Virgin revenue falls despite new subs

Virgin Media's cable service continued to grow - albeit by only 4,900 subscribers - during the first three months of the year.

A first quarter highlight for the company, which has been pushing its video on demand and broadband internet, was reducing churn among cable customers to the lowest rate since 2004, at 1.2%. For the same period in 2007 the figure was 1.6%. The firm cited improvements in billing, credit control and quality of products.

Overall, Virgin also continued to narrow its net loss, from £120.3m in Q1 2007 to £104.4m in this quarter.

However, revenue from cable customers fell both quarter-on-quarter and year-on-year to £618.2m. Virgin puts this down to a fall in average revenue per user, to £41.91, credited to greater price competition and existing customers moving to lower priced bundles.

The firm is attempting to mitigate by cross-selling and up-selling other products. Also, it is putting up prices from June 1.

There were 36,800 net additions to cable television products, just exceeding 36,100 in Q1 2007, though a steep fall from the 61,100 achieved in Q4 2007.

Virgin's digital video recorder service V+ saw very strong growth, adding a record 101,800 to reach 364,200. This number represents 11% of its digital subscribers, and the company noted that "growth opportunity remains strong".

The firm said its "strategic priorities are to lead the next generation broadband market in speed and quality and to redefine the mid-market TV experience through on-demand" - representing chief executive Neil Berkett's focus on the advantages over competitors offered by its cable network.

Virgin reports that 1.6m customers are now using video on demand on a month basis - a reach of 48%, up from 36% in the same period last year. Average monthly views were 36m, up 10% on the previous quarter and up 155% on the same quarter last year.

"Our first quarter results represent another solid operational performance," said Berkett. "In particular, churn continued to decline, reflecting the emphasis that we have placed on this area. Our results demonstrate that our customers are continuing to respond positively to our compelling consumer propositions."

Virgin also issued an update on its plans for faster broadband internet: "...our 4Mbps to 10Mbps upgrade program is underway and we plan to launch 50Mbps later this year."