NEW YORK ( TheStreet) -- Virgin Media ( VMED) shares are dropping today after analyst Robert Grindle of Deutsche Bank downgraded the stock to a hold rating from a buy.

Grindle lowered his rating on the media stock on the expectation of rising competition in the cable and broadband industry this year.

"We are concerned about the need to adjust business mix (in favor of mobile) to compensate for tougher cable and broadband competition in 2011," Grindle said in a Jan. 18 research note. "Although the company offers strong free cash flow growth, we feel the risk-reward balance is now more neutral."

He said that while Virgin was a strong performer in 2010, its free cash flow yield is now "less compelling relative to the sector and other cable stocks."

In the face of the increased competition, Virgin Media will likely shift its business to focus more on its mobile offerings and less on cable. Grindle recognizes the risks associated with adjusting its business.

"Mobile data and the move to smartphones should indeed benefit Virgin Media ," Grindle said, "but we are concerned that the market will more heavily discount mobile versus cable growth."

He projects that the competition among U.K. cable TV providers will stifle Virgin's cable revenue growth.

Virgin Media shares are down 2.5% to below $24.60 today.

-- Written by Theresa McCabe in Boston.

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