Blog Post

Earnings: Virgin VOD Gathers Steam; £163.2 Million Q4 Loss

Virgin Media (NSDQ: VMED) posted a £163.2 million net loss in the three months to December 31 – attributed to lower cashflow and higher staff turnover. But it continues to add subscribers and re-focus on broadband as its “premier” product. Overall revenue edged up 2.2 percent on the previous quarter to £784.9 million. Some 49.5 percent of customers now take triple-play services and the rate of customers churning away from the operator reduced from 1.7 percent to 1.4 percent – there were 24,400 more subscribers.

Broadband: Subscribers grew by a net total of 106,200 to 3.413 million – slower growth than in the previous quarter but this was a Christmas month. As recent marketing campaigns demonstrate, it sees its cable operator status as an advantage over copper-wire competitors in the speed stakes, and will offer 50Mbps this year, while BT’s (NYSE: BT) 21st Century Network will only offer 24Mbps. It’s anticipating it will “deliver the next generation of personalized on-demand content”.

TV: 47 percent of customers (1.5 million) are using the VOD service monthly, and the number of monthly VOD views has risen from 10 at the start of the year to 23. There were some 33 million VOD views in the quarter – up 45 percent on the previous quarter.

Release & Financials

Cable: After three consecutive falls, average revenue per customer (ARPU) was up 1.66 percent to £42.24 thanks to rising phone prices, cross-selling packages, PPV sports and high telephony usage – but these last two are “not expected to recur this quarter” (ie. phone use was probably bumped by votes to The X-Factor and Strictly Come Dancing).

Mobile: Virgin made less money from calls because it got less from roaming charges. Usually brought in from sumer holidaymakers, roaming charges were cut by the European Commission last year. ARPU fell from £11.11 to £10.69. Revenue fell 4.4 percent to £151.6 million