Jasmeet_87
5th May, 2009, 12:47 PM
OVERVIEW
In the first quarter, our business continued to demonstrate good resilience to the weaker macroeconomic conditions. Our first quarter results show encouraging progress, operationally and financially, against our key strategic priorities.
Our on-net customer base grew during the period and customer retention improved with average monthly churn falling to a record low of 1.1%. Further on-net RGU growth, underpinned by successful cross-sell, has taken triple-play penetration to a record 57.0%. On-net revenue increased year-on-year due to higher ARPU at GBP42.29.
In broadband, we are decisively distinguishing Virgin Media's services from those of our DSL competitors as we continue to exploit the inherent capabilities of our next generation fiber optic network. This helped us achieve a significant improvement in our tier mix, reflecting a growing consumer appetite for higher broadband speeds. We are pro-actively redefining the broadband market with the roll-out of our ultra fast 50Mb product and the recently announced upgrade of our 2Mb customers to 10Mb from May 2009.
In television, the addition of new content from ITV to our market leading video-on-demand (VOD) offering, together with our existing line-up of popular TV shows, movies and music videos, drove a significant increase in VOD views, reaching a record high of 55 million per month in the quarter.
We are working to ensure our TV service stays ahead of changes in consumer behavior. We expect to increase our High Definition (HD) content steadily to complement our existing linear and on-demand line-up. We are currently negotiating with several broadcasters with a view to launching at least five new HD channels in the third quarter of 2009. We've recently had some positive results from our VOD advertising trial and this offers the potential for an attractive revenue stream in the future.
We also successfully expanded our contract mobile base during the quarter, through targeted cross-sell to our on-net customers, competitive propositions and offering a market leading fixed data rate.
We continue to use our strong cash flow to exploit the capabilities of our network, improve our consumer offer and lay the foundation for future growth. We have identified around half a million homes whose proximity to our existing access network makes it a commercially attractive opportunity to extend our network to reach them over the next few years. We plan to extend our network coverage to over 50,000 of these homes during 2009.
We are also investing in a series of value added services that take advantage of the power of our broadband product and enhance our broadband proposition. For example, we recently launched a network storage facility that enables customers to back-up and store their digital files.
Looking further ahead to the next generation of home entertainment, we are working on capitalizing on technological convergence by developing a prototype interface that combines traditional broadcast TV content with on-demand programming, web-based entertainment and interactive features in a simple and user-friendly format.
Neil Berkett, Chief Executive Officer of Virgin Media, said:
"We began 2009 with another quarter of sound operational and financial performance. For the third successive quarter, we've achieved year-on-year growth in on-net ARPU and have driven churn to a record low, whilst maintaining strong levels of cash generation. We have achieved these results by continuing to deliver a differentiated and highly competitive consumer proposition that exploits our strength in broadband and video-on-demand."
Financial
* Total revenue of GBP936m (excludes Sit-up - see below) (Q1-08:
GBP947m)
* OCF1 of GBP312m (Q1-08: GBP324m)
* Operating income of GBP13m (Q1-08: GBP2m loss)
* Free Cash Flow2 of GBP62m (Q1-08: GBP82m)
* Net cash provided by operating activities of GBP129m (Q1-08:
GBP111m)
* Disposal of Sit-up business on April 1st; Sit-up treated as
discontinued operations in Q1-09 and prior periods adjusted
accordingly
Operational
* On-net3 ARPU increased year-on-year for third successive quarter
to GBP42.29 (Q1-08: GBP41.95)
* On-net churn reduced to a record low of 1.1% (Q1-08: 1.2%)
* On-net customer net additions of 7,100 (Q1-08: 4,900)
* Revenue Generating Units (RGU)4 net increase of 148,400 (Q1-08:
204,300) to 12.56m (Q1-08: 11.90m)
* Record triple-play penetration of 57.0% (Q1-08: 51.3%)
On-net Broadband
* On-net broadband customer net increase of 47,300
(Q1-08: 88,400) to 3.73m (Q1-08: 3.50m)
* Improving tier mix with 1.4m next generation (10Mb and
above) customers (Q1-08: 0.9m)
* 75% of gross additions subscribed to 10Mb or higher
(Q1-08: 19%)
* 50Mb broadband roll-out proceeding on track
* Upgrading 2Mb customers to 10Mb, commencing May 2009
Television
* TV customer net increase of 30,600 (Q1-08: 36,800) to
3.65m (Q1-08: 3.51m)
* Video-on-demand (VOD) usage rises to 53% of digital
customers (Q1-08: 46%)
* Highest ever average VOD views of 55m per month (Q1-08:
36m)
Mobile
* Contract mobile customers net increase of 62,900
(Q1-08: 59,400) to 712,300 (Q1-08: 435,700), up 63% in
the last twelve months
Virgin Media : Press Office : Press Release (http://pressoffice.virginmedia.com/phoenix.zhtml?c=205406&p=irol-newsArticle&ID=1284077&highlight=)
In the first quarter, our business continued to demonstrate good resilience to the weaker macroeconomic conditions. Our first quarter results show encouraging progress, operationally and financially, against our key strategic priorities.
