriber relative to Virgin Media uniquely profitable combination: – High share, strong ARPU and leading cost 248 base 217 210 193 179 • DSL competitors face an unenviable choice 100 – Growing market share, but with low revenues on a high cost base (Sky) Virgin BT Retail Sky Talk Talk Tiscali Orange – Falling market share, with high revenues Media on a high cost base (BT Retail) 12 Source: Oliver & Ohlbaum Analysis, October 2008; Costs weighted for LLU / Non LLU split
  • 14. Strategic growth objectives Consumer strategy YTD progress • 4Mb to 10Mb upgrade completed in Sept 08 • Supported wireless router launched Lead next Lead next • Migrating 20Mb customers onto Docsis 3.0 will improve service quality and generation broadband generation broadband speed for all tiers • Preparing for 50Mb launch (Q4) • First and only TV platform to launch iPlayer Lead on demand TV • Approx 12m iPlayer views per month, 1/3 of all iPlayer views Lead on demand TV • revolution 96% growth in VOD views from Q3-07 to Q3-08 revolution • Increased DVR (V+) penetration from 6% to 14% year-on-year • Record contract cross-sell to cable base in Q3-08 Leverage position in • Renegotiated wholesale voice and data rates with T-mobile Leverage position in • mobile Launched mobile broadband in October mobile • Mobile sales integration 13
  • 15. Customers are paying for quality On-net broadband tier mix (‘000s / % of total) Tier mix at point of acquisition quot;Mquot; 2Mb quot;Lquot; 10Mb quot;XLquot; 20Mb quot;Mquot; 2Mb quot;Lquot; 10Mb quot;XLquot; 20Mb 3,308 3,626 4% 6% 10% 12% Average ARPU uplift 19% 18% 19% – L to XL + £8 35% – M to L + £3 76% 77% 71% 53% Q3-07 Q3-08 Q3-07 Q3-08 • Huge success in driving upsell to higher speed, higher priced broadband at point of sale • Upsell is central to our broadband strategy, given high market penetration but low penetration of high speed – Higher ARPU – Lower churn – Increased differentiation versus competition 14
  • 16. The on-demand world is here VOD views per user iPlayer/BBC views (m) Monthly VOD views (m) 45 27 11.9 9.1 17 23 Q2-08 Q3-08 Q3-07 Q3-08 Q3-07 Q3-08 • VOD usage is continuing to grow – nearly half of our TV homes use this service monthly – Catch-up TV, music and TV on demand are the most viewed products • VOD reduces churn • Leverage growing usage through VOD advertising capability – 3 month trial underway in North London – Adverts from Kellogs, John Lewis and Royal Mail are being inserted around selected on-demand programs from VMtv, Channel 4 and Warner TV • Opportunity to further improve user interface through personalisation, search, visuals, recommendations etc. 15
  • 17. Strong operational trends since merger Broadband subscribers (000s) Mobile contract subscribers (000s) 3,502 3,563 3,626 579 3,308 3,414 3,192 3,059 3,146 492 2,902 2,980 436 376 329 299 246 192 121 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Percentage of calls abandoned Fault rates DTV Broadband Phone Combined 20% 14% 12% 15% 10% 8% 10% 6% 4% 5% 2% 0% 0% Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 16
  • 18. Strong operational trends since merger (cont’d) Triple play¹ RGUs² (millions) 53.1% 54.7% 12.2 12.0 11.9 51.3% 11.7 49.5% 11.4 11.2 11.2 45.2% 47.0% 11.0 10.9 42.9% 40.6% 37.1% 38.7% Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Cable RGU / customer Monthly on-net cable churn 2.38 2.36 1.8% 1.8% 1.7% 1.7% 2.32 1.6% 2.29 1.5% 1.5% 2.26 1.4% 2.23 1.3% 2.20 1.2% 2.17 2.14 2.12 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 1 Triple play is percentage of on-net customers who take all three cable TV, phone and broadband services 17 2 RGUs include on-net, off-net and contract mobile
  • 19. Financial improvement since merger SG&A (£m) OCF margin³ % 33.9% 33.6% 267 267 32.8% 258 32.4% 245 31.7% 238 31.0% 230 30.6% 223 29.9% 217 211 28.9% Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Net debt4 (£m) OCF¹ less Capex² (£m) 225 5,905 218 209 204 5,816 199 5,794 5,741 5,736 5,732 184 182 5,677 5,637 5,597 155 153 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 1 OCF is operating income before depreciation, amortization, goodwill impairment and restructuring and other charges and is a non-GAAP financial measure 2 Capex is purchase of fixed assets and purchase of intangible assets 3 OCF margin is OCF divided by revenue 18 4 Net debt is a non-GAAP financial measure; See appendices for reconciliations of non-GAAP financial measures to their nearest GAAP equivalents
