Virgin Media sees revenue grow despite cable exodus

Increased take-up of data services and public-sector contract wins helped drive a small rise in second-quarter revenue even though Virgin lost 36,000 'lower-end' subscribers
Written by Ben Woods, Contributor

Virgin Media saw sales increase 2.2 percent in the second quarter, despite losing thousands of home broadband customers and seeing a lack of growth in revenue from businesses.

On Wednesday, the communications and media company reported revenue of £986m for the three months ending 30 June. During the period, it lost 36,000 "lower-value" cable subscribers, 12,000 of whom were broadband customers, according to Virgin.

The fall was offset partly by a rise in the number of consumers and businesses paying for higher-value services, the company said.

"The increasing demand is evident in a 25-percent increase in data consumption among Virgin Media's customers in just six months," Neil Berkett, chief executive of Virgin Media, said in statement. "This trend is rapidly transforming the profile of our subscriber base, with more than half of all new broadband customers choosing 30Mb or higher, compared to just 18 percent a year ago."

While the company saw a 23-percent rise in its mobile customer base to around 1.35m, it saw revenue from the unit fall. It took in £132.6m in the quarter, compared with £136.3m the previous year.

Virgin provides cable broadband, television and mobile services, as well as non-cable ADSL broadband. On the corporate side, it has signed deals with Westminster and Cambridgeshire councils to provide a public-sector network, essentially a portal for the procurement of phone, data, video, CCTV and Wi-Fi services.

In the second quarter, Virgin's business-derived revenue was flat, dropping from £152.7m a year ago to £151.2m. It attributed this to a fall in sales of wholesale voice and data services, which decreased 44.3 percent and 2.4 percent respectively.

For the first half of the year, however, business revenue rose by six percent, and Virgin said it expects recent contracts to spur "robust" sales growth in the second half of 2011.

Private sector

"Our market share is... increasing in the private sector. A mixture of cloud, big data, overloaded mobile networks and the increasing use of video is driving the demand for fast, secure and robust connectivity," Mark Heraghty, the managing director of Virgin's business unit, said in a statement.

The increasing demand is evident in a 25-percent increase in data consumption among Virgin Media's customers in just six months.
– Neil Berkett, Virgin Media

"Our business division is pursuing its strategy to increase market share by focusing on growth in business data and leveraging our unique asset — a fibre-optic network that passes over half of all UK businesses," he added.

The company is in the middle of a rollout of a 100Mbps fibre-optic network for super-fast broadband across the UK. On 21 July, it said that 6.5 million homes are now eligible to sign up for the service; it intends to reach 13 million homes by mid-2012.

Also this month, Virgin began a trial of 1.5Gbps cable connections in the area of east London around Old Street known as Silicon Roundabout. As well as providing download speeds of up to 1.5Gbps, which is around 240 times the national average, the service promises upload speeds of up to 150Mbps.

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