Virgin adds 35,000 mobile contract customers in Q1

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Contract mix continues to improve, but overall customer base suffers as MVNO loses more than 75,000 prepay subscribers in the quarter 

Virgin Media added 35,100 contract customers in Q1 but lost 75,800 prepay subscribers to bring its overall base closer to the three million mark.

Its new contract additions were down from the 64,100 customers added in the same quarter last year. These customers now make up 58 per cent of Virgin’s overall customer base, which now stands at 1.74 million subscribers. This is up from £1.59 million a year ago.

The remaining 42 per cent consists of 1.25 million prepay customers, down from 1.42 million a year ago. Virgin’s total customer base now stands at three million subscribers, down slightly from 3.04 million in the previous quarter.

Mobile revenue was £137.8 million, down slightly from £138.5 million in Q1 2012. Virgin said improving contract mix was offset by declining prepay revenue and the impact of regulatory changes to mobile termination rates (MTRs).

Contract service revenue was up slightly by 0.6 per cent to £99.3 million while prepay service revenue declined 10 per cent from £36.4 million to £32.7 million. Virgin said the MTR change reduced the amount of inbound mobile revenue it received by around £6.9 million compared to the same quarter last year. Mobile ARPU was also down slightly from £14.96 to £14.60.

Quad-play penetration, where customers are in possession of multiple Virgin Media services (TV, broadband and home phone) increased to around 15.9 per cent of its residential customer base, compared to around 15 per cent a year ago.

Overall, Virgin Media’s revenue was up 3.6 per cent year-on-year to £1.04 billion with gross margin up 4.4 per cent to £615 million. Operating income increased 14 per cent to £150 million and net income amounted to £139 million, up from £7 million. Free cash flow was up 54 per cent to £135 million.

Virgin Media CEO Neil Berkett (pictured) said: “We have had a good start to the year with accelerated revenue growth, improved churn and strong free cash flow growth. The great value we provide through our Collections packages, which bundle superfast broadband and our next generation TiVo service, has seen new customers join and our existing customers stay loyal to us. This positive momentum in the business positions us well for our planned merger with Liberty Global.”

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