Virgin Media loses 20,000 customers

Virgin Media, the cable operator formerly known as NTL Telewest, surprised the market today with news that it broke into the black for its second quarter with a healthy operating profit of £333 million.

However, that profit was wiped out by £366 million write-down on the value of its Virgin Mobile virtual mobile phone network business, which the company paid £962 million for in 2006.

Average revenue per user (ARPU) also slipped slightly, falling to £41.63 per month from £42.16. Sales slipped slightly to £990.5 million from £995 million, broadly in line with expectations.

However, the company confirmed that it lost 19,500 net customers in the second quarter, taking the total of residential customers on its cable network to 4.74 million.

"In the face of a tougher national economic environment... we continue to focus on improving our operational execution and driving unnecessary cost and inefficiencies out of the business," said Virgin Media chief executive Neil Berkett in a statement.

Virgin Media offers residential customers landline and mobile phone services, cable TV and cable broadband. It also has a business arm, NTL Telewest Business, which offers networking and telecoms services to the enterprise. IT PRO reported earlier this week that this division is facing the possibility of being sold-off to raise money for investment elsewhere in the business.

The company said it increased triple-play customers - those who sign up for cable, landline phone and broadband - to a record 53 per cent of overall subscribers.

It added 54,600 broadband customers in the quarter, compared with BT's 103,000 - which includes business customers - and 41,000 at Carphone Warehouse’s TalkTalk.

Robert Jaeger, credit analyst at Societe Generale, said Virgin Media's deceleration in customer numbers was a slight concern for the medium term, though he said he was still comfortable with the company's overall cash flow profile.

The second quarter, when students and others move home, is usually weak for Virgin Media. Last year's second quarter was particularly bad, with 70,300 customers walking out after BSkyB pulled its core channels, including popular stations such as Sky One, from the Virgin platform.

(Additional reporting from Reuters).

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