UK cable operator Virgin Media reported a continued loss of customers in the second quarter, reducing its total by 70,300 to 4.7 million. The company estimates it lost some 40,000 customers in the period due to Sky removing its channels from the Virgin platform in March. Average revenue per user also fell, to GBP 42.16 from GBP 42.75 in Q1, hurt by lower telephony use and more retention discounts. Growth in broadband subscribers slowed from the previous quarter to 45,800 net additions, while both the mobile and fixed telephony activities showed declines in customer numbers. Second-quarter revenues increased to GBP 995 million from GBP 884 million a year earlier, thanks to the takeover of Virgin Mobile in July 2006, while operating profit fell to GBP 3 million from GBP 6.3 million. The net loss narrowed to GBP 119 million from GBP 196 million a year ago due to the absence of forex losses.
At Virgin Mobile, the company lost a net 46,500 customers in the quarter for a total 4.415 million in June. It added 52,800 postpaid customers, helped by cross-selling to cable customers, and lost 99,300 prepaid users. Mobile revenues still grew to GBP 146.3 million from GBP 141 million in the first quarter, while operating cash flow increased to GBP 32.7 million from GBP 26.7 million. ARPU increased to GBP 10.70 from GBP 10.07 in Q1. Virgin Mobile expects lower operating cash flow in Q3 as higher customer additions lead to an increase in acquisition costs.
The broadband activities finished June with 3.467 million customers. Net additions slowed to 50,500 from 97,600 in the first quarter of the year, which Virgin attributed in part to increased churn due to the Sky problems. The fixed telephony service posted a net loss of 56,900 customers, fewer than the 63,400 lost in Q1. The total base stood at 4.069 million at the end of June, while Virgin said it saw an improvement in line loss in the course of the quarter due to increased management focus and new selling techniques.
In cable, consumer revenues fell to GBP 619.3 million from GBP 644.7 million a year earlier, and business sales dropped to GBP 155.8 million from GBP 160.1 million. At the residential business, Virgin increased the average number of services per customers to 2.23, while triple-play penetration was at 45.2 percent. Churn increased to 1.8 percent form 1.6 percent in Q1, with the increase attributed entirely to the Sky issues. Use of video-on-demand services rose to 44 percent of customers with access to the service, from 36 percent using the service at least once a month at the start of the year. Average views per user per month are currently 13.7 compared to 9.6 at the start of the year.
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UK cable operator Virgin Media has extended talks on a possible takeover of the company following the recent weakness in world debt markets. In early July the company confirmed that it had received a takeover approach and was starting a strategic review of its options. According to the company, “potential strategic and financial counter parties have continued to confirm a strong ongoing interest in a transaction”. However Virgin’s financial advisers have recommended it extend the process “until these parties can complete their proposals in a more stable debt market environment”. To date private equity companies such as Carlyle and Providence have been rumoured to be considering a bid for Virgin Media.
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UK cable operator Virgin Media has confirmed that the company received a takeover approach. The unnamed bidder has made the offer dependent on its identity not being revealed prior to the public announcement of the offer terms. Virgin Media has yet to start negotiations with the potential suitor and any offer still depends on accounts due diligence. Earlier media reports suggested that the private equity firm the Carlyle Group had approached the cable and mobile operator with an offer of around GBP 5 billion. Virgin Media also confirmed that prior to receiving the takeover approach, the company had already hired Goldman Sachs to look at its strategic options, including a possible sale of the group
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Virgin Mobile UK said fourth quarter sales were up 20% year-on-year as it added 193,000 net active mobile users in the three months to 31 December 2005, taking its total customer base to 4.346 million. ARPU on a twelve-month rolling basis was up GBP2 to GBP123, whilst non-voice services accounted for 32.6% of revenues; churn stood at 27.5% for the quarter, from 26.9% in 3Q05.
- February 28th, 2007
- 4:28 pm
Telegeography writes…Virgin Media, the UK largest cable operator formed by the merger of ntl and Telewest, has said its 2006 loss widened as costs more than doubled after the company increased marketing. The net loss for the year was GBP533.9 million pounds (USD1.05 billion), compared to a profit of GBP421 million a year earlier. Costs rose to GBP3.59 billion from GBP1.97 billion, while revenue grew from GBP1.95 billion to GBP3.6 billion. At the end of the year the company claimed 4.11 million cable telephony customers, 3.35 million cable TV subscriptions and 3.06 million cable broadband connections, taking its ‘on-net’ revenue generating units (RGUs) to 10.52 million.
Overshadowing its results announcement is Virgin Media’s ongoing and very public spat with satellite TV rival BSkyB over distribution fees for four of BSkyB’s channels. Virgin’s current contract to air Sky One, Sky Two, Sky Sports News and Sky News expires at midnight tonight and BSkyB said on Monday that it was possible they might not reach a distribution deal. Virgin responded by saying that BSkyB was seeking to double the cost of the existing distribution contract for the four channels, whose average audience size has fallen on average by 7% a year over the past three years.
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- February 8th, 2007
- 1:43 pm
Telegeography writes…BT Group has delivered slightly better than expected third quarter results after its Retail division grew its share of the broadband market. In the three months to the end of December 2006 BT Group revenues rose 5% to GBP5.13 billion as growth in its internet and IT services businesses outweighed declines from its traditional voice operations. BT Retail’s turnover edged up 1% to GBP2.13 billion, the first rise in four years, on broadband growth and the first rise in its fixed line customer base in four years. BT Retail added around 237,000 new broadband customers in its third quarter following the launch of its Vision video-on-demand service in December. According to the group, Retail’s share of total new broadband subscribers in the UK, excluding those signing up to cable giant ntl (now known as Virgin Media), increased to 34% from 25% in the previous quarter. Meanwhile, at its Global Services division, which focuses on large corporate customers, BT reported that revenues increased 4% to GBP2.29 billion.
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Virgin Media customer loss continues in Q2(UK)
