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Earnings: Virgin Media Turns A Corner – Q3 Broadband Growth Helps Slow Defections

After a torrid year in which it lost many customers to BSkyB (NYSE: BSY) and others, Virgin Media (NSDQ: VMED) turned a corner in most areas of the business, turning Q2’s loss of 70,300 customers in to a net gain of 13,000 to finish the quarter with a £46.7 million operating profit (Q2: £3 million) on revenues of £1 blllion (Q2: £995 million). Growth was attributed to increases in mobile and content revenue.

Broadband: Net customer additions more than doubled from Q2’s 50,500 to 122,900, taking it up to 3.59 million subscribers. This will come as some comfort, a week after BSkyB’s profit for the same quarter dipped 28 percent after its broadband infrastructure investments. In the quarter, it completed the upgrade of 10Mbit customers to 20Mbit (though data published yesterday from ConsumerChoices shows only 38.2 percent of 20Mbit customers actually get that speed – on average, they only get 7.6Mbit). It’s planning “significant increase to existing speeds in 2008”, continuing a 50Mbit regional trial.

VOD: The digital cable TV on-demand service got 24 percent more views than the prior period at 23 million. It now has 4,300 hours of shows and 45 percent of viewers are using it monthly, up from 36 percent at the start of the year (most people using it 17 times in any month, up from 10 at year’s start). Virgin said it expects to be the first to offer BBC iPlayer over a TV.

TV & DVR: Some 20,400 net TV subscribers were gained in the quarter (Q2: 2,200). Customer base for the Sky+-like, V+ DVR grew 14 percent to 190,200 (six percent of all its digital TV subscribers) on additions of 23,000.

Phone: The desertion of 56,900 landline users in Q2 was slowed to just 1,300, attributable to better marketing and more flexible pricing. Mobile revenue edged up to £158.7 million (Q2: £146.3 million) but fewer multi-play customers are taking out a mobile contract – additions down from 52,800 to 29,700.

Content: VMtv, the in-house channel producer borne out of Flextech, brought home £27 million revenue (Q2: £25.9 million).

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