The ratings on Virgin Media Inc. (VMI) are constrained by: the fierce competitive landscape in the U.K., which weighs on the prospects for revenue growth at VMI; a highly leveraged--albeit improving--capital structure, with £6.2 billion reported financial debt on March 31, 2009; and the group's reliance on a competitor for some key TV content. The ratings benefit, however, from VMI's well-established business position as the second-largest pay-TV operator in the U.K. The group's two-way cable network passes through one-half of all U.K. households and its strong network capabilities provide customers with innovative and fast broadband offerings. Furthermore, VMI's debt amortization schedule is favorable. Following an amendment to the group's senior credit facilities, no significant debt amortizations become due until 2012.