  • 20. Growth and value drivers Volume ARPU Tenure / Churn • Broadband penetration • Reduce backbook premium • Fault reduction whilst protecting ARPU and • Product differentiation • Product depth / quality margin (50Mb BB, V+, VOD, mobile) (50Mbs BB, V+, VOD, mobile) • Driving up-sell and cross-sell • Sales and marketing efficiency • VFM enhancements via • Improving depth and range cross-sell / up-sell to reduce – Segmentation of products backbook premium – Channel strategy • Price rises • Becoming more customer – Maximizing customer centric and improving Net • Manage telco usage decline touchpoints Promoter Score (NPS) • Building on Virgin brand • Bundling drives RGU/customer • Intelligently expanding our footprint Embedded key customer value metrics across the organization 19
  • 21. Influences on revenue and ARPU Telephony usage Potential market Backbook decline pressure Revenue and ARPU New customers Upsell Cross-sell Price rises Upsell, cross-sell and new customer growth underpinned by superior broadband, VOD in TV and contract mobile 20
  • 22. Backbook unwind slowing Mitigated by up-sell/cross-sell Breakdown of quarterly rate of migration from Back to % Customers on backbook pricing Front Book pricing (%) 100% Price migrate to Frontbook Reduced by success of up-sell/cross-sell offers 90% Q2-07 backbook unwind estimate Up-sell to Frontbook 80% up-sell offers used to migrate customers 70% Cross-sell to Frontbook 60% Cross-sell offers used to migrate customers; improved profitability of offers in 2008 50% 40% 30% 20% Q3-08 backbook unwind estimate 10% 0% Apr-07 Jun-07 Aug-07 Apr-08 Jun-08 Aug-08 Apr-09 Jun-09 Aug-09 Feb-07 Oct-07 Dec-07 Feb-08 Oct-08 Dec-08 Feb-09 Oct-09 Dec-09 2007 2008 2009 21
  • 23. Sources for sustained revenue growth Next generation broadband subs (10Mb or more) Contract mobile subs 4.0m 1.6m 0.6m 1.05m Q3-08 Q4-12 Q3-08 Q4-12 Average monthly VOD views 100m 45m Q3-08 Q4-12 22
  • 24. Intelligently expanding our cable footprint Significant low cost New Build opportunity • New homes can be cabled for £200 or less per home • Could add 40-50k per annum when house build market returns • Strong take up in New Build areas with average penetration reaching 40% within 6 months • 5 year payback and significant ongoing value generation – through up-sell and cross-sell • Developing relationships with national and regional developers to pitch Virgin Media’s vision and negotiate favourable commercial agreements • Opportunities of near-net infill and analogue overbuild also being investigated • Accommodated within existing capex budget New build program scales up on success basis 23
  • 25. National household opportunity Non-cable coverage split between LLU and Non-LLU Opportunity to expand our cable footprint All UK - 5,500 exchanges • C&W wholesale deal (25.8 m homes) gives us better cost structure • Enhanced products and improved pricing • Billing systems migration Wholesale LLU (C&W) now completed Cable on-net network 11m HH of which 4.3m homes incremental 12m marketable homes to on-net • BT and BT Wholesale products are only competition to Virgin Media • WLR and NLA cut out BT relationship BT Wholesale Network • We are the only major provider who can bundle with mobile • Better opportunity to capture cable “movers” • We currently have low off-net penetration (<3%), meaning we can be more aggressive for growth 24
  • 26. Reasons customers will choose Virgin Can watch what I Great value want when I want bundles with 000’s of hours customized for my Fastest and most Customer friendly of VOD needs reliable broadband Makes the digital iPlayer on my TV! world simple Then only place I Great value mobile can get mobile, My favourite with my cable landline, TV and content across all services broadband in one Simple single bill 3 screens - TV, PC great package and mobile 25
  • 27. Consumer Growth Initiatives Mark Schweitzer – CCO
  • 28. Lead Next Generation Broadband Goal: 4m next generation broadband subscribers by end 2012
  • 29. The consumer broadband market today • Continued growth in overall broadband market (though slowing) • Continued pricing pressure at low end; pricing and cost pressures likely to drive consolidation over time • Cable to retain and deepen differentiation at the top end – Virgin Media & Sky the only major players basing tiers on speed; others differentiate by usage caps – Our unlimited fibre optic proposition will remain unique for foreseeable future Consumer broadband market (000s) Consumer broadband market share Other Virgin Media BT 7% Carphone Warehouse Tiscali Orange Virgin Media Sky Orange 7% 23% Other DSL & LLU 16,000 14,000 Sky 12,000 11% 10,000 8,000 Tiscali 6,000 12% BT 4,000 22% 2,000 Carphone 0 18% Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- 06 06 06 06 07 07 07 07 08 08 Source: Company reports and Virgin Media research Source: Company reports and Virgin Media research 28
