It surpassed analyst expectations as it added 38,300 net cable customers to solidify its position as the UK’s second biggest pay-TV provider.
Chief executive Neil Berkett said the firm had benefited from both record new customers and the lowest outflow of customers recorded since it was formed. Just 1.1 per cent of Virgin customers left the firm.
Berkett said: “We’ve got a rhythm about us now. To produce results showing strong customer growth as well as strong financial performance is very pleasing.”
The average customer spend also increased, creeping over the £45-a-month mark for the first time, helping to push first quarter revenue up 2.9 per cent to £963m. The results were boosted by strong demand for broadband and pay-TV and the number of existing customers upgrading to take additional products.
Those taking three services of either pay TV, broadband, fixed and mobile telephony were up at 62 per cent of the base. It said it has reached one million mobile contracts, increasing the number of customers signing up by more than 40 per cent in the past 12 months. Its shares have risen more than 130 per cent in the past year, and closed yesterday at £11.84.
But despite the record growth in customers, the cost of interest payments on its mammoth £6.1bn debt pile, as well as losses on currency hedging, meant its pre-tax losses in the first quarter widened from £154m a year ago to £160m.
FAST FACTS | VIRGIN MEDIA
● Virgin added more than 38,000 net cable customers last quarter.
● It also held its churn – the number of customers leaving its subscription services – to 1.1 per cent.
SKY VS OFCOM
THE LEGAL BATTLE
VIRGIN will be eagerly awaiting the verdict of its arch rival Sky’s legal challenge against telecoms regulator Ofcom.
A landmark legal battle that began last Friday, expected to last a single day, was still dragging on yesterday afternoon.
The case centres around a ruling handed down by the watchdog ordering Sky to slash the wholesale prices it can charge its rivals, like Virgin, for Premier League football.
Sky vowed to fight off the ruling in the courts and the first stage in the epic legal wrangle is its application for a “stay of implementation”.
This would prevent Ofcom from forcing Sky to immediately drop its prices. The regulator would be forced to wait until after the matter has been debated in front of a court.
It would effectively scupper Ofcom’s chances of bringing in the price changes in time for next season’s Premier League as the appeals process would take a minimum of nine months before the case came to court.
The ruling could be a pivotal moment for the future of Sky’s pay-TV dominance. The broadcasting giant has more than 9.5m subscribers – more than double Virgin which is in second place. However, its rivals have hinted they may offer the sports packages for free as part of a bundled deal including broadband and a fixed phone-line.
Sky’s dominance in Pay-TV is largely down to its investment in the Premier League and the ruling could chip away at its subscriber base.
In what Sky has branded a “sop”, Ofcom will allow it to sell subscriptions for its premium content through Freeview, giving it a potential new audience of around 10m.
The scheme – codenamed picnic – would almost certainly net Sky millions in extra revenue. Sky would also benefit from the extra wholesale subscriptions it would sell due to the cheaper prices.
However, the long-term implications could be catastrophic and Sky will fight tooth and nail to overturn the ruling.