Virgin Media posts 2.9pc increase in mobile revenue

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Contract customer base hits 1.6 million subscribers as MVNO’s quad-play strategy continues to accelerate

Virgin Media increased its mobile revenues by 2.9 per cent to £136.4m in Q2, driven by its continued improvement in the proportion of mobile customers with contracts.

It said that mobile termination rate changes reduced the amount of inbound mobile revenue it received by around £6 million in the quarter and excluding this regulatory factor, said mobile revenue would have increased by around seven per cent.

The MVNO added 53,900 contract customers in the quarter, to increase that base by 22 per cent year-on-year to 1.64 million subscribers. However, this was down from the 83,200 contract customers added in the same quarter last year.

Prepay customers continued to fall, with 35,200 leaving in the three-month period to leave the base at 1.38 million subscribers. This was slightly up on the 32,600 that left in Q2 2011 but significantly down from the 93,400 customers lost in the previous quarter.

Contract service revenue increased 15 per cent year-on-year to £101.7 million, but prepay service revenue declined 20 per cent to £32.8 million.

Virgin said the strong contract revenue growth was partially offset by the headwinds of declining prepay revenue and regulatory changes to mobile termination rates.

Mobile ARPU in the quarter was £14.86, up from £14.27 in the same three-month period a year ago but down from £14.96 in the previous quarter.

At the end of the quarter, Virgin had around 791,000 cable households with at least one Virgin Mobile contract, which is up 28 per cent year-on-year. These homes had around 1.1 million contract mobiles.

It also estimated that it has a further 203,000 cable households with at least one of its prepay phones, meaning total mobile penetration of the cable base is around 21 per cent.

Quad-play penetration, where a household has all three cable products and at least one mobile phone service, increased to 15.4 per cent, up from 13.2 per cent a year ago. Virgin now has around 742,000 quad-play customers, up 18 per cent year-on-year.

Virgin Media CEO Neil Berkett (pictured) said: “This has been a quarter of improved revenue and OCF growth. We are well placed to benefit from the fast-growing demand for superfast broadband and TiVo positions us well to lead the evolving TV market.

“Customer ARPU and churn have improved and, together with our growing business division and great value mobile offerings, we have maintained steady financial progress across the company which is translating into strong free cash as well as continued shareholder returns.”

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