MUMBAI (Thomson Financial) - Fitch Ratings upgraded Virgin Media Inc.
long-term issuer default rating to 'BB-' with a stable outlook from 'B+', to
reflect stabilised performance in a very competitive market, as well as the
maintenance of financial metrics consistent with the rating.
In the second half last year, the company succeeded in turning around the
decline in customers it had experienced for several quarters and continues to
exhibit extremely strong triple-play metrics which, Fitch believes will remain a
key competitive advantage and defence.
Although the company admits there is limited value in competing with British
Sky Broadcasting on the basis of its dominant premium TV offering, Fitch
believes Virgin Media's bundled packages, together with its broadband speeds,
will prove a key differentiating factor in the U.K. market. Despite aggressive
competition from BSkyB, Virgin Media has regained positive momentum in all areas
of its residential cable segment and merits "second incumbent" status, in the
agency's view.
Virgin's mobile business performance has been patchy, but the cross-selling
of contract mobile into the cable customer base has enabled relatively
consistent growth in postpaid subscribers despite volatile churn in the prepaid
base
Despite the substantial amount of the company's next scheduled debt
amortisation -- 1.1 billion pounds due in 2010 -- Fitch does not anticipate that
Virgin Media will encounter difficulties in making this repayment. Not only does
the company generate comfortable levels of annual free cashflow, but the
recently completed $1 billion convertible issue is evidence that there are a
number of other external financing solutions available to the company which it
could utilise for a partial refinancing of those instalments if necessary.
Hence, Fitch believes the upcoming debt maturity schedule is not a constraint on
the company's ratings.
The agency also affirmed the company's short-term IDR at 'B'.
TFN.newsdesk@thomson.com
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