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Virgin Media in management shake-up after over-counting new homes

Virgin Media in Papworth007Liberty Global has suspended four Virgin Media employees after being forced to reassess the number of homes it has built out as part of its high-profile Project Lightning investment.

Liberty admitted in an SEC filing that it had previously over-counted the number of new homes connected to its UK network by 151,000 homes as a result of the status of a number of homes being built out under the project being “misrepresented”.

Liberty has now restated the number of homes added, with Virgin Media now saying it added 314,000 homes last year as opposed to the 465,000 previously stated.

The company has appointed Virgin Media’s chief information, network and technology officer Robert Evans as managing director of Project Lightning as part of series of measures to address the revelation that progress has fallen short of that reported earlier. Evans will report direct to Liberty Global CTO Balan Nair.

Virgin Media is also to name a new president, and Dana Strong, Liberty’s chief transformation officer, has been appointed as Virgin Media COO, with direct responsibility for overseeing the project. Strong will report to Virgin Media CEO Tom Mockridge.

In its Q4 numbers, Liberty had said that its European operations added 1.4 million premises to its networks in 2016,  including 465,000 premises added by Virgin Media. The latter included 323,000 premises connected to networks in the UK and Ireland and 142,000 premises in  UK locations “where the company understood construction to be essentially complete, but which still required power, headend capacity upgrades and/or physical connection activities”.

The operator said it discovered last month that this group of “inactive premises” would not be ready for connection in this quarter, an assumption that had underpinned its decision to include them in the 2016 figures.

The new figures exclude a further 9,000 homes “inadvertently” classified as connected at the end of last year.

As part of the series of measures it is taking over the problems with Project Lightning, Liberty Global said it would no longer count ‘inactive premises’ in the number of homes connected it reports quarterly, no matter what stage of development they are at.

“In late February 2017, the Company discovered that the construction work necessary to connect a substantial number of the Inactive Premises had not progressed as originally understood,” Liberty said in its SEC filing.

“The Company then initiated a review of the records underlying the construction status of the Inactive Premises and the circumstances that led to the overstatement of their construction progress. Our review found that the completion status of a number of Inactive Premises had been misrepresented. In connection with this review, four Virgin Media employees have been suspended and removed from their posts and employment investigations are ongoing. Pending the results of these investigations, disciplinary action may be taken against employees, including dismissal,” it said.

Liberty said it now expected the inactive premises to be connected by the end of June rather than the end of Q1. It said it did not believe that the shortfall would have an impact on the number of homes it expected to connect as part of Project Lightning.

Overall, Liberty Global now says it has connected 1.529 million homes through its new build programme, as opposed to 1.68 million. This includes 1.276 million homes connected last year, as opposed to the 1.427 million previously stated.