Virgin’s Project Lightning set to stall, as Liberty takes operating income hit

Project Lightning

Liberty Global CEO Mike Fries said fewer UK premises than expected will be connected to faster broadband technology this year, as he revealed the company’s European operating income suffered in Q1.

The Chief Executive pinned the blame for an expected slowdown in Virgin Media’s Project Lightning network upgrade programme on the fallout from the misreporting of figures earlier this year.

In March, the company revealed that a "substantial" number of premises it labelled as connected to new technology, including FTTP, had been done so erroneously.

Four managers were suspended and a new team installed to manage the rollout in the wake of the news.

Fries said around 700,000 homes out of the total of four million it plans to upgrade by 2020 had now been completed, including 102,000 premises in Q1.

But he added: “We expect that the management transition and related review is likely to result in a slower build pace than what we previously expected for 2017.”

The CEO made the comments as he unveiled Liberty Global’s first quarter financial results.

Like-for-like revenues in Europe rose 2.1 percent year-on-year to $3.5 billion, after it added 40,000 new customers and increased prices.

In the UK and Ireland, where the fall in the value of the pound saw reported revenues dip 10.8 percent, Virgin Media registered organic sales growth of 1.7 percent.

Germany was the best performer, with sales up 5.6 percent at Unitymedia, while Belgium’s Telenet saw revenues rise 0.8 percent.

Operating income fell 18.1 percent to $431 million in Europe on the back of currency movements and the deconsolidation of its Netherlands arm, which is now part of a joint venture with Vodafone.

However, Liberty cut its net loss in Europe from $334 million 12 months ago to $293 million.

Fries said: "Our first quarter results in Europe showed an acceleration in volume growth, as the mix of market-leading broadband speeds, next-generation TV functionality and new build activity underpinned this performance.”

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