  • 30. Opportunity and strategic initiatives in broadband Characteristics Our positioning Opportunity • • Growth driven by price & Lowest unit cost operator bundles Low tier broadband • • Significant up-sell 10Mb cable offering superior opportunity to 16Mb DSL (latter reaches Mid tier broadband only 10% of UK homes) • • Speed & quality important Sustainable competitive • Application driven advantage vs. ADSL High tier broadband • Our 2, 10, 20, 50Mb tier structure drives upsell and better value acquisitions – increasing share of broadband profit pool • 50Mb drives upsell and wider appreciation of our ultra-fast broadband capability • 2009 will focus on 10Mb, using Docsis 3.0 to dramatically reinforce our QoS and speed leadership • Will launch a market-leading package of Value Added Services • Plus ground-breaking new services, enabled by increased network intelligence • Relaunch of virginmedia.com, enhancing quality of offering & customer experience 29
  • 31. Leading in broadband speed delivery Virgin Media continue to lead the market in broadband speed delivery, leading the ADSL ISP’s in a number of key benchmarking studies throughout 2008 Virgin Media now tops the latest Point Topic research in the ratio of advertised speed to reported speeds above 2Mb, leading Tiscali, Sky, BT, Car Phone Warehouse and Orange (Jan – July 2008) Virgin Media have now comprehensively taken the crown for the Fastest broadband provider away from O2 who have held the position all year (Sept 2008) With an average reliability of 50.5%, cable broadband continues to be far more reliable than ADSL as a whole – which scored an average of only 38.8%. Broadband Choices also reported our 2Mb service delivering 81.5% of headline speed, far superior to any ADSL providers 2Mb service (Aug 2008) Virgin Media 20Mb average throughput is 3 times faster than the top speeds offered by BT, AOL, Tiscali, Talk Talk and Pipex (Sept 2008) Top 10 Broadband 2008 Awards: Virgin Media won the title of Best Broadband Bundle – “The award for best broadband bundle went to Virgin Media whose range of fast, unlimited, cost-effective bundles stood out from the crowd” (2008) Recently the BACC, the body responsible for the clearance of TV adverts prior to transmission, have cleared our 50Mb launch advertising which claims our 50Mb product is the ‘Fastest’ Broadband available in the UK. This is a first time ever that the body has approved a ‘superlative’ speed claim for an ISP and reinforces our dominant speed positioning in the UK market (Oct 2008) 30
  • 32. Launch of 50Mb: the next generation of UK broadband • The best, fastest broadband product – by a mile! A tripling of Virgin Media’s cable network capacity – Unbeatable speeds – Broadband with robust VAS package DOCSIS 1.0 network DOCSIS 3.0 network – Packaged with wireless kit 3.7 m customers Next Generation in 2008 • 50Mb will be priced to drive premium user demand – Targeted at power users & ‘premium purchasers’ – A compelling upsell price point 38 38 50 50 50 50 – Currently in final trials, launch late Q4 Mbit/s Mbit/s Mbit/s Mbit/s Mbit/s Mbit/s • DOCSIS 3.0 a huge ‘halo’ for all customers – DOCSIS 3.0 the largest UK network build since the original launch of the cable network – 4 new D/s channels on top of today’s 2 D/s – The new home for our 10-20-50 customers Each D1 modem can Each D3 modem can view – Statistical gain of channel bonding deliver massive view one D/s channel all 4 D/s channel. speed capability Theoretical capacity 200 Mbit/s – Dramatic reductions in cost of capacity 31
  • 33. Lead on Demand Television Revolution Goal: 100m VOD views per month by end of 2012
  • 34. The TV market today • Growing share for “multi-channel” viewing driven by free-to-air DTT (Freeview) • VOD is still a relatively new development, but iPlayer is driving growing usage • Sky keeping churn low through Sky+ and other incremental services • BT recently entered market with BT Vision (TV over ADSL) Digital TV market growth (000s) Digital TV market share at Q2-08 Sky Freeview Virgin Media Free Sat Free Sat TV over ADSL 4% 25,000 Virgin Media 15% 20,000 Freeview 15,000 43% 10,000 5,000 Sky 0 38% Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- 06 06 06 06 07 07 07 07 08 08 Source: Company reports and Virgin Media research Source: Company reports and Virgin Media research 33
