15 February 2018
Virgin Media Inc. (“Virgin Media”) is the leading cable operator in the U.K. and Ireland, delivering 14.4 million broadband, video and fixed-line telephony services to 5.9 million cable customers and mobile voice and data services to 3.1 million subscribers at December 31, 2017.
Rebased1 revenue growth of 4% in Q4 and 2% for 2017 was driven primarily by growth in residential and SOHO RGUs; our Q4 revenue performance was also helped by a return to growth in mobile
Rebased residential cable revenue growth of 2% in Q4 and 2.5% for 2017 reflects higher subscription revenue driven by RGU growth and higher non-subscription revenue due to higher installation revenue
Residential mobile revenue increased 17% in Q4 but declined 2% for 2017 on a rebased basis
Q4 performance reflects a 64% rebased mobile non-subscription revenue increase driven by higher handset sales, partially offset by a 7% rebased mobile subscription revenue decline
2017 mobile subscription revenue declined 9.5% on a rebased basis primarily due to £78 million less revenue from our U.K. subsidised handset base, partially offset by a £31.5 million revenue increase from our U.K. Freestyle Split-Contract base
B2B revenue increased 6% in Q4 and 4% for 2017 on a rebased basis driven by higher SOHO revenue and a modest increase in B2B non-subscription revenue
Operating income decreased by £54 million in Q4 and £133 million for 2017 as an improvement in Segment OCF was more than offset by higher depreciation and amortisation charges, higher related-party fees and allocations and increased impairment, restructuring and other operating items
Rebased Segment OCF growth of 5% in Q4 and 4% for 2017 reflected the net effect of (i) increased revenue, (ii) higher handset and programming spend, (iii) higher network taxes following an April 1, 2017 increase in the rateable value of our U.K. and Irish networks (£8.5 million higher in Q4 and £25.5 million higher for 2017), (iv) an £8 million benefit in Q4 and a £30 million benefit for 2017 associated with a telecom operator’s agreement to compensate Virgin Media for certain prior-period contractual breaches related to network charges and (v) lower staff-related and marketing costs
Property and equipment additions increased to 34% of revenue in Q4 and 2017 compared to 38% in Q4 2016 and 27% for 2016
As of December 31, 2017, our fully-swapped third-party debt borrowing cost was 4.6% and the average tenor of our third-party debt (excluding vendor financing) was 7.4 years
At December 31, 2017, and subject to the completion of our corresponding compliance reporting requirements, the ratios of Senior Secured and Total Net Debt to Annualised EBITDA (last two quarters annualised) were 3.55x and 4.48x, respectively, each as calculated in accordance with our most restrictive covenants
As of December 31, 2017, we had maximum undrawn commitments of £675 million. When our compliance reporting requirements have been completed and assuming no changes from December 31, borrowing levels, we anticipate that the full £675 million will continue to be available to be drawn