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April 24, 2012updated 23 Aug 2016 2:53pm

Enterprise and superfast broadband boosting Virgin Media’s growth

Virgin Media has continued its growth, boosting by its business division and the increase in superfast broadband customers.

By Allan Swann

The company’s first quarter 2012 results fell broadly in line with its projections presented at its full year 2011 results. Group revenue was £1bn (up 2.4%) and net income was £7m, alongside operating income of £131m (up 18%).

"In the first quarter of 2012, we’ve made steady progress against our strategy. Demand for superfast broadband and TiVo, the UK’s first mass-market connected TV service, continued to gather momentum," said Virgin Media’s CEO Neil Berkett.

"In addition, 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 which, combined with the underlying resilience of
our business model, will translate into strong cash flow and shareholder returns."

Superfast broadband continues to be a big draw card, as half of all the company’s new users took speeds of 30MB or more. It tripled the number of these customers compared to first quarter 2011, adding 146,700 superfast customers taking the company total to 850,000.

Of this, 250,000 are on 50Mb, 60Mb or 100Mb plans. This quarter also oversaw the company’s roll-out of 100Mb.

Virgin claims the 100MB plan is the country’s fastest widely available broadband service, and is now available across Virgin’s entire network.

The company’s Usain Bolt promotion to double the speeds of its existing customers is already paying off. As of April 24th, Virgin claims to have doubled the speeds of approximately 250,000 customers, representing around 6% of its cable broadband base. By completion, Virgin will have doubled the broadband speeds of over 4m of its customers.

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TiVo has also been a strong performer, the company adding 242,000 more customers during the quarter for a total of 677,100, 18% of its total TV customer base.

The company continues to grow mobile revenue, by 1.2% to £138.5m. Much of this has come from users moving from pre-pay to contracts. Contract revenue increased 14.9% to £99.9m, while prepay revenue declined by 24.2% to £35.2m.

Virgin Media Business has continued its growth into the black, posting revenue of £170.4m (up 7.1%) in the quarter, and now accounting for 47% of the group’s total revenue growth.

The company has been successful in its pursuits of government contracts, which now account for 16% of Virgin’s total yearly revenue. Of its £4bn in yearly revenue, some £637m comes from the Virgin Media Business division alone.This is growing – by 7% in 2011, following 3% last year and losses of 3% and 7% the two years before that. To read CBRs interview with Mark Heraghty, head of Virgin Media Business, click here.

This pursuit of public sector contracts continued across the quarter, VMB recently winning the contract to provide public access Wi-Fi at up to 120 Tube stations in London before the Olympics. This will utilise the company’s fibre network outside of retail and enterprise for the first time.

VMB has been awarded a place on a new Public Services Network (PSN) Connectivity Framework run by the Government Procurement Service.

VMB also implemented a new telephone system for Portsmouth City Council powered by its fibre optic network.

In the private sector, the company picked up global property consultancy Knight Frank as a new enterprise customer. The network, which will be delivered as part of a new five year contract, will provide staff in all Knight Frank’s 60 offices across the UK with increased bandwidth and easy access to its multimedia property database.

"It’s great to see the business is continuing to grow in line with expectations. We’ve capitalised on last year’s successes which has given us the momentum to deliver positive results in the first quarter of 2012," said Heraghty.

"We’re continuing to shake things up in the telecoms world and this quarter we announced we would be treating the public sector as a single customer, bringing shared services and economies of scale to everyone regardless of the size of contract or location. This bold strategy secured the company with a position on the PSN Connectivity Framework, ensuring that wecontinue to be a leading provider of PSN services. I’m confident that we’re on track to deliver on this year’s objectives and continue to be the main challenger to BT in the market."

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