We reiterate our long-term Neutral recommendation on
Virgin Media Inc.
) based on the company's strong financial results in the first
quarter of 2013.
Why Kept at Neutral?
In the reported quarter, Virgin Media improved its average
monthly churn rate to 1.1% from 1.2% in the year-ago
quarter. The churn rate improved despite a 5% price hike.
Subscribers opting for the company's services have shown their
preference for its high-margin bundled services with innovative
high-speed broadband offerings. Another major growth area is the
company's next-generation video services using
) developed Internet-connected TV platform. The Mobile segment is
also performing well.
Virgin Media is offering an innovative video service called TV
Anywhere. This state-of-the-art application platform will enable
the company's subscribers to watch up to 45 live TV channels on
several devices including TVs, PCs, smartphones and tablets. This
simply means that customers can view live TV shows even outside
home using their mobile devices. Furthermore, using this
application, subscribers can manage recorded programs and control
TiVo-developed set-top boxes from a remote place.
On Apr 15,
Liberty Global Inc.
) received European Union's regulatory approval for its proposed
acquisition of Virgin Media. In Feb 2013, Liberty Global decided
to acquire a 100% stake in Virgin Media, in a cash and equity
deal. The deal is worth around $15.8 billion or an enterprise
value of nearly $23.3 billion. The deal is now being weighed by
the U.S. regulator and is expected to be closed by the second
quarter of 2013.
If this deal finally matures, then the merged entity will
become a formidable challenger to BSkyB Group plc, the largest
pay-TV operator of the U.K. BSkyB is partially controlled by
LIBERTY GLBL-A (LBTYA): Free Stock Analysis
NEWS CORP INC-A (NWSA): Free Stock Analysis
TIVO INC (TIVO): Free Stock Analysis Report
VIRGIN MEDIA (VMED): Free Stock Analysis
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