Virgin looks to businesses for growth

David Hellier
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CABLE-to-entertainment group Virgin Media yesterday reported quarterly revenue figures of £1bn, up from £941.3m a year ago, predicting strong growth from its business services division in the year ahead.

Virgin chief executive Neil Berkett said the order book for business data services was up 40 per cent from a year ago and he said that growth in this area would be faster than the consumer area.

In the consumer space the group said it attracted 17,100 net new cable customers in the fourth quarter ending December 31 and that cable average revenue per user rose 4.9 per cent to £47.51 in the fourth quarter from £45.28 a year earlier. Its total number of cable homes stands at 4.8m, still well down on that of its main competitor BSkyB.

Sanford Bernstein said in a research note it sees “significant opportunity in coming years” for the group. The broker has an ‘outperform’ rating and target price of 2,500p on the stock. The stock has risen 79 per cent over the past 12 months.

Although Berkett described Virgin’s relationship with BSkyB as “as good as it ever has been” there are still tensions, not least over the launch of Sky’s prized new US import channel Sky Atlantic.

Virgin is not showing the channel, tempting some of its customers to switch to Sky. Berkett said that he had not been able to agree a price with his rival for “a single channel which is completely unproven.”

Berkett said his offering had its own advantages, such as video on demand and faster broadband speeds. He also said that Virgin had reduced its prices for Sky Sports following a regulatory ruling last summer but it had not passed all the savings on to its customers, choosing to boost its margins.