Broadband News

Accelerating ARPU from Virgin Media boosts Liberty Global results

Adding an extra 105,300 RGU during the last quarter for Virgin Media is a positive move and for those not used to investor speak an RGU is a Revenue Generating Unit. Breaking things down the broadband additions in the quarter were 36,400 and we suspect a large number of there were the result of the Project Lightning expansion which officially added an extra 109,000 premises in the quarter. The net additions in the UK is higher due to the bundling effect i.e. people adding extra elements such as TV or mobile to their account.

The continued operating and financial momentum at Virgin Media helped fuel our Q3 results. With respect to our U.K. subscriber growth, we generated over 100,000 net additions, which represents a record third quarter performance. This achievement was supported by strong volume growth in both our Project Lightning and legacy footprints. From a product perspective, we continue to reap the benefits of our next-generation V6 set-top box and Hub 3 WiFi router deployments, as we saw meaningful year-over-year improvement in churn. We also announced a 4.5% average U.K. customer price rise, which should underpin our results in the coming quarters. In our other markets, we reported mixed results as Telenet delivered 8.4% rebased OCF growth in the quarter, driven by synergy realization, while we posted a 9% rebased OCF contraction in Switzerland.

Liberty Global CEO Mike Fries

The Project Lightning expansion is running at a decent pace and with the RFOG component is currently a key part of the growing FTTP footprint in the UK. Where we disagree with the CEO is the positive attitude towards the SuperHub 3, this device has known Intel Puma chipset bugs, in theory fixed by firmware but that does seem to have been pushed to all customers and even then the router does odd things like stop responding to pings (result plenty of Virgin customers thinking our BQM tool has broken). The big kicker is highlighting an inflation busting price rise in the UK, now we know Virgin Media is not the only provider to raise its prices in the last year but the market itself is rapidly moving to a position of no in contract price rises and if Virgin Media misses that boat it might find retaining customers even harder, particularly in areas where competitors can offer speeds that are reasonable.

Our tracking of the Virgin Media footprint showed the operator growing its footprint by 192,000 premises passed in the quarter, the reason it is higher than the official figure is that in the quarter we improved our detection of the network expansion and therefore are catching up on what we missed in some previous quarters.

Hopefully Liberty Global will not see the UK as a market sector which it can use to prop up other markets i.e. more price rises but actually reward the UK with new broadband hardware and a sooner rather than later deployment of DOCSIS 3.1. DOCSIS 3.1 allows for a big change in speeds with Gigabit products and if backed by investment in the core network which often seems to be the Achilles heel has the potential to fight off any new FTTP market entrants.

Comments

Very unfortunate that Virgin Media doesn't actually care about upgrading to DOCSIS 3.1 (and beyond).
There is practically zero incentive now or in the near future. Openreach/BT are still scrambling with FTTP and their FTTC products are way too inferior (on paper and in terms of raw 'speed', ignoring that power users actually know about VM latency issues).

  • nidstigator
  • 13 days ago

Meanwhile in countries like Romania you can get unlimited 1Gb/sec broadband for just £7/month.

  • Khan
  • 12 days ago

VM have previously told investors that most if not all of the UK network is DOCSIS 3.1 ready, but the limit is the Hub 3, which is DOCSIS 3.0. They then went on to say they were in no hurry to offer higher speeds until the market was ready to pay more for them. So expect a Hub 4 and gigabit speeds eventually, but I'd guess the broadband will probably cost about £60 a month before any voice line rental or package extras.

  • Andruser
  • 12 days ago

The average salary in Romania is less than £500 a month. Not sure if that also appeals?

  • CarlThomas
  • 12 days ago

So 3.1 is built to be installed on existing networks without upgrade. Claiming the network is ready for 3.1 is like claiming Openreach's network was ready for 17a VDSL when it was running 8b. It's entirely true but meaningless.

The network requires some additional kit either end. New modems and new line cards in some cases and licenses in others for the routers at VM's sites feeding customers. It's not a big job, though, not big at all. Upstream-wise is more challenging.

This said, they are in a holding pattern and don't see the value in spending on widely available 3.1 right now.

  • CarlThomas
  • 12 days ago

VM's parent is investing in 3.1 in Poland right now for the simple reason that the primary competition, Orange Poland, is rolling out 1Gb down, 100Mb up for less than £15 a month - realistically out of range of their DOCSIS 3.0 network.

Here's there's no such competition. The fastest non-cable product available with any significant coverage is 330/50. The faster Openreach FTTP tiers are ridiculously expensive and available to very few. The alternative networks have minimal availability. Why spend money on 3.1 when you can go to 500/30 or 500/50 via 3.0 and existing Hubs?

  • CarlThomas
  • 12 days ago

and high latency and packet loss (vm only upgrades areas to 3.1 that are very congested)

  • leexgx
  • 10 days ago

I'm more interested in when VM are going to provide decent upload speeds, than when they're going to increase what is to me an already quite adequate download offering.

  • pfvincent
  • 10 days ago

There is an incentive in places like Coventry for VM to up its speeds and to roll out DOCSIS 3.1. Vodaphone is busily installing FTTP in Coventry. This will offer 1GB (symmetrical) to residential customers.

  • Windblown
  • 9 days ago

Leexgx please stop making things up. VM do NOT deploy DOCSIS 3.1 for congestion relief at this time - there are no 3.1 deployments in either pilot or production stage yet and, when the pilots do start, they will be in new build FTTP areas, not legacy areas for congestion relief.

VM do not have particularly bad latency and packet loss. Their jitter is above that of xDSL products but baseline latency and packet loss are okay.

Windblown - they don't want to roll out selectively for some reason. Widely or not at all.

  • CarlThomas
  • 8 days ago

The latency and packet loss aren’t amazing as some have said. I did prefer the stability of my old VDSL2 connection but I’m happy having nearly 390/24.

I did get pings as low as 5ms on VDSL2 and when playing online with friends who use BT, you can feel the difference in the responsiveness.

As someone from a rural area who only received VDSL2 in late 2015 it’s a nice jump in speed.

I imagine with DOCSIS 3.1 that things will improve. Virgin aren’t going to make the mistake of choosing another Intel Puma headache again.

In the meantime I hope they bring out a 500/30 or 500/50 tier.

  • Wilsonic
  • 7 days ago

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