Virgin struggles to win over investors

28 Sep 2004

The share price of UK MVNO Virgin Mobile fell by more than 6% on early trading this morning after the company warned that tariff cuts imposed by the regulator would adversely effect its forecast service revenue growth for the second half of 2004. Virgin is now expecting growth of around 15% in service revenues for the period, a similar level to that recorded in the first half of the year but down on the 20% growth expected by the investment community. Despite scaling back its service revenue forecast, the operator has maintained that it expects to report a ‘substantial’ rise in earnings and operating margins thanks to strong cashflow generation which has allowed it to reduce debts substantially over recent months. Nevertheless, investors remained unconvinced, with Virgin’s shares trading at GBP1.96 by 9am this morning, down from yesterday’s closing price of GBP2.09. The operator, which listed at GBP2 a share in July, is expected to announce a shareholder dividend when it reports its full-year results next summer.

United Kingdom, Virgin Mobile UK