Telephone and TV defections hit Virgin Media revenues

gallery

Cable and mobile phone operator Virgin Media has announced a lacklustre set of first quarter figures, showing both customer numbers and revenues hit by competition in the broadband market and the loss of TV channels supplied by rival Sky.

The company, which renamed itself as Virgin Media in February following the merger of cable companies NTL and Telewest, and following the acquisition of mobile virtual network operator (MVNO) Virgin Mobile, saw total revenue drop £59.7 million from £1,081.6 million in the last quarter of 2006 to £1,021.9 million over the first three months of this year. AS a result the company reported an operating loss of £15.3 million for the quarter.

The company blames the fall in revenue on several factors including lower sales from its shopping channels, integration issues resulting from the merger and acquisition, lower telephone revenues and the fallout from the loss of several Sky TV channels, which were pulled from its TV service in March after the two companies failed to agree a new carriage deal.

"Gross customer additions in the first quarter were 184,300, down from 213,500 in the fourth quarter, due to the loss of BSkyB's basic channels from our platform and to increased competitor activity" the company said in a statement. "As a result of the Sky basics issue and also continuing pressure on telephony, we expect negative customer, TV and telephony net additions in the second quarter."

Broadband was the one clear success for the company, which now has 3.15 million cable broadband subscribers. It added 87,900 new broadband connections in the quarter, up from 78,100 in the previous quarter. Its plans to upgrade its broadband service from 10Mb to 20Mb is still on track for completion by June, and the company confirmed it is trialling even larger bandwidth services. "We are also currently conducting a residential trial of a 50Mb broadband service" the statement said. However the company is still facing significant competition from competitors such as Orange, Carphone Warehouse and Sky, all of which are using subsidised ADSL-based broadband as a loss-leader to maintain customer loyalty and subscriptions to their core services.

But Virgin Media's telephony service suffered the most, with net subscriber losses of 63,400. The company blames this on a combination of market competition and its previous failure to actively sell phone lines alongside broadband and TV services, a failing the company is addressing with new 'triple play' bundles.

"Our first quarter of 2007 shows strong growth in TV and broadband, while fixed line telephone continues to struggle" said Virgin Media chief executive Steve Burch. "We are encouraged by the decline in churn and the impact that our rebrand message is having on consumers. With reinvigorated products and packaging, and a focus on cash flow growth, the outlook for our business remains strong."

Email to a friend

Print this page