  • 35. Opportunity and strategic initiatives in TV Characteristics Today’s positioning Opportunity • • Low growth Poor content economics Premium TV Limited • • Heavy investment Sky owns c.80% market • • Decent growth VOD to all Basic pay-TV • • Choice / price driven Setanta in XL TV tier • • Many subs dissatisfied “Free TV + VOD” bundled Free DTV and want more choice with other products • Creating linear parity following the return of Sky basics • Exploit our VOD superiority • Grow penetration of our best-in-class DVR service • Build our HD offering • Enhance the TV interface • Regulatory progress on premium offers significant opportunity – Today less than 20% TV subs take premium at negative margin 34
  • 36. VOD content Virgin Media offers over 4,600 hours of on-demand content Cost • Huge selection of shows from the last 7 days from: BBC, 4oD, LIVING, Bravo, Virgin1 Free Catch Up • Includes 350 hours from BBC iPlayer TV • ITV and Channel 5 are the only terrestrial channels missing on catch-up • Over 2,000 comedy, drama, entertainment, factual, kids and sci-fi shows M&L– • TV Choice 80 hours HD content £7/month XL – Free • Over 2,000 music videos M&L– • Music Karaoke, playlists and concerts 20p/video • Adds a live music component XL – Free • Over 500 films – blockbusters, cult classics, family favourites Pay Per • Movies 30 HD movies View: £1.50-£4.50 • Current TV, Teachers TV, Real Estate TV, Baby Channel, New You Free More Free TV (Niche) • Bollywood movies: from £2 per view Various More On • Adult on demand: £5 per view; £6 HD per view Demand • Late night 24/7: 18 rated but not “Adult” rated, from £2.49 More to follow: catch-up, live music, enhance SVOD with premium TV content and expand HD VOD 35
  • 37. Improving the interface DVD cover navigation Advanced search 36
  • 38. Growing V+ penetration and enhancing HD PVR penetration in Sky and cable digital TV homes • Significant DVR growth opportunity with (as at 30 Sept 08) only 14% V+ penetration 46% • Our V+ box superior to current Sky+ box – 3 tuners, 160GB storage, HD capable • V+ customer churn is 57% lower than non V+ TV customer churn • Plans to enhance HD content 14% – Will add HD broadcast channels – Continue to grow on-demand HD content Sky Virgin Media 37
  • 39. Telephony Goal: 1.6m contract mobile customers by end of 2012
  • 40. Defending the cash cow UK residential market call volumes (billions of minutes) On-net telephone net adds (000s) and year-on-year decline (%) 39 32 22% 29.8 29 30 20% 17.8% 26.8 28 18% 15 26.3 15.3% 25.1 25.1 6 26 16% 15.6% 15.4% 24 14% 14.4% (1) 22 12% Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Source: OFCOM Telecommunications Report, Oct 2008 On-net telephone customers by type (millions) • UK residential market call volumes declined 15% y-o-y in Q1-08 Metered Unmetered 2.10 2.10 • Mitigate impact of usage declines through: 2.07 2.04 2.02 – Continued focus on migration to flat rate 2.04 – Bundling fixed line with broadband and TV 1.99 1.99 1.98 – Mobile cross-sell and bundling initiatives e.g. bundle landline / mobile minutes 1.89 – Potential for line rental price increase – Continued innovation e.g. Talk Anywhere Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 39
  • 41. Key strategic initiatives in mobile Contract mobile customers (000s) Lower mobile churn by VMED cable customers 579 436 VMED 82.4% 329 customers 246 121 Non-VMED 56.4% customers Q3-06 Q1-07 Q3-07 Q1-08 Q3-08 Mobile subscribers retained at 12 months • Fully integrate Cable / Mobile • Drive higher contract penetration more aggressively into Cable base • Exploit new T-Mobile wholesale rates to grow mobile data usage to handset • Mobile broadband – opportunity to bundle with fixed broadband • Mobile TV / Video is a growth opportunity, leveraging our existing TV platform • Cross-sell and bundle with offnet more aggressively 40
  • 43. Developed customer insight tools which help us understand the market… Household Usage Gives us a comprehensive picture of a total household’s use of communication services, Gives us a clear and detailed allowing us to segment the entire UK market to picture of how our customers use identify “must succeed with” segments and our services and provides valuable help us understand how to win in these spaces insights into household and subscriber lifestyle Value Ensures we understand the differences between our highest Subscriber and lowest value customers and Gives us a comprehensive picture of the are able to utilise this information consumer and segment the UK market to help operationally us understand the mapping between household and individual needs 42
