Virgin media nets more money per user

City A.M. Reporter
Cable operator Virgin Media added fewer net new customers in the third quarter than expected but managed to extract record sums from each user.

Virgin Media, which competes in Britain with BT and BSkyB in the provision of broadband, telephony and pay-TV, said it had added 14,100 net new customers in the period ending September, compared with a Reuters forecast of 21,000.

Churn, or the percentage of customers who left the company, increased slightly to 1.6 per cent as rivals increased their marketing activity and increased competition.

But the group managed to cross sell more products to their existing customer base, with 62.7 per cent now taking three products, helping Virgin to post record average revenue per user of £46.38.

Virgin Media has benefitted since it moved its focus to delivering faster broadband products and services to order TV shows on demand.

It said on Wednesday it had launched the pre-registration service for 100 Mb broadband, which is due to go on sale in December.

The strong operating performance enabled the group to post a third-quarter rise in revenue up 6.4 percent to £978m, compared with a Reuters poll predicting £968m.

The key operating cash flow (OCF) metric was up 11 per cent to £387m, compared with the forecast of £376m, in the fourth successive quarter of double digit percentage growth.

"Our continued focus on exploiting our strategic advantages with the resulting multiple opportunities for revenue growth, as well as robust financial discipline has delivered another strong financial performance this quarter," chief executive Neil Berkett said in a statement.

Virgin Media said in July its consistent improvement in attracting new customers and securing more revenue per user had given it the confidence to launch a share buyback of up to £375m over the next 12 months.

The buyback is part of a £700m capital return programme that will also pay down debt. It said on Wednesday it had completed an initial buyback of £125m of stock and retained the authority for a further £250m.