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Sprigge
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Message 11 of 16
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Re: Open letter to Jeff Dodds (COO)

While I am waiting for Lee to try to sort things out for me, here's a summary of what happened yesterday to showcase the frustrations that so many of us on this forum are experiencing.

At 8:45 I received a text message asking me to confirm the date for my internet to be connected. "The big day's coming" the SMS announced proudly. "We'll be connecting ou on Thu 14 Oct 8am - 1pm". I dutifully typed our CONFIRM, as I've done many time before, and tried to put my cynicism to one side.

At 18:39 I received an automated voice message asking me to confirm that it's OK for the engineers to visit on the 14th. Again, I confirmed, daring to allow a small amount of hope to enter my heart.

At 20:33 I received another SMS which said "We need to do some extra work outside before we can get your broadband up and running. This means that we've had to move your installation to 30/10/2021 between 1-6pm.

So far I've been told that the "Big Day" would be on:

  • September 1
  • deferred to September 15
  • deferred to October 01
  • deferred to October 14
  • deferred to October 30

I fully expect to get another series of automated messages to defer the date until the middle of November.

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Andrew-G
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Message 12 of 16
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Re: Open letter to Jeff Dodds (COO)

No response from Jeff Dodds yet I see.

Option 1: It'll take time for VM's communications department to parse a letter dripping with unfelt apologies and sympathies, whilst promising nothing and deliberately overlooking the very serious concerns that @Sprigge has raised.

Option 2:  Somebody in the communication chain is too scared to pass the open letter on, meaning VM's senior management intimidate staff.

Option 3: Mr Dodds has got the message, but doesn't want to respond because he doesn't have anything to say, and he's quite happy with VM's performance on installations, repulls, customer service, communication, complaints etc.

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Message 13 of 16
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Re: Open letter to Jeff Dodds (COO)

I hope no-one is holding their breath.

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Sprigge
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Message 14 of 16
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Re: Open letter to Jeff Dodds (COO)

In another thread @Tudor said “You only see problems on the board, never ever the 100’s of customers who installation goes ok”, which is a fair point in many ways. It got me asking “how many installs does VM do a year?” which led me down a rabbit warren.

According to the 2020 annual report VM has 6,061,900 ‘fixed-line’ customers who take one or more services (broadband, TV, phone) from VM. In 2019 this number was 5,953,500, so they added 108,400 (+1.8%) customers in one year or about 2000 a week.

Some customers left between 2019 and 2020 (i.e. attrition) and so the number of new installations will be higher than that. Indeed, on page II - 66 the annual report says that they did installations for 426,000 new customers.

So they added 426k customers in 2020 (~8200 a week) and lost 318k (5% of their total subscriber base). In 2019 they connected 505k customers; in 2020 they connected 80k fewer households than 2019.

Revenues

Revenues are broadly flat falling from £5168m in 2019 to £5128m in 2020 (£-40m or -0.1%). In other words, revenues fell by 0.1% even though the number of customers increased by 1.8%. That’s not a good position for any company to be in. Businesses want to generate more revenue per customer and VM has a strategy for that:

While we seek to increase our customer base, we also seek to maximize the average revenue we receive from each household by increasing the penetration of our digital broadband internet, video, fixed-line telephony and mobile services with existing customers through product bundling and upselling. 

That may be their ambition. However, the “Revenue Generating Units per customer relationship” fell from 2.45 in 2019 to 2.37 in 2020. So VM customers are taking fewer of the three services (broadband, telephone, TV) than they used to, with the proportion taking all three (“triple play”) falling from 60.8% in 2019 to 57.4% in 2020.

In summary, VM’s revenues are at best flat and might even be considered to be going backwards by some KPIs.

Costs

On the costs side, in 2020 the operating costs were £4795m, providing an operating income of £334m off of revenues of £5128m (6.5%). 

During 2020 and 2019, we reported net earnings (loss) of £39.3 million and (£337.3 million), respectively, including (i) operating income of £333.9 million and £86.7 million, respectively, (ii) net non-operating expense of £525.3 million and £445.0 million, respectively, and (iii) income tax benefit of £230.7 million and £21.0 million, respectively. 

VM is highly leveraged and has considerable debt that needs to be financed:

We have a substantial amount of indebtedness. As of December 31, 2020, the outstanding principal amount of our combined third-party debt, together with our finance lease obligations, aggregated £11,944.4 million, including £2,012.7 million that is classified as current on our combined balance sheet and £9,547.8 million that is not due until 2026 or thereafter. 

