Neil Berkett: The man who led Virgin Media into the light

In just five years he transformed the cable company into one of Britain's biggest digital players. Nick Clark reports
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The Independent Online

Earlier this month, Neil Berkett found himself slightly out of place in a dilapidated building on London's South Bank, surrounded by twentysomething hipsters and beams of light. The 53-year-old chief executive of Virgin Media was nevertheless in a buoyant mood as he unveiled a spectacular art installation to celebrate the 10-year anniversary of Telewest – one of Virgin's legacy companies – launching broadband in the UK, saying the next decade would be one of growth for the group.

Virgin is unrecogniseable from when the New Zealander joined five years ago: transformed from a company that was shedding customers and had a reputation stuck in the gutter to what he hopes will be "the enabler for people in the digital world". The group is expected to show further evidence of growth in its first-quarter numbers next week, when analysts expect revenues to hit £966m, up from £936m a year ago.

The opening of the Speed of Light installation came just a day after the Digital Economy Bill had made it through the Commons. A sign of interesting times ahead? "I don't think there's an uninteresting time in this industry," Mr Berkett said. "If you think about where the digital industry is taking us, there's a development every day, week or month."

The Bill, which was eventually rushed through ahead of the general election, may not have been what Lord Carter had in mind when he drew up his vision for the future in his Digital Britain report, published in June, but Lord Carter's work has changed the debate, Mr Berkett said.

"Stephen Carter has left a legacy. It may not have come out the way he expected but he did a good job in bringing it together and raising the profile on both sides of the House," he said. Digital Britain was so important because it "asked all the right questions, and I think in a way the core paper answered quite a few of them".

Mr Berkett is positioning Virgin to be at the forefront of the digital revolution in the UK. Virgin wants to be more than just a "dumb pipe" that carries data, instead seeing itself as "the intermediary of choice in the digital world".

"We all get carried away in this new world about the plumbing being on one side and – in Stephen Carter's words – the poetry on the other. Nobody thinks about how it all comes together." It believes it can offer some answers, such as in the illegal filesharing debate. The group is preparing to launch an unlimited music service, for a small monthly fee, to help combat piracy without simply threatening disconnection. If successful, it could provide similar models for TV and film.

Virgin's heritage is in broadband. Its cable network covers half the UK, and offers superfast broadband speeds of up to 50Mb per second. It is preparing to roll out speeds of 100Mb – moving into the realms of ultrafast – before the end of the year and is trialling 200Mb in Kent and Coventry.

"Part of my job is making broadband trusted," Mr Berkett said, adding: "You have to make it sexy otherwise it is a commodity."

The group is extending its network to cover 13 million homes, and has been in discussions on how to expand as far as is economically practicable. Last month it announced a move to run fibre over telegraph poles, which could extend its reach by a further million homes.

Universal broadband has now become a strongly fought election issue, and Mr Berkett favours funding from the BBC licence fee to encourage companies to expand in rural areas. There has been talk about BT opening its ducts to rivals, but Mr Berkett is not particularly keen. "Academically it's interesting, but we don't know if it's practical. Half the ducts are blocked." Rivals are also looking at running cable through sewers and waterways.

Virgin's services extend from the internet to TV, fixed line phones and mobiles, and it has increasingly found customers looking for the "quad play" of all four.

Mr Berkett sees the different products converging, saying: "The product is digital. Digital entertainment, digital information, digital communication, those are the products. There are various routes to getting a hold of it."

The pay-TV service is also growing, through a rise in its video on demand business, and should benefit from Ofcom's recent decision to force Sky to wholesale Premier League rights more cheaply. However, no one is really happy with the ruling, according to Mr Berkett. The future of its TV looks brighter following a deal with US set top box maker TiVo. The enhanced, internet TV boxes should be in the shops by Christmas, providing what some insiders call "Canvas on steroids". Mr Berkett still has profound misgivings over Project Canvas, the online TV project run by companies including the BBC, ITV and BT.

But Mr Berkett believes the country is in good shape. "The politicians are looking to accelerate next generation access; that's the right thing to do. Are we doing it in catch up mode? I'm not sure we are. I think on a global basis we are moving at a good pace."

Mr Berkett trained as an accountant in Wellington and after stints at the New Zealand post office, ICL, and Citibank, he took over as head of East-West Airlines.

He moved to the UK 12 years ago, and after stints at Prudential and Lloyds TSB joined NTL as chief operating officer in 2005.

He succeeded Steve Burch as chief executive two years later as the merger of NTL and Telewest, as well as the acquisition of Virgin Mobile, was being digested. The company faced significant competition from new entrants TalkTalk and Sky into broadband; just the sort of challenge he likes. "My core competency is not industry specific. I like big, hairy problems, whether that's a turnaround or a turn up or a rebuild," he said.

The group expects to be profitable within a couple of years, as a big chunk of historical amortisation comes off in 2011, and reveals it has completed a three-year refinancing drive.

"We now have a more sensible capital structure," Mr Berkett said, adding: "The company is in the growth phase... I was pleased with last quarter's results, but we've got to do it again, and again and again."

CV

Neil Berkett, Chief executive of Virgin Media. Married, four children

Education:

Studied accountancy at the University of Wellington, New Zealand

Work:

Chief operating officer, NTL; Managing director, Lloyds TSB; Chief operating officer, Prudential; Principal, Marsh Mill Consulting; Head of retail, St George Bank; Senior general manager, Citibank; Chief executive, East-West Airlines; Financial Controller, ICL Australia

Interests:

His passions are hiking and driving his Smart car. A sports fan, he supports the All Blacks rugby team and follows Formula 1

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