Virgin Media O2 publishes first quarter results

Our 16.3 million Homes Serviceable, which increased by 107,800, have access to a gigabit speed network where the average speed is 5x the national average. We continue to future-proof our network evolving towards new fibre homes and remain on-track to deliver 5G services to 50 per cent of the UK(ii) in 2023 whilst also boosting existing capacity.

• Synergies: We are on-target to deliver over 50 per cent of £540 million run-rate synergies by the end of 2023 with full realisation of the benefits of the migration of Virgin Mobile base onto the Virgin Media O2 network and further synergies crystallised through the migration of the Virgin Mobile base to O2 plans and Mobile backhaul integration delivered through the year
• Resilient trading performance: Despite the impact of price rises, our fixed customer base continued to grow as we delivered O2 monthly churn of 1.0 per cent and customers benefited from gigabit speeds and high-value services
• Solid development year-on-year in Transaction Adjusted Revenue and EBITDA: Reported Transaction Adjusted Revenue grew 3.9 per cent, a decline of 0.1 per cent excluding the impact of nexfibre construction revenue. Transaction Adjusted EBITDA had another positive quarter of 2.0 per cent growth on a reported basis
• 2023 guidance – nexfibre impact: During the quarter, we concluded our accounting treatment where nexfibre construction revenue will be reported on a gross basis:

1. Guidance of ‘Revenue growth’ excludes the impact of nexfibre construction revenue (expected to contribute approximately 5 percentage points for 2023)
2. Guidance of ‘mid-single-digit EBITDA growth’ also excludes nexfibre construction

• 2023 guidance: We expect to deliver growth in Transaction Adjusted Revenue and mid-single-digit Transaction Adjusted EBITDA (before CTC) growth, both exclude the impact of nexfibre construction. Additionally, we predict opex and capex CTC of approximately £150 million and P&E additions of around £2.0 billion. The cash distribution to shareholders is anticipated to be £1.8 to £2.0 billion including cash from recapitalisations to maintain leverage at the upper-end of the 4-5x range.

Lutz Schüler, CEO of Virgin Media O2, said:
“In the first quarter we delivered a solid performance as we laid the groundwork for further progress through the remainder of the year.

“As the largest gigabit network in the country our speed leadership continues, with customers taking broadband that is five times faster than the UK average. We continue to invest in the upgrade and expansion of our footprint and we are on-target to cover 80% of the country with full fibre. When coupled with bringing 5G services to more areas and reaching half of the UK(ii) this year, we are playing a big role
in future-proofing the UK’s digital infrastructure.

“Our integration activity and the delivery of run-rate synergies is progressing at pace, with the migration of Virgin Mobile customers to O2 plans. We expect further run-rate synergies throughout the year including Mobile backhaul integration using our own fixed network.

“With strong foundations in place and as commercial momentum builds, supported by price increases, we remain on track to meet our 2023 guidance.” BCS Bureau