  • 44. Our customer segment strategy Aspiring Thriving Realigning Young Young New Growing Teenage Nearly Older Older Empty 1 Greys Utilise our quad play product Single Couple Family Family Family There Single Couple Nesters Actively superiority, brand image and service 1 Doing Well reliability to dominate the Thriving 2 2 orient our Family Market Doing OK services to the highest Making Do 2 Exploit the natural “halo effect” from 2 value part of Single our new focus to drive significant Parents the market growth in the shoulder segments – Surviving, Aspiring, Realigning Surviving Retiring Emerging Nesting Rather than leading on speed for the launch of 50Mb Broadband, position as the Utilise a variety of only broadband services that will support fast simultaneous usage for multiple levers to implement family members the strategy Provide clear reassurance on product reliability through guarantees, meeting Ensure customer care concerns through clear communication of service levels we Marketing address Communicate parental control levels available and clear instructions on how to the needs apply Proposition of our “bulls eye” Provide integrated mobile and landline propositions which give clear benefits for having family members on Virgin Mobile network (free calls to landline, reduced segment Commercial calls between family members etc) Utilise understanding of different TV preferences across family to produce family TV channel pack (Sport for Dad, Celebrity / Soaps for Mum / Cult USA viewing and films Operations for teens / CBeebies etc for children) 43
  • 45. Q&A
  • 47. Network Strength • Video usage is now driving network bandwidth . . . all usage trends are up • Hybrid Fibre Coax remains extremely well placed to serve this demand • UK market has unique characteristics which favour cable 46
  • 48. Our network advantage 2008 Virgin Media BT Network Network LLU Hub Exchange Copper to the Cabinet Fibre to the Cabinet (POTS & ADSL2+) Cabinet Cabinet Coax to the Home (DVB-C & DOCSIS 3) Copper to the Home Copper to the Home (POTS & ADSL2+) (POTS & VDSL2 capable) 2, 10, 20, 50 Mb/s >20 Mb/s to <5% Home Home Plus DTV & VOD Includes any IPTV 47
  • 49. Our network advantage 2012 Virgin Media BT Network Network LLU ? Hub Exchange Fibre to the Cabinet Fibre to the Cabinet Cabinet Cabinet Coax to the Home (DVB-C & DOCSIS 3) Copper to the Home Copper to the Home (POTS & VDSL2) (POTS & VDSL2 capable) Capable of 200 Mb/s Max Speed 40Mb/s Home Home Plus DTV & VOD Includes any IPTV 48
  • 50. Our spectrum advantage BT VDSL2 Copper spectrum used for VDSL2 is 12 or 30MHz Copper Spectrum Virgin Media Coax spectrum is a min of 650MHz with c80% at >750MHz Coax Spectrum Broadband will Analog TV Digital TV VOD use up to 48MHz approx 240MHz approx 216MHz approx 72MHz after DOCSIS 3 will be freed up used By DVB-C used by DVB-C rollout completed with switch off for linear TV for on-demand Spectrum freed up from ATV provides plenty of scope for further growth in Broadband, Linear DTV (SD & HD) and VOD 49
  • 51. A superior quality of experience You don’t lose If you want to Broadband speed watch iPlayer on when you watch your TV in full TV on-demand TV quality – you can + + Broadband Digital TV VOD The independent spectrum allocations for Broadband, DTV and VOD mean that each one can be engineered to deliver the right simultaneous QoE 50
  • 52. Expansion into mobile broadband Virgin Media Communication & Entertainment Virgin Mobile Virgin Media MVNO Network DTV & VOD Mobile Mobile Broadband Voice & TXT Telephony Broadband The UK’s leading Communication & Entertainment network 51
  • 53. Looking into the future … Existing Existing Linear & On-Demand TV Ultra-fast Broadband (DVB-C) (DOCSIS 3.0) Home Home Gateway IP Home Network PC or ipSTB Portable Laptop TV Device Bring both halves of our powerful access network together into an integrated next generation entertainment experience 52
  • 54. …next generation entertainment Broadcasters & Advertisers will be able to create an entertainment experience which can move effortlessly between all of their TV assets and all of their web assets Its not about putting the Internet on your TV nor about putting the TV on your PC. Its about enabling broadcasters to create the next generation of entertainment for whenever and wherever you want to enjoy it53
