Virgin Media to invest 110 million pounds to double broadband speeds

By Telecom Lead Team: Virgin Media will double the speeds
of over four million of its broadband customers and boost its top speed to

The speed upgrade program will involve an incremental
investment of approximately £110 million in 2012 which will be primarily funded
from the sale proceeds of Virgin Media’s share in UKTV. The investment will go
largely towards new enhanced modems, and upgrades of the company’s fibre
network and hub-sites.

Excluding the incremental £110 million investment, Virgin
Media’s cash capital expenditure will remain within current guidance of 15 to
17 percent of revenue for 2012 and for future years.

In addition, it is expected that the cost of assets
acquired under leases6 will continue to be no greater than 2 to 3
percent of revenue per annum, in line with recent years. All other strategic
growth opportunities will be met within this guidance.

Virgin Media remains on track to realize a leverage
target of around 3x Net debt/OCF7 between mid 2012 and mid 2013. Its
existing share buyback program remains in place, with around £453 million
authority remaining until the end of 2012, representing approximately 11
percent of current market capitalization.

With the mass roll-out starting in February 2012, the
upgrade program will continue over 18 months and is expected to be complete by
mid 2013.

Subscribers to Virgin Media’s current 10Mb, 20Mb, 30Mb
and 50Mb services will see their speeds at least doubled, with 100Mb customers
seeing a significant increase to 120Mb. This ground-breaking initiative will
enhance the company’s position as the fastest broadband provider in the UK2
and help meet the growing demand for next generation broadband.

“The last few quarters have demonstrated that, with
the proliferation of exciting new digital services, demand for superfast
connectivity among UK households is accelerating fast. Virgin Media’s long
history of investment in next generation digital infrastructure means we have –
and will continue to have – the ability to meet this demand by putting more
bandwidth in the hands of consumers at a fraction of the cost of other network
operators,” said Neil Berkett, chief executive officer, Virgin Media.

This long term network advantage, combined with
fast-growing consumer demand, means that today we have a window of opportunity
to simultaneously step change the UK market, decisively differentiate our
consumer proposition and transform our customers’ digital experience,”
Berkett added.

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