Virgin Mobile grows up

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Virgin Media’s third quarter results showed a record increase in its mobile contract customer base, up 51 per cent to 873,000, compared with the year-ago quarter, a significant progression from where it stood at the beginning of the year.

Its success has come in part from its cross-selling of mobile products into its parent’s TV, broadband and fixed line customers in the home.

It was a deliberate strategy for the company, once the long integration of Virgin Mobile into the old NTL cable business completed following the latter’s assumption of Virgin Mobile for £962 million in 2006 and its reinvention as Virgin Media.

It was also a necessary move for it to focus on low-cost contract acquisitions as its prepay channels were torn up in the recession in the early part of the year with the administration of Zavvi and Woolworths.

Virgin Media director of mobile Jonathan Kini (pictured) reflects: “It resulted in a huge gap in prepay connections for us, and 300 staff were also affected. I was called on Christmas Eve last year, and we worked closely with Ernst and Young, managed it brilliantly, and retained a lot of those staff through new store openings.”

Retail expansion
But the slump in broader consumer retail has been a mixed blessing. A decline in high street rental charges as real estate has been vacated has seen Virgin Media stores open up swiftly. “Economic conditions are very favourable,” points out Kini.

“There are a lot of empty sites out there. We have significantly reduced the cost of rollout compared with our competitors. They’re holding quite heavy asset liabilities but we haven’t had to take that on from the start so we have been able to accelerate that growth. It’s well ahead of plan.”

Virgin Media’s Oxford Street store in London, opened earlier this month, was its 21st new outlet this year, bringing its shop estate to 44, and on track to hit 75 next year. These Virgin Media shops showcase its full quadplay offering: mobile, TV, fixed line and broadband.

The rollout is part of a three-year plan, formulated in the summer, which includes a series of ‘retail lite’ shopping mall kiosks, and has seen the total absorbtion of its Virgin Mobile brand under the Virgin Media umbrella for all propositions.

The restructure saw commercial director Kini, a five-year veteran of the firm (with a year-sabbatical at Phones 4U between), handed charge of the mobile division, reporting to former Virgin Mobile chief Graeme Oxby, now overseeing the mobile, fixed line, and broadband businesses.

The recession, it figures, also makes its over-arching Virgin Media offer appeal, as budgeting consumers look for a single provider to bill them for all entertainment and communication services.

Broader proposition
Virgin Media has a total of 3.2 million mobile customers. It will hit one million contract customers next year with an expanding handset range, and opportunities to sell mobile into 10 million existing Virgin Media customers in the UK. It is an enormous and natural target market for it.

Kini reckons Virgin Media has stemmed the loss of prepay customers since the loss of Zavvi and Woolworths, with an expanded retail estate of its own and increased activity through Carphone Warehouse, Phones 4U and other third parties.

Full article in Mobile News issue 453 (November 30, 2009).

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