menu
search
Skip to main content
search

Search to find the correct information:
search
Search

Virgin Media O2

Telecommunications, delivering innovative services to the UK population.

1328869573

This is a marketing communication. Please refer to the prospectus of the Fund and to the KIID / KID and/or offering documents before making any final investment decisions. Please refer to the risks section at the bottom of this page.

View More

First bought

Since fund inception – July 2012.

What is it?

The second largest Telecommunication operator in the UK. It provides Gigabit internet, video, fixed-line telephone and mobile services to residential and business customers. Their network now covers 2/3rds of all UK homes and 5G mobile network covers half of the UK population1. Virgin Media O2 is a 50:50 joint venture between Liberty Global plc and Telefonica S.A.

Why do we own it?

Virgin Media O2 possesses two key competitive advantages – efficient scale and high switching costs – which enable the company to consistently generate stable and positive free cash flow. A solid financial position and credit ratings contribute to its long-term resilience, which we believe allow it to weather short-term challenges and adapt to changing market conditions. For this reason, we do not see competitor attempts at increasing broadband capacity as being successful and believe the market will consolidate. From a geographic standpoint, the UK scores well on our proprietary country vulnerability framework, which quantitatively analyses six key macroeconomic indicators with the aim of identifying imbalances or risk factors, suggesting to us that it will remain stable.

We are comfortable with the sustainability profile of the company and do not believe Virgin Media O2 faces any material ESG concerns. In summary, Virgin Media O2’s sustainable competitive advantage, solid sector and country positioning, and lack of ESG concerns have helped us build conviction in holding this company.

View More

competitive advantage

We believe Virgin Media O2’s position as a leading network owner and operator gives the company a competitive edge, with the cost and effort for competitors to replicate such infrastructure acting as a strong barrier to entry. Their range of differentiated and strategically bundled services creates cross-selling opportunities, making it more difficult for customers to switch to competitors and loyal customers tend to stick with their well-established brand, reducing churn and increasing revenue stability. Virgin Media O2’s vertical integration with parent companies, Liberty Global and Telefonica, leads to better resource allocation and cost optimisation, and in our opinion, such integration enhances its competitive position. In summary, we believe Virgin Media O2’s economic moat is fortified by its network infrastructure, brand loyalty, product differentiation and strong technical innovation.

View More

Key points

  • Virgin Media O2’s main assets are its cable, fibre, and mobile networks which are expensive and hard to replicate for any new entrants to the market.
  • The Gigabit serviceable internet footprint now reaches over half of all UK homes and 5G mobile network covers half the UK population.
  • Liquidity is strong and leverage is manageable for the stable business profile.
View More

CONSIDER THE RISKS

Investors should consider the risks that may impact their capital, before investing. The value of your investment may fluctuate from the time of the original investment. Please refer to the risks section enclosed. A decision to invest should take account of all the characteristics and objectives described in the prospectus and KIID/KID and/or offering documents. The portfolio does not have a sustainable investment objective. While the evaluation of Sustainability Risks through the analysis of ESG factors is part of the investment process, it may not necessarily result in the exclusion of a security. Please refer to the sustainability related disclosures for information on the commitments of the portfolio: https://www.wellington.com/en/legal/sfdr.

1All information can be found on Virgin Media O2’s investor relations website.

Risks

Below Investment Grade: Lower rated or unrated securities may have a significantly greater risk of default than investment grade securities, can be more volatile, less liquid, and involve higher transaction costs. | Capital: Investment markets are subject to economic, regulatory, market sentiment and political risks. All investors should consider the risks that may impact their capital, before investing. The value of your investment may become worth more or less than at the time of the original investment. The Fund may experience a high volatility from time to time. | Credit: The value of a bond may decline, or the issuer/guarantor may fail to meet payment obligations. Typically lower-rated bonds carry a greater degree of credit risk than higher-rated bonds. | Emerging Markets: Emerging markets may be subject to custodial and political risks, and volatility. Investment in foreign currency entails exchange risks. | Hedging: Any hedging strategy using derivatives may not achieve a perfect hedge. | Interest Rates: The value of bonds tends to decline as interest rates rise. The change in value is greater for longer term than shorter term bonds. | Manager: Investment performance depends on the investment management team and their investment strategies. If the strategies do not perform as expected, if opportunities to implement them do not arise, or if the team does not implement its investment strategies successfully; then a fund may underperform or experience losses. | Sustainability: An environmental, social or governance event or condition that, if it occurs, could cause an actual or potential material negative impact on the value of an investment.

Please refer to the fund prospectus and KIID/KID for a full list of risk factors and pre-investment disclosures.

View More

© Copyright 2024 Wellington Management International Ltd. All rights reserved.
WELLINGTON MANAGEMENT FUNDS ® is a registered service mark of Wellington Group Holdings LLP.
Wellington Management International Limited. Registered in England and Wales 04283513. Registered office: Cardinal Place, 80 Victoria Street, London SW1E 5JL, United Kingdom. Authorised and regulated by the Financial Conduct Authority of the United Kingdom.

For professional investors and intermediaries only. This content is not suitable for a retail audience.

View More

we’d love your feedback!

Help us improve our website. For every short survey taken, we give 2 to the Wellington Management UK Foundation to support educational charities helping economically disadvantaged children in EMEA.