Virgin Media loses 47,000 customers

09-05-2007

Virgin Media loses 47,000 customers
Virgin Media lost almost 47,000 customers in the last quarter, with the cable company also revealing that its revenues fell by more than five per cent over the period.

The group, which was formed earlier this year following a merger between NTL, Telewest and Virgin Mobile, said that its customer base was down 46,900 on the previous quarter, posting an increased operating loss of £15.3 million for the three months ending March 31st

Consumer revenues for Virgin Media's cable business declined to £637.3 million, compared to £644.4 million in the last three months, with the drop primarily attributed to a small fall in the average amount of revenue per customer and the net loss in subscribers.

The churn rate – which measures the rate of customers leaving – was down to 1.6 per cent a month and Virgin Media stressed that the decision by rival BSkyB to withdraw its basic channels from the network "did not significantly" impact upon the percentage of customers who left the service during the quarter as cable customers were required to give 30 days notice to cancel their contracts.

Sky withdrew its basic channels from Virgin Media's TV platform on March 1st following an unresolved pricing dispute between the two companies.

While Virgin Media stressed that the withdrawal had not impacted much on customer losses for the first quarter, it acknowledged that the number of new subscribers had fallen due to the loss and warned that the impact on churn was likely to be felt in subsequent quarters.

However the company stressed that it had taken action to mitigate the impact of the loss of Sky's basic channels, including through competitively price propositions for consumers and "reinvigorated" marketing, and therefore expected the overall effect to be within its expectations.

Commenting on the results Virgin Media chief executive Steve Burch insisted that the company had exhibited "strong growth" in the first quarter within its TV and broadband businesses despite a continuing "struggle" in the fixed line telephone market.

He added that the £25 million Virgin Media had spent on its rebranding would further boost performance in the long term.

"We are encouraged by the decline in churn and the impact that our rebrand message is having on consumers," said Mr Burch.

"The £25 million incremental spending on rebrand and marketing will have long term benefits as we establish our position in the marketplace," he explained.



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