Virgin Media Inc. (VMED), the second largest cable MSO in the U.K., continues to innovate offerings in order to reduce churn and prevent its market share drain due to the onslaught of new entrants. Recently, the company launched “Get Social”, a new social networking and email application for its wireless subscribers, to give them instant updates from a number of social networking sites. Get Social will provide instant updates from Twitter, Facebook, Google Talk of Google Inc. (GOOG), Yahoo! Messenger of Yahoo! Inc. (YHOO) and virginmedia.com and will also enable people to stay in touch and up-to-date with their counterparts at all times.

Virgin Media will launch this service on two Nokia Inc. (NOK) handsets ? 5580 and 5530 ? and also on two Sony-Ericsson handsets namely, W595 and K770i. Sony-Ericsson is a joint venture between Sony Corp. (SNE) and L.M. Ericsson (ERIC). Increasing sale of high-end mobile handsets resulted in huge growth of mobile Internet data tariff for Virgin Media.

Virgin Media is the first quad-play service provider in the U.K. offering television, fixed-line telephone, broadband and mobile telephone services. In our view, the company is in the early stages of a turnaround, poised to generate strong free cash flow and improved EPS in fiscal 2010. A new management team is re-branding the product, formerly notorious for poor customer service.

Virgin Media’s video-on-demand (VOD) service is gaining traction. Average monthly VOD views increased 51% year over year to 66 million in the third quarter 2009, and is now second only to YouTube for on-demand viewing of any kind. The market for quad-play cable MSO is emerging rapidly in terms of technological innovation and demand. Through Get Social, Virgin Media is trying to change the mobile experience of its customers’ favorite social networks.

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