Virgin Media displays persuasive abilities

VIRGIN Media, the broadband and cable television giant, is persuading more of its customers to buy a wider range of services, it disclosed yesterday.

The company said broader demand from its subscribers had contributed to record average customer revenues, though it failed to meet expected new customer figures in the face of stiff competition.

It aims to lure more customers with the promise of super-fast broadband speeds. Yesterday it confirmed it will begin the roll-out of the UK's first 100Mb broadband service in December.

Analysts welcomed better-than-expected revenue and earnings figures in the third quarter update but noted that the growth in new customers was below forecasts.

Virgin Media, which competes with BT and BSkyB to provide broadband, telephony and pay-TV, said it added 14,100 net new customers, compared with a forecast 21,000. The group also posted slightly higher cancellations as BT and BSkyB engaged in a fierce marketing war to draw in new business.

Neil Berkett, chief executive of Virgin Media, said he was delighted with the results which showed the group cross-selling more products and drawing in a solid number of customers without having to spend strongly on marketing.

BSkyB said last week it had spent 302m in its first quarter on marketing, compared to Virgin's 37m. Berkett said: "We are seeing top line growth of 5 or 6 per cent but you are seeing the best part of 20 per cent free cash flow growth and that is because of our financial discipline, that is strong cost control and we are really, really pleased."

Shares in Virgin Media, listed on the US NASDAQ market, are up over 70 per cent in the last 12 months. It is now listed in New York and London after making a secondary listing on the London Stock Exchange in January.

The group sold more to existing customers, with 62.7 per cent now taking three products, helping Virgin to post record average revenue per user of 46.38. Yesterday the firm launched a pre-registration service for 100Mb broadband. The first areas to get the service include parts of London, the south-east and Yorkshire, and Virgin hopes to hopes to complete the launch across the UK by mid-2012.

The new offering will allow users to download a music album in five seconds, a television show in 30 seconds and a movie in 90 seconds.

Berkett said the launch was "a significant milestone in the UK's broadband evolution".

Virgin Media, in which Sir Richard Branson has a stake, first announced aims to launch its 100Mb service in February.

It is also trialling a 200Mb service, which began in Kent last May.

The group posted a 6.4 per cent rise in third-quarter revenue to 978m, compared with expectations of 968m.

In July the firm launched a 375m share buyback, part of a 700m capital return programme that will also pay down debt.As of September 30, 2010, the firm's long-term debt was 5.8bn, up slightly on the previous quarter. The firm said it aimed to reduce this over the next two to three years.