Virgin Media customer loss continues in Q2(UK)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.
