Virgin Media’s mobile division saw revenue drop by 1.6% to £141.2 million in the quarter ending 30 September 2011, compared with the same quarter in 2010. Operating income stood at £128.4 million, up from £101.7 million in Q3 2010.
The company attributed the decrease in revenue to the impact of regulatory cuts in mobile termination rates (MTRs), which reduced revenue by approximately £6 million. If MTR cuts are excluded, revenue growth would have been approximately 2.6%. Mobile average revenue per user (ARPU) was £15.22.
The company added 74,800 net contract customers in the quarter, taking the total customer base to 1.4 million, up 23.1% from a year ago. Contract customers account for 900,000 of the total base. Over 90% of these additions were to Virgin’s existing base of cable customers, up from 53% a year ago.
The number of prepay net disconnections in the quarter was 138,300, up from 63,900 in the same quarter in 2010. Virgin said the loss of prepay subscribers ‘reflects our strategy of focusing on contract customers with a higher lifetime value'.
Virgin is continuing to pursue its strategy cross-selling contract mobile services into its cable customer base, as this ‘favourably impacts churn and lifetime value, as well as positioning us to exploit further product convergence’.
Of Virgin’s 664,000 cable households, 14% had a least one Virgin Mobile contract, up 21% on the start of the year. These homes had 933,000 contract mobiles, or 1.4% per cable household, representing 66% of all contract subscribers.
The company estimates that a further 160,000 cable households have at least one prepay phone. This takes the mobile penetration of the cable base to around 17%, leaving a significant growth opportunity to cross-sell to the remaining 83%.
Quad-play penetration, where a household takes all three cable products, including TV and broadband, and at least one mobile phone service, increased to around 13.7%, compared with 11.8% at the start of the year. Virgin said it had 658,300 quad-play customers.
Total revenue for Virgin Media in the quarter was up 2.2% to £1bn with operating income up by 2.8% to £398 million.