(The following statement was released by the rating agency) LONDON, June 08 (Fitch) Fitch Ratings has upgraded Virgin Media Inc’s (VMED) Long-term Issuer Default Rating (IDR) to ‘BB-’ from ‘B+'. The Outlook is Stable. At the same time, the agency has upgraded the instrument rating of the unsecured notes issued by Virgin Media Finance Plc to ‘B’ from ‘B-'. A full list of rating actions is at the end of this comment. The upgrade reflects Fitch’s view of VMED’s ability to generate free cash flow (FCF) and support a leveraged balance sheet. VMED has a strong operating profile as the country’s leading alternative telecoms infrastructure, with well-established levels of customer penetration, service per customer metrics and high average revenues per user (ARPU). These metrics provide visibility over the project economics of Project Lightning, VMED’s plan to cable an additional 4 million UK homes. While Lightning is expected to supress FCF for three to four years from 2016, underlying FCF generation is expected to remain strong. VMED’s ownership by Liberty Global means a leverage policy that in Fitch’s view is likely to keep funds from operations (FFO) net leverage towards the higher end of the 4.5x-5.0x range. However, it also provides procurement and financing synergies and could be expected to provide financial resources in the event of company specific or capital market stress. The strength of underlying cash flows and the scalability of Lightning capex, suggest an ability to deleverage in times of capital markets stress. Fitch considers this a differentiating factor relative to businesses with similar leverage but no underlying cash flow or organic ability to deleverage. KEY RATING DRIVERS Strongly Performing Cable Business VMED’s cable operations have the strong operational profile of a number of European cable businesses, where cable’s technological advantage, targeted network build and rational approach to pricing and content aggregation, position the sector and company to continue to deliver top-line growth and healthy cash flows. Increased network investment will suppress cash flow through to 2018 or 2019; while the medium-term visibility of project returns and the scalability of Project Lightning moderate capex risk. VMED benefits from being part of the Liberty Global group, which in Fitch’s view allows procurement and financing synergies as well as product strategy and technology advantages.