TiVo and superfast broadband boosts Virgin’s results

Virgin Media has announced its latest set of results (for the first nine months of the year and Q3) with strong TiVo growth and record superfast broadband customers.

The cable operator has successfully focused on cross-selling products to existing customers in recent months. The results will go some way to reassuring investors after shares fell in July following a disappointing second quarter.

A solid performance in Q3 saw Virgin’s average revenue per user increase 3.2%, helping to take group revenue to £1 billion – in line with forecasts.

• Revenue growth of 3.3% for nine months – Quarterly revenue growth of 2.2% to £1bn

• Operating Cash Flow (OCF) up 5.4% for nine months – OCF up 2.8% to £398m for the quarter

• Operating income up 49% for nine months, up 26% to £128m for the quarter

• Free Cash Flow (FCF) up 31% for nine months – FCF up 13% to £136m for the quarter

• Net cash provided by operating activities up 11% for nine months, down 7% to £297m for Q3

• Strong TiVo growth in the quarter; 162,900 TiVo customers at quarter-end – 127,200 net adds, around one third of which are new to Virgin Media

• 222,000 TiVo customers as at 26 October

• Rate of consumer demand for better connectivity accelerating. Record growth in superfast broadband customers (30Mb or higher); 54% of new subscribers

• 178,300 increase in superfast broadband customers

• Over one million households now on 20Mb or higher; 26% of cable broadband base

• Continued growth in cable ARPU, up 3.2% to record £47.86

• Net cable customer additions of 6,300 in Q3

• Mobile contract customers up 23% to 1.4m – Record 69,800 contract net additions into cable homes

• Contract customers in cable homes up 24% year-to-date to 0.9m

• Business division signed new mobile backhaul contract with MBNL worth over £100m revenue

• £234m spent on stock buyback programme in Q3

• £348m cash received in connection with sale of UKTV

• Incremental stock buyback programme of up to £250m, in addition to £625m announced in Jul-11 – takes cumulative total to £1.25bn share buybacks expected from mid-2010 to end of 2012

Neil Berkett, chief executive officer of Virgin Media, said: “Our results show that we’re successfully serving what is a rapidly emerging market for better quality services. The demand for superior connectivity is accelerating as more people, regardless of their circumstances, recognise the best digital technology is worth paying more for.

“Over a quarter of our entire base now subscribe to speeds of 20Mb or higher and a record number of customers joined us on superfast broadband speeds during the period with. In TV, we have quadrupled the number of households using our game-changing TiVo service and customer advocacy for this product is very strong.

“We are increasing the value and mix of our customer base as people add or move to higher tier services and as new joiners increasingly take up higher value products. This, along with subscriber growth, has increased revenue and we have had further substantial increases in free cash flow and OCF. Our strong and sustained financial performance allows us to continue to invest in giving our customers more value and further differentiating our range of market leading products.”