Virgin Media’s mobile growth slows in Q3

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Revenue falls and customer growth loses pace as firm shifts focus to quality business and investment on retention  

Virgin Media saw growth in its mobile business lose pace in Q3, with a fall in revenue and a slowdown in contract customer additions.

Mobile revenue was £136.8m, down 3.1 per cent from a year ago. Virgin said this was largely due to regulatory changes to mobile termination rates (MTRs), which reduced inbound mobile revenue by around £7m from Q3 2011. However, revenue did increase by £400,000 from  Q2 2012.

Contract service revenue was £99.3m, down £300,000 from Q2 but an increase of £5.3m from a year ago. Prepay service revenue fell by £400,000 to £34.5m. This figure also represented a decrease of £9.6 from the £44.1m figure posted a year ago.

The firm’s contract mobile base increased by 28,900 in the quarter to 1.7m subscribers, but this represented a slowdown in growth compared to the 53,900 customers that were added in Q2. However the final number resulted in an increase of 18 per cent from a year ago.

Virgin said contract customer growth slowed as it shifted its focus in the three month period towards quality customer growth with the launch of new all inclusive tariffs in June.

It added it focused handset investment more towards customer retention and particularly those customers coming out o0f contract at the end of their initial two-year term. It warned of a similar approach for Q4.

Virgin lost 24,100 prepay customers in the quarter, compared to 35,200 disconnections in Q2 and a decline of 138,300 in the same period last year. This base now stands at 1.36m subscribers. Overall, Virgin has 3.03m mobile customers.

Mobile ARPU for the quarter was £14.72, down 14p sequentially and 50p year-on-year.

At the end of the quarter, Virgin had 809,800 cable households with at least one Virgin Mobile contract, which is up 22 per cent from last year. These homes had around 1.2m contract mobiles.

It also estimated it has a further 205,400 cable households with at least one of its prepay phones. This resulted in mobile penetration of the cable base at around 21 per cent, which Virgin said leaves “significant growth opportunity to cross-sell to the remaining 79 per cent”.

Quad-play penetration, where a household takes all three cable products (landline, broadband and TV) and at least one mobile phone service, on creased to around 15.6 per cent of its cable customer base, compared to around 13.7 per cent a year ago. Virgin has around 757,000 quad-play customers, up 15 per cent year-on-year.

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