Virgin speeds up on UKTV cash

Virgin Media will spend £110m (US$169m) this year to boost broadband speeds across its network, using cash generated from last year’s sale of its UKTV channels business.

The UK cableco said the cash would be spent mainly on upgrades to its fibre network and hub sites and on new enhanced modems, claiming that the initiative would double speeds for more than 4 million households. The upgrades will also boost Virgin’s maximum broadband speed from 100Mb to 120Mb, with the programme due to begin in February and complete by mid-2013.

In its third quarter earnings results last year, Virgin said that it had received some £348m (US$557m) in cash from the sale of its 50% in UKTV to Scripps Networks Interactive in August, including a quarterly dividend. In October, it said it planned to a separate £250m from this to boost its share buy-back initiative.

Virgin today said that excluding the latest £110m investment, Virgin’s cash capital expenditure remained within the current guidance of 15% to 17% of revenue for 2012 and for future years.

The firm is due to announce its full-year and fourth quarter earnings on February 8, when it will give more details about its broadband initiative and its strategic growth plans. This will include information on its ongoing TiVo rollout and consumer price plans.