Virgin tanks despite jump in customers

 
Steve Dinneen
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VIRGIN Media yesterday announced it has added more high-value customers but saw its shares tank as cashflow generation ran out of steam.

It made net customer adds of 6,300, bouncing back from a traditionally difficult second quarter that saw 36,000 people left the service.

Investors struggled to digest the results, with Virgin trading up slightly during afternoon trading in the UK before lurching as much as 10.5 per cent upon the opening of the US markets, where the majority of its stock is listed. It closed down 7.4 per cent in London and 5.9 per cent in New York.

Virgin said strong growth in its TiVo content-on-demand service helped drive its average revenue per user to a record £47.86.

Enders analyst Ian Watt described the results as “one of the most interesting I’ve seen in the sector,” saying it is difficult to gauge the firm’s performance.

He told City A.M.: “It’s a glass half full or half empty situation. Cashflow has more or less ground to a halt after two years of strong growth. Volumes are positive, with strong uptake of fast broadband and TiVo but there are also quite a lot of people leaving through the back door.”

The group also announced an extension of its share buyback programme of up to £250m.