Cable customers flock to Virgin Media

The telecoms and cable giant reported a far better than expected 38,300 net cable customers – those joining less those leaving – in the first three months of the year, up markedly on the 7,100 seen a year earlier. Virgin also saw the number of mobile phone contract customers soar past the one million mark for the first time as it switched focus away from the pre-pay market. The group, which is 4 per cent owned by Virgin empire tycoon Sir Richard Branson, posted a 14.1 per cent rise in underlying operating income during the first quarter, to 356m. Its performance follows the record result for net cable customer additions, which came as it attracted another 15 per cent of customers year-on-year and saw disconnections fall to its lowest level in the merged group's history. This left churn – measuring the rate of customers joining and leaving the group – at 1.1 per cent, maintained at the record low recorded a year earlier. Neil Berkett, Virgin Media chief executive, said: "This quarter, we added cable customers at our fastest ever rate." He added: "We are developing our services to exploit our natural network advantage, both now and in the future. "More customers than ever before are choosing faster broadband and every day millions of our customers are enjoying the benefits of the video-on-demand revolution we are leading." Its cable broadband offering continued to attract new subscribers, up 53 per cent year-on-year at 72,300 on a net basis in the fourth quarter, helping take total broadband customers to 4.2 m. Virgin announced in February it was to lead the way in super-fast broadband in Britain, with plans to roll-out the UK's first 100Mb service by the end of 2011. It already offers speeds of 20Mb to 50Mb nationwide, with the number of subscribers taking 50Mb up 40 per cent in the quarter. Telecoms analyst Steve Malcolm at Evolution Securities said yesterday's figures were "proof that after 26 years, it is finally leveraging cable's hitherto theoretical network advantage". A focus on improving customer service in recent years has also helped the group hold on to more customers, with Virgin Media claiming to have brought faults down to a record low following major investment. Virgin has likewise been seeking to get customers using more than one service, with 62 per cent taking three and 11 per cent taking four. The group's overall revenues rose 2.9 per cent in the three months to 963m, led by the cable customer growth. Virgin Media was formed through the merger of NTL and Telewest.