Our on-net customer base grew during the period and customer retention improved with average monthly churn falling to a record low of 1.1%. Further on-net RGU growth, underpinned by successful cross-sell, has taken triple-play penetration to a record 57.0%. On-net revenue increased year-on-year due to higher ARPU at GBP42.29.
In broadband, we are decisively distinguishing Virgin Media's services from those of our DSL competitors as we continue to exploit the inherent capabilities of our next generation fiber optic network. This helped us achieve a significant improvement in our tier mix, reflecting a growing consumer appetite for higher broadband speeds. We are pro-actively redefining the broadband market with the roll-out of our ultra fast 50Mb product and the recently announced upgrade of our 2Mb customers to 10Mb from May 2009.
In television, the addition of new content from ITV to our market leading video-on-demand (VOD) offering, together with our existing line-up of popular TV shows, movies and music videos, drove a significant increase in VOD views, reaching a record high of 55 million per month in the quarter.
We are working to ensure our TV service stays ahead of changes in consumer behavior. We expect to increase our High Definition (HD) content steadily to complement our existing linear and on-demand line-up. We are currently negotiating with several broadcasters with a view to launching at least five new HD channels in the third quarter of 2009. We've recently had some positive results from our VOD advertising trial and this offers the potential for an attractive revenue stream in the future.
We also successfully expanded our contract mobile base during the quarter, through targeted cross-sell to our on-net customers, competitive propositions and offering a market leading fixed data rate.
We continue to use our strong cash flow to exploit the capabilities of our network, improve our consumer offer and lay the foundation for future growth. We have identified around half a million homes whose proximity to our existing access network makes it a commercially attractive opportunity to extend our network to reach them over the next few years. We plan to extend our network coverage to over 50,000 of these homes during 2009.
We are also investing in a series of value added services that take advantage of the power of our broadband product and enhance our broadband proposition. For example, we recently launched a network storage facility that enables customers to back-up and store their digital files.
Looking further ahead to the next generation of home entertainment, we are working on capitalizing on technological convergence by developing a prototype interface that combines traditional broadcast TV content with on-demand programming, web-based entertainment and interactive features in a simple and user-friendly format.
Neil Berkett, Chief Executive Officer of Virgin Media, said:
"We began 2009 with another quarter of sound operational and financial performance. For the third successive quarter, we've achieved year-on-year growth in on-net ARPU and have driven churn to a record low, whilst maintaining strong levels of cash generation. We have achieved these results by continuing to deliver a differentiated and highly competitive consumer proposition that exploits our strength in broadband and video-on-demand."
Financial
* Total revenue of GBP936m (excludes Sit-up - see below) (Q1-08:
GBP947m)
* OCF1 of GBP312m (Q1-08: GBP324m)
* Operating income of GBP13m (Q1-08: GBP2m loss)
* Free Cash Flow2 of GBP62m (Q1-08: GBP82m)
* Net cash provided by operating activities of GBP129m (Q1-08:
GBP111m)
* Disposal of Sit-up business on April 1st; Sit-up treated as
discontinued operations in Q1-09 and prior periods adjusted
accordingly
Operational
* On-net3 ARPU increased year-on-year for third successive quarter
to GBP42.29 (Q1-08: GBP41.95)
* On-net churn reduced to a record low of 1.1% (Q1-08: 1.2%)
* On-net customer net additions of 7,100 (Q1-08: 4,900)
* Revenue Generating Units (RGU)4 net increase of 148,400 (Q1-08:
204,300) to 12.56m (Q1-08: 11.90m)
* Record triple-play penetration of 57.0% (Q1-08: 51.3%)
On-net Broadband
* On-net broadband customer net increase of 47,300
(Q1-08: 88,400) to 3.73m (Q1-08: 3.50m)
* Improving tier mix with 1.4m next generation (10Mb and
above) customers (Q1-08: 0.9m)
* 75% of gross additions subscribed to 10Mb or higher
(Q1-08: 19%)
* 50Mb broadband roll-out proceeding on track
* Upgrading 2Mb customers to 10Mb, commencing May 2009
Television
* TV customer net increase of 30,600 (Q1-08: 36,800) to
3.65m (Q1-08: 3.51m)
* Video-on-demand (VOD) usage rises to 53% of digital
customers (Q1-08: 46%)
* Highest ever average VOD views of 55m per month (Q1-08:
36m)
Mobile
* Contract mobile customers net increase of 62,900
(Q1-08: 59,400) to 712,300 (Q1-08: 435,700), up 63% in
the last twelve months
Virgin Media : Press Office : Press Release (http://pressoffice.virginmedia.com/phoenix.zhtml?c=205406&p=irol-newsArticle&ID=1284077&highlight=)