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Virgin Media O2: Brakes on just temporarily

16 May 2022
Access report

While VMO2’s Q1 results were strong, its subscriber additions were weak, particularly on the broadband side, with a seemingly somewhat deliberate go-slow as the year began, but cost-of-living crisis and fibre overbuild may also be factors.

We see considerable scope to ramp up commercial aggression from here given the sizeable tailwinds from price increases, synergy benefits and the migration of the Virgin Mobile MVNO from Vodafone.

We remain sceptical of VMO2’s further network extension ambitions and hope that no news on securing a financial partner is good news, increasing the odds of it pursuing the less risky strategy of expanding its footprint through wholesale.

Related reports

Virgin Media O2: Brighter future

25 February 2022

VMO2 finished 2021 with muted revenue and EBITDA growth, but stronger subscriber progress, with underlying ARPUs a touch weak but not totally out-of-line with industry trends.

The company has a (justifiably) high level of confidence that this can be turned around in 2022, with a significant boost from price rises, the waning of some temporary effects and backed up by solid subscriber dynamics.

Expecting to not be impacted at all by Openreach’s FTTP roll-out into its current and prospective footprint would however be too confident, and for this reason we remain sceptical of VMO2’s accelerated roll-out ambitions.

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What to expect from the new kid in town: Virgin Media O2 joint venture

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With the O2/Virgin Media merger now approved, VodafoneZiggo in the Netherlands may hold clues to their likely approach to the market although their starting point is not quite the same and some lessons may have been learned.

We remain sceptical of the merits of discount-led convergence strategies. The pandemic, however, has eased the route to cross-selling and strengthened the case for convergent technologies.

Virgin Media’s network strategy will be key with significant risks from wholesaling their cable network and from expanding their footprint.

Access report

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3 March 2022

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Access report

  • Virgin Media O2: Brighter future

    25 February 2022

    VMO2 finished 2021 with muted revenue and EBITDA growth, but stronger subscriber progress, with underlying ARPUs a touch weak but not totally out-of-line with industry trends.

    The company has a (justifiably) high level of confidence that this can be turned around in 2022, with a significant boost from price rises, the waning of some temporary effects and backed up by solid subscriber dynamics.

    Expecting to not be impacted at all by Openreach’s FTTP roll-out into its current and prospective footprint would however be too confident, and for this reason we remain sceptical of VMO2’s accelerated roll-out ambitions.

    Access report

  • What to expect from the new kid in town: Virgin Media O2 joint venture

    9 July 2021

    With the O2/Virgin Media merger now approved, VodafoneZiggo in the Netherlands may hold clues to their likely approach to the market although their starting point is not quite the same and some lessons may have been learned.

    We remain sceptical of the merits of discount-led convergence strategies. The pandemic, however, has eased the route to cross-selling and strengthened the case for convergent technologies.

    Virgin Media’s network strategy will be key with significant risks from wholesaling their cable network and from expanding their footprint.

    Access report

  • Positive growth prospects: UK broadband, telephony and pay TV trends Q4 2021

    3 March 2022

    Market revenue growth accelerated to just under 2% in Q4, with broadband growth holding up despite the ending of most pandemic restrictions.

    Backbook pricing pressure should continue to retreat in 2022, and ultrafast speed premia should also bolster ARPU as FTTP roll-outs accelerate.

    The price increases due in April will further support growth, with BT in particular to benefit, and all will have to be wary of customer backlash.

    Access report