Virgin Media may be sold to global cable firm

 

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By Stewart Mitchell

Posted on 5 Feb 2013 at 12:20

Cable company Liberty Global is considering a bid for Virgin Media, meaning the UK's second biggest broadband provider could change hands.

According to a report in the Financial Times citing sources close to the deal, a bid could be made within days, and Virgin told PC Pro that talks are ongoing.

"Virgin Media confirms that it is in discussions with Liberty Global, a leading international cable company, concerning a possible transaction. Any such transaction would be subject to regulatory and other conditions," the company said in its statement. "A further announcement will be made in due course."

In the market, you can't really separate broadband from TV, because as fast as Virgin's speeds are, people don't always understand faster speeds

The FT story focuses on the impact the deal could have on the television market in the UK, with Liberty linked with several major studios, but as the UK's second largest ISP any changes in the company's direction could also have an impact on fibre deployment and home equipment.

According to analysts, after similar takeovers in other countries, Liberty Global has maintained the local branding, so the Virgin name would likely remain in place if any deal were to go ahead.

In fact, the biggest difference could be the addition of Liberty's Horizon set-top box to the Virgin line-up, bringing more internet TV features to the living room.

"In the market, you can't really separate broadband from TV, because as fast as Virgin's speeds are, people don't always understand faster speeds – most people want more 'bells and whistles' like more TV selection," said Francesco Radicati, a research analyst with Informa Telecoms and Media.

"The Horizon box is more of a gateway to the web, with photos and YouTube - it has a few companies running scared."

Network improvements?

Liberty could also dip into its cash reserves to fund network upgrades to improve capacity, according to analysts, although wholesale cable broadband footprint improvements are unlikely.

"As Virgin upgrades its network to avoid congestion by adding new cabinets and extra fibre feeds, there are bits and pieces of work that could benefit, but at one point it will have to decide whether to spend more on upgrading the existing network or go the way that Openreach is going and start going to people's homes rather than cabinets," said Andrew Ferguson, network expert at Thinkbroadband.com.

"It's not going to speed that up, but any extra capital might help with pre-improving the network with extra fibre capacity and other improvements before congestion becomes an issue."