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Virgin Media to invest £3bn in broadband

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Virgin Media has announced it is to invest £3bn in improving its fibre optic broadband network, increasing the network's reach from 13 million to 17 million homes.

It says it is the biggest investment in broadband infrastructure in the UK for more than a decade.

Virgin said the investment would also create 6,000 new jobs of which 1,000 would be apprenticeships.

Virgin Media currently has five million customers.

The company is already in the process of expanding its network to 110,000 homes across east London, Glasgow, Sunderland and Teesside.

media captionVirgin chief executive Tom Mockridge: "Top speed broadband is essential to economic performance"

Virgin Media said the additional £3bn in broadband investment would be worth £8bn in terms of stimulating UK economic activity.

However, the money will be spent on filling in gaps in its existing network rather than widening the network to rural areas, which critics say has long been neglected by communications companies such as Virgin and BT.

Speaking to the BBC, Virgin chief executive Tom Mockridge said it was BT's job to do more to bridge the so-called "digital divide".

Analysis: Rory Cellan-Jones, technology correspondent

Virgin Media chief executive Tom Mockridge compares the expansion of its broadband network to the building of the railways by the Victorians or the rollout of the motorways in the 20th Century.

That sounds just a touch hyperbolic, but this is indeed one of the biggest investments we've seen in the UK's internet infrastructure, made possible by the deep pockets of Virgin's owners, Liberty Global.

What the money will do is fill in the gaps left in the network when the old cable companies ran out of money in the 1990s. That will mean that streets in urban areas where BT's superfast broadband is the only game in town should now get a choice of supplier.

What it won't do is bring high-speed services to what's known as the final third - rural Britain, where it is hard to make the economics of laying fibre cables to every home add up.

That job is being left to BT - aided by public funds, mainly money set aside from the TV licence fee. BT, which is preparing to take over EE and become the dominant player in fixed and mobile broadband, may quietly welcome today's announcement.

A stronger Virgin Media network may make regulators less inclined to worry about its dominance.

He told BBC Radio 4's Today programme: "I think an investment of this size is unambiguously helping to close the digital divide. Everything can't happen at once so we are really focusing on the areas where we can bring ultra fast broadband as quickly as possible and as effectively as possible."

He also called on BT to do more to invest in improving existing infrastructure to help speed up internet services in the countryside.

The investment comes at Virgin Media announced a 2.3% increase in total revenues to £4.214bn for the year to the end of December compared with a year earlier.

Virgin said the increase in revenue was largely the result of increased cable subscription revenue, which grew 3% last year.

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