Virgin Media has given away some of its plans for Virgin Mobile at the cables-to-mobiles group’s investor day in London, painting the wireless business as a major contributor to its future revenue growth
The company stressed the opportunity offered by growth in the number of subscribers taking four services: cable television, broadband, fixed line phone and mobile. Virgin Media said that churn is very low amongst these “quad-play” customers at less than half of churn seen among triple play customers who don’t take mobile.
It also said that average revenues per quad play subscriber are almost double those generated by triple play customers: some £80 versus £46.
But analysts at Enders Analysis were not entirely sold on the story. “We do not doubt the veracity of these figures, but would question the causality and hence significance,” wrote Ian Watt in a research note. “The strong hint is that quad play causes much lower churn, but correlation does not prove causality.
“Presumably a Virgin Media customer who chooses to take Virgin Mobile as well is pretty keen on Virgin in general, so would naturally have a low propensity to churn. In other words, high loyalty causes quad play, quad play does not necessarily cause loyalty.
“The same argument applies to ARPU [average revenue per user]; it is the high spending cable customers who take the extra mobile product, the only extra ARPU actually caused by mobile is the mobile revenue itself (which would work out at about £25-£30 per quad play household, not £34+).”
It seems the market has still to be persuaded by the strategy dubbed “four-play” by Sir Richard Branson when he sold Virgin Mobile to NTL to create Virgin Media.