Virgin Media sheds 36,000 customers, but profits are up

Subscribers leaving, but at the bottom end of the product scale
Kerry Butters
Kerry Butters -

Virgin Media

Virgin Media lost 36,000 cable customers according to figures for the last quarter published today, but the company still managed to increase profits by 2.2% and report record growth.

The company said that although customers using its services had declined, over 90% of these were “lower-value single and dual-play customers.”

The quarter is traditionally less profitable than other times of the year due, in part, to students stopping their low-cost services as they return home for the summer, although Virgin cite the “weaker economic environment” to also be a factor.

However, the report said that the company continues to expand its customer base of consumers who are choosing high-level products, as the level of triple and quad-play customers rose by 2.6%, whilst customers on dual-play services decreased by 3.6%.

New broadband customers requiring speeds of 30Mbps were also shown to be on the increase, with half of all new customers ordering 30Mbps or higher as opposed to 18% of new take-ups ordering 20Mbps or more this time last year.

Almost 1m customers now enjoy speeds of 20Mbps or more with the company whilst their 50Mbps and 100Mbps services are seeing an increase of more than 50% in the last twelve months.

Virgin Media commented: “We are on track for rolling out the country’s fastest widely available broadband service, 100Mb, right across our network by mid 2012 and around 6m cable homes already have access to this superfast speed.”

The company also reported strong growth in the amount of data downloaded, an increase of 25% in the last quarter. The amount of data consumed had grown by 43% every year since 2007.

TiVo, the new television service is showing signs of success too and is already installed in over 50,000 homes in the UK. The company said that demand for the new service is high and this is due to the unrivalled platform that they offer, including a library of on-demand products which are used regularly by 78% of their TV customers.

Virgin saw a fall in profits in its mobile service, but even so, this section has shown the best growth out of all of the company’s services and is enjoying the most positive period in the last three and a half years.

This is due to an “ongoing focus on customers with a higher lifetime value”, Virgin said, noting it had achieved “83,200 contract customers in the quarter, taking the total to 1.35m, up 23% from a year ago.”

Virgin also intends to offer a new telephony package in the near future to attract both mobile contract customers and those who want to take up four Virgin products. The package will offer discounts to customers choosing to combine broadband, TV, telephony and mobile services.

Neil Berkett, Chief Executive Officer of Virgin Media, said: There is a growing and increasingly broadbased population of people who are becoming dependent on next generation digital technology and are prepared to pay for quality services.”

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