Virgin Media has recorded a 60 per cent year on year growth in mobile contract customers in its Q2 results out today, with net customer additions of 72,300 in the quarter. It brings its total contract mobile customer base to 785,000, compared with 492,000 in the same quarter last year.
Revenue from Virgin Media’s mobile arm was however down to £127.5 million, from £143.9 million in Q2 2008 and £135.3 million last quarter.
The company said the decline reflects the reduction in mobile termination charges (the rates networks charge each other to transfer calls from customers across networks) and the expected reduction in low lifetime value prepay subscribers. It said this is being partially offset by growth in the number of higher lifetime value contract subscribers. Contract customers make up 24 per cent of Virgin Media’s total mobile customer base.
Virgin Media put its contract growth down to its strategy of cross-selling mobile contracts through its own sales channels and existing broadband and television customers.
It said this strategy was effective at reducing churn, with the monthly churn rate for a quad-play customer being less than 0.7 per cent compared with around 0.9 per cent for a triple-play and around 2.7 per cent for a single product customer. At the end of the quarter, Virgin Media had around 450,000 quad-play customers.
The rate of prepay net disconnections slowed in the quarter to 106,500, down from 138,000 last quarter and 151,600 in Q2 last year. “The decline reflected our decision not to focus on the lower end of the prepay market because this segment has higher churn, low tariffs and lower overall lifetime profitability,” the company’s statement said.
Overall mobile ARPU for the quarter was £12.43.
Virgin Media is also in negotiations to agree its first “three screen rights deal” so customers can access the same content via TV, PC or mobile. It is also working to launch an unlimited music download subscription service with Universal Music. Negotiations are also underway with other record labels.
Total revenues across the company measured £936 million, down from £940 million in Q2 last year. It recorded an operating income of £15 million, up from minus £328 million in the same quarter last year; and a net income of minus £49 million, up from minus £449 million in the same quarter last year.
Virgin Media chief executive Neil Berkett said: “I am pleased to report strong consumer on-net revenue growth during another quarter of solid financial performance. Our strong free cash flow is underpinned by good cost control and a high quality customer base.
“This reflects the success we have had in delivering and monetising a compelling and highly competitive consumer proposition which exploits our strengths in broadband and video-on-demand. The growth outlook for the second half of the year remains strong.
“We have now reached a landmark milestone with the completion of our next generation network. More than 12 million homes now have access to 50Mbps broadband, the fastest commercially available product in the UK, and we continue to innovate with our customer pilot of 200Mbps.”