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Virgin Media turns on speed with super-fast broadband rollout

Cable firm expected to report first annual profit as it reveals network will be plugged in months ahead of schedule

Virgin Media will complete its rollout of super-fast broadband ahead of schedule, making the service available to each of the 13m homes passed by its network this spring.

The group, which is expected to report its first annual profit on Wednesday, will announce on Monday that its super-fast service now passes 10m of the UK’s 26m homes and that its entire network will be plugged in several months ahead of the original mid-2012 deadline.

Virgin Media, which is the UK’s only cable company and was formed through rounds of mergers between loss-making predecessors, is forecast by at least two banks to report a small net profit. Analysts forecast an average of £3.988m in revenues for the year, with BNP Paribas saying this could produce a £72m profit, and JP Morgan Cazenove estimating £60m.

BT Group and Virgin Media are engaged in a broadband arms race which will see download speeds double for many households in the coming year. In a separate project, Virgin will over the next 18 months double its customers’ download speeds, with the fastest going from 50Mbps to 120Mbps from the summer. BT will move its 40Mbps customers to 80Mbps. The higher speeds ensure several members of a household can simultaneously watch internet TV, play online games, or use smartphones, tablets and computers.

The UK is outside the world’s 30 fastest for internet connections, according to speed testing company Ookla, but Virgin Media says its work will push the country into the top 20, ahead of the US, Japan, France and Germany.

Jon James, executive director of broadband at Virgin Media, said: “Soon half the country will be able to get superfast 100Mbps broadband from us. Reaching today’s milestone puts us ahead of schedule as we help propel the UK up the global broadband rankings.”

The TV and telecoms group could add 13,000 customers in its fourth quarter, according to JP Morgan Cazenove, bringing its total subscribers to 4.8m. The total, which takes into account those leaving the network, could include 30,000 more broadband subscribers. In its last quarter, BT added 146,000 broadband subscribers.

BT and Virgin Media are racing towards higher speeds in the hope that consumers will leave Talk Talk and BSkyB, which will struggle to match their service. BT and Virgin are the only two operators that own fibre cables.

Sky and Talk Talk have spent millions unbundling BT’s copper network, installing their own equipment in telephone exchanges, but the higher speeds cannot be delivered over copper.

According to analyst Robin Bienenstock at broker Sanford Bernstein: “This leaves the unbundlers (but in particular BSkyB as TalkTalk is the clear discounter in the market) in the unenviable position of having to choose between selling product that is margin dilutive or resisting its sale and seeing their premium quality status diluted.”

Sky is already considering renting fibre from BT, and has begun a trial on the former national monopoly’s network which could form the basis of a high speed broadband offer to its customers.

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