  • 55. Building a Customer Focused Organization
  • 56. 2008 – 2012 operational transformation review • To create a new operating model for our organisation which delivers significant improvements in: – Customer focus – Product delivery and management Our vision Our vision – Clearer accountabilities leading to streamlined decision making • Supported by better processes, making considerable savings Proposed key initiatives • Refocus organization on product delivery • Invest in holistic approach to sales channels supported by “customer insight” • Converge mobile and cable marketing Customer growth Customer growth • Drive efficiencies across operations • Further cable and mobile operational integration • Call volume reduction through removal of root cause quality issues • Focus on first call resolution Customer service Customer service • Improve resource management – work scheduling and despatch • Supply chain transformation • Transformation of IT support • Rationalization of property portfolio Support functions Support functions • Review support functions: Transaction services Total annual P&L savings by 2012 >£120m Goals Goals Net reduction in roles in the organization by 2012 2,200 55
  • 57. 2008 – 2012 operational transformation: Proposed new operating model Customer Provide Platform Operations Customer Contract Management Research and Consumer Insight Sales & Marketing TV / On Demand Broadband Telephony Develop Proposition Integrated Product Work Strategy Install & development Management Shared Services Repair Product and Operations Delivery Product Proposition Connection Scheduling & Pricing Product Planning & Implementation Operations Delivery Network Planning Network Monitoring and Fault Provision & Maintain Core Network Management Operations Support Programme People & Org Procurement & IT CTO Facilities Finance Legal office Development Supplier Mgt 56
  • 58. Strategic objectives for growth • Guides our people and customer experiences Brand is front • Drives our cultural and centre development Build growth Manage our plans around business more segment effectively strategies • Insight and knowledge led • Integrated planning and performance Excite and delight people with management • Based around customers needs our easy to use, irresistible and wants from acquisition through the full customer journey customer propositions that drive profitable growth End to end P&L Execute and Product brilliantly Management • Manage product P&Ls • Multi-skilled growth contact centres • Drive strategy, innovation, delivery • Integrated customer journey and interface Strengthen our and customer experience with Care delivery • Clear accountability • Multi-channel distribution capability • Invest in Online experience • Faster deployment of products and services 57
  • 59. 2008 – 2012 operational transformation review: Customer growth • Focus on high value channels: invest in on-line channel • Maximize demand through multi-distribution approach Optimize sales channel Optimize sales channel • Segment intelligence based approach to reduce subscriber acquisition costs • Maximize complimentary channel approaches (e.g. Telesales scheduling lead closing visit) • Operate multi-skilled, in-house call centres • Review possible off shoring high volume, low complexity enquiries Call centres Call centres • Maximize revenue at each customer touchpoint • Leverage brand: Deliver Virgin customer experience at all customer touchpoints • Focused, integrated approach across all products: Media and Mobile Marketing Marketing efficiency • Optimize marketing spend change to reflect awareness and consideration gains and focus efficiency on high value segments • Combined reward structures • More integrated channel approach to selling e.g. field selling mobile with targets embedded Cable and mobile Cable and mobile in commission plans integration integration • Increased bundling and maximize upsell through segmentation and contact strategy work • Use Cable Broadband leadership to deliver complementary Mobile Broadband growth 58
