Demand for fixed line telephony is in decline, with the rate of decline in lines used by business nearly twice as high as that in the residential fixed telephony market. There is a trend for businesses to replace fixed line telephony with voice-over-internet-protocol, or VoIP, telephony, while residential customers are tending to migrate from fixed line to mobile telephony. However, Virgin Media’s fixed line customers may not migrate to the company’s mobile phones and it may eventually lose its fixed line customers to other providers of mobile telephone services. Such a migration could have a material adverse effect on Virgin Media’s ARPU, results of operations and financial condition. Across the industry, the landline subscriptions have been declining. According to industry estimates, landline subscriptions in the UK fell by over one million in 2010, with the business market hit hardest with a 5% drop. Ongoing negative trends in the fixed telephony market will negatively impact the company’s revenues. • Economic Factor
Furthermore, as convergence gathers pace, Virgin Media is focusing on differentiating TV product to become the first major operator to launch a next generation entertainment service combining its own extensive video-on-demand library with a range of popular web based applications such as YouTube. As it evolves, Virgin Media TV powered by TiVo, will provide a fully integrated entertainment experience across a wide range of fixed and mobile devices. The consumers in the UK are increasingly accessing video content across multiple platforms. According to a recent survey conducted, 55% of the UK video consumers have watched content across dual platforms over a 30-day period. The online video unique audience increased from 25.9 million in January 2011 to 26.9 million in April 2011. The trends indicate growing online consumption of video content.
The company will be able to increase the revenues...