Improved churn sees Virgin Media report increased revenue in 3Q12

23 Oct 2012

British cableco Virgin Media has posted a 2.9% year-on-year increase in quarterly revenue amid stronger customer retention, with the operator revealing net cable customer additions of 39,500 in the three months to end-September 2012, up from 6,300 a year earlier, and reporting that quarterly churn fell from 1.7% to 1.4%. For the three month period Virgin Media recorded total turnover of GBP1.027 billion (USD1.65 billion), up from exactly GBP1 billion in the year ago quarter, with the consumer segment accounting for the lion’s share of that – GBP859.1 million, up from GBP846 million. Revenues from the operator’s mobile voice services declined by 3.1% against 3Q 2011, though Virgin Media said that this was ‘largely due to regulatory changes to mobile termination rates which reduced the amount of inbound mobile revenue [it] received by approximately GBP7m in the quarter compared to 3Q11’. Operating income meanwhile increased by 40% y-o-y to GBP180 million, with net income for the period standing at GBP124 million compared to a net loss of GBP74m in 3Q11. Free cash flow for the three-month period was down 11% at GBP120 million, which the operator said reflected the incremental capital investment in its broadband speed upgrade programme.

Broadband uptake in the quarter was strong, with Virgin Media noting that total broadband net additions in the period were 56,900, a figure which was more than double that reported a year earlier. Further, the cableco noted that the number of customers taking ‘superfast’ connections (those it described as offering downlink speeds of 30Mbps or more) had continued to increase; at end-September 2012 it said that it had 1.8 million superfast broadband subscribers, up 452,900 in the quarter. It also noted that demand for its top-end speeds remained strong, with approximately 44% of new broadband subscribers taking speeds of 60Mbps in 3Q12. At 30 September 2012 Virgin Media’s total broadband subscriber base stood at 4.209 million.

Commenting on the results, Virgin Media CEO Neil Berkett said: ‘This has been a quarter where continued strong demand for superfast broadband and TiVo has led to lower churn and meaningful cable customer growth. Combined with progress in our business division, we have again delivered solid financial progress with continued revenue and OCF growth, translating into strong Free Cash Flow and shareholder returns.’

United Kingdom, Virgin Media