With revenues flat and high levels of debt there’s clearly a need to control costs. There is a line in the cost structure for “other operating expenses” which “include network operations, customer operations, customer care and other costs related to our operations.” According to the 2020 annual report, “Our other operating expenses increased £78.4 million or 11.1% during 2020, as compared to 2019.” So presumably that means they invested in customer services, right?

Er, no. Although their 'other operating expenses' increased in 2020 vs 2019, the customer service costs actually decreased.

A decrease in customer service costs of £4.0 million or 3.4%, primarily due to lower external call center costs, including the impact of the lockdowns during the second and, to a lesser extent, third quarter of 2020 associated with the COVID-19 pandemic, which prevented certain outsourced contract services from being performed.

There’s also a line for Selling General & Admin expenses (page II - 71).

A decrease in customer service costs of £3.5 million or 14.9%, primarily due to lower external call center costs

Conclusions

Revenues are flat and the external marketplace is highly uncertain, with an established competitor (BT) rolling out FTTP which will erode VM’s USP (fast internet connection via fibre). VM also has a high level of debt, presumably because they’ve had to invest in infrastructure, which will be expensive to finance.

Net earnings of £39m off a revenue base of £5128m is not a great position for a company to be in. Therefore it’s understandable that they are controlling costs as much as they can. However, they will only grow their way out of stagnation if they can increase the volume of installations they do each year before BT catches up with them. VM estimates that 16.2m homes could potentially have VM installed, so there are significant opportunities for them if they can get their act together.

The annual report includes a long list of potential risks to the business, one of which is:

our ability to provide satisfactory customer service, including support for new and evolving products and services

The volume of complaints on this forum about poor customer service and installation problems is probably a tiny percentage of the installs they do each week. However, in my opinion it should be considered the canary in the coal mine and alert the management team to some important issues that need to be addressed if they are to increase revenues by growing their customer base. 

The first step should be to admit publicly that there’s a problem, and to make more meaningful responses to the various issues raised on this forum. Sticking your head in the sand and hoping it goes away is never the best strategy.

Andrew-G
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Message 15 of 16
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Re: Open letter to Jeff Dodds (COO)

I have come to similar conclusions myself, and said as much in now long forgotten posts, and I'm sure other have, and in future others will.  VM management clearly don't read, or read and ignore the content of these forums, and continue to fiddle whilst Rome burns.  Which is unsurprising in a company run almost exclusively by marketing berks.

The corporate response by Liberty Global to the performance issues that are obvious from any competent analysis (or indeed spending a few hours reading this forum), plus the emerging threat of Openreach FTTP was not to sack most of VM's useless senior managers and put in competent people, but to ram through a takeover of O2, and then issue breathless press releases trumpeting on about the improbable savings they hope to make, and the monstrous benefits supposedly available from this "quad play".  What this looks like to me is fattening up the turkey for Christmas - or more exactly for an IPO, where Liberty Global and minority stakeholder Telefonica hope that gormless equity investors will flush their money down the toilet for a badly run company that doesn't give a flying anything about its customers, whilst the parent companies gallop off into the sunset with the gold.  And shortly after that the IPO investors find they've not bought a Faberge egg, but rather a dog's egg rolled in glitter.

Clearly the web site's got a typo - the COO isn't Jeff Dodds, its Ken Dodd.  

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Message 16 of 16
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Re: Open letter to Jeff Dodds (COO)

What is really going to bring an IPO down with a bump is Openreach's intention to have universal FTTP service completed couple of years before VM's target (if I've read the reports correctly).  Why would anyone buy into a failing company that still needs billions of investment just to remain an effective competitor?  It doesn't make sense.  There must be many, many VM customers like me who are just waiting for OR's fibre to arrive at my door to jump to a more reliable service.  We're not going to wait for VM to catch up.

The disconnect between Liberty and its customers in GB is clearly illustrated by this support forum.  If senior management knew what was being said here they would either take steps to improve customer service or take the much simpler step of clamping down on what can be said about them.  As it is we can all make our severe but honest criticisms of the management, provided only that we avoid bad language which offends the moderator. 

Once again I have to say how sorry I feel for the local GB staff who are stuck in the middle of this unpalatable sandwich, beween a rigid deaf management board in the US and the bitterly disappointed customers here who they try to help.  .

 

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