  • 60. Strategic objectives for Customer Service Customer touch points: Take control of • Call centres our customer • Install and service experience • Network Reduce costs Improve product through better reliability processes and systems • Supply Chain • Reduce defect rate Enable growth through • Customer self service • Equip staff providing a service to our • Consolidation customers that is always on • Automate and being unbelievably easy • Service levels to do business with Understand Manage change segment and brilliantly customer value • Differentiate service: • Multi-skilling • Higher value customers • Product introduction Get things right • Complexity of customer contact • Invest in Online experience • Customer education first time • Review our suppliers • Staff multi-skilling 59
  • 61. Customer Service Proposed operating model vision Self Care Serve: in house in house outsource Offshore onshore In multi- 1st service house Will work closely with install line skilled INDICATIVE MIX Tiered Customer Product to agree and Care delivering in house ensure delivery of target 2nd In 95% first contact Offshore onshore line multi-skilled house NPS set by Proposition team resolution Network / Business 5% case in house management Work closely with Sales Data specialists and Marketing to Multi-skilled engineering teams cross sell and up sell Delivering end to end service to customers in geographic units Activate & Single Service and fault management Operate Field Resource & Supply Chain function responsible for network Network Management management and outage screening to improve network responsiveness Forecast Despatch Schedule Planning and Provisioning Demand Single end to end planning and provisioning Build Plan Design responsibility Resource planning and despatch services across regional field organisation Working closely with Technology to drive down obsolescence and continuously improve performance 60
  • 62. 2008 – 2012 operational transformation review: Customer Service • Call reduction through simplification of billing and pricing • Improve 1st call resolution through investment in product reliability Reduce call volume Reduce call volume • Provide and promote self service on-line • Redefine install process and reduce defects • Integrate activities through multi-skilling first line agents Improve inbound call Improve inbound call • Differentiate high value, high complexity calls experience experience • Review outsourcing and off-shoring of lower value, lower complexity calls • Schedule and support teams to provide improved customer appointment times • Fewer hand-offs as schedule and support team own customer contact once job is Improve resource Improve resource scheduled to field management management • Field delivery – take control of customer activity and field delivery and field delivery • “Perfect visit” initiative to improve efficiencies and customer experience • “Premium install” initiatives to differentiate service to higher value customers • Consider consolidation of warehouses • Improved control of CPE and recovery of assets Supply chain Supply chain transformation • Review efficiency of suppliers and purchasing transformation • Improve planning process to update inventory systems with network asset data Planning & network Planning & network • Integrate outage surveillance to improve network responsiveness to customer impacting management management faults 61
  • 63. 2008 – 2012 operational transformation review: Support functions • Reduced volume through improved prioritization and efficiency • Consider transformational outsourcing of tech services Transform IT support Transform IT support • Review duplication of functions e.g. local tech teams, program mgt and technical delivery and technical delivery • Improved permanent: contract staff ratio • Consider consolidation of multiple sites • Property strategy developed alongside growth and customer operations plans to maximise Rationalize property benefit Rationalize property portfolio portfolio • Consider home-working solutions with meeting facilities at local sites where possible • Increase quality and utilization of biggest regional offices • Review of support functions: Finance, HR, Corporate Function • Introduce new integrated shared services function Review support Review support • Consider outsourcing certain transaction services functions functions • Create a single employee service group 62
  • 64. Q&A
  • 65. Non-Consumer Assets, Financial Structure and Flexibility Charles Gallagher – SVP Finance
  • 66. Overview • Valuable non-Consumer assets • Seeking significant cost savings from Operational Transformation • Sensibly investing for growth • Successfully secured senior credit facility amendment • Strong cash flow generation 65