Super-fast broadband bolsters Virgin Media revenue

Virgin Media hit £1bn in revenue in the first quarter, helped by the addition of nearly 150,000 super-fast broadband subscribers, higher customer retention rates and a push on its TiVo television services.

Virgin Media has posted revenue of more than £1bn, helped by an increase in demand for consumer super-fast broadband and TiVo television services. Image credit: Virgin Media

A strong performance in the broadband division contributed to a 2.4-percent rise in revenue to just over £1bn, up from £982m a year ago, the internet and media company said in its earnings report on Wednesday. Net income rose to £7m from a profit of £3.3m the year before.

Virgin noted that the number of people choosing to unsubscribe from its cable services in the quarter — covering the three months to 31 March — reached its lowest level since mid-2010.

"We have seen [...] greater customer loyalty, with our best subscriber retention for two years, and this has reinforced our confidence that people increasingly appreciate the value of a genuinely next-generation digital experience," Virgin chief executive Neil Berkett said in a statement.

Overall, the operator added 147,000 customers for its super-fast consumer broadband services, which provide 30Mbps or faster connections. In total, it now has more than 850,000 customers on super-fast packages, a quarter of a million of whom are on the 50Mbps, 60Mbps and 100Mbps tiers, according to Virgin.

Like its key rival BT, Virgin has begun a project to double the speeds of its super-fast broadband packages, with topline download rates of 120Mbps. By comparison, BT's upgrade exercise will see its fastest Infinity package reach a topline of 76Mbps.

"We once again demonstrated the unique power of our network by starting to double the broadband speeds of over four million customers," Berkett said.

The company noted it has already upgraded the super-fast connections of around 250,000 customers. Alongside this, it said it has seen strong uptake of its TiVo personal video recorder service, adding 242,000 subscribers during the quarter. However, non-cable revenue from consumers fell £1.3m to £19m due to a drop in customers.

Bucking the trend

Virgin's success in squeezing extra cash out of existing customers and increasing its customer base helped it to buck the general outlook for the market, according to Jan Hein Bakkers, research manager at European Telecommunications & Networking at IDC.

"Solid net additions in broadband in general and higher speed services in particular, upsell of mobile services and strong growth in the number of TiVo subscribers were key in enabling the company to post a consumer revenue growth rate that outpaces IDC's flatter outlook for the development of total consumer spending on telecoms and TV services in 2012," Hein Bakkers said in a statement.

Beyond consumer broadband, Virgin saw revenue growth in other areas. Its business division reported a revenue rise of 7.1 percent, to £170m. Its mobile revenue inched up by 1.2 percent to £139m, with contract mobile revenue rising by 15 percent to make up £100m of that total.

"A growing base of mobile contract subscribers together with strong revenues in Virgin Media Business showed again that we have multiple sources of revenue growth. Over the remainder of 2012, we expect continued steady progress across the company," Berkett said.