Virgin Mobile to focus on retention after sales fall

Virgin Mobile to focus on retention after sales fall

Virgin Mobile is focusing on retaining customers in its fourth quarter, after posting a fall in revenues of 3.1% to £136.8m.

The MVNO blamed the changes to mobile termination rates for the decline and said without those changes, sales would have increased by 1.8% to £143.8m. Sales were broadly flat on its previous quarter revenue of £136.4m. Average revenue per user was £14.72, down slightly on its previous quarter and down 3.3% on last year.

The trend in declining prepay sales continued, although it was shallower than in previous quarters. Sales were £34.5m, down 21.8% on last year but only down 1.1% on the last quarter. It had 1.36m pay as you go customers by the end of the quarter, down 13.1% on last year and 1.7% on the last quarter. It had a net loss in prepay customers of 24,100 during the period.

Contract sales were up but its new contract adds slowed, up 29,000 compared to 53,900 in the pervious quarter. It totalled 1.67m contract customers, up 17.5% on last year and 1.76% on the previous quarter. Post pay sales were worth £99.3m during the quarter, down marginally on last quarters sales of £99.6m but up 5.6% on last year.

In a statement, Virgin said: 'Contract net additions slowed as we shifted focus in the quarter more towards quality customer growth with the launch of new all inclusive tariffs. We also focused handset investment more towards customer retention and particularly those customers coming out of contract at the end of their initial two-year term. We are planning a similar approach in the fourth quarter.'

Operating income was £180.0m for the quarter across the entire business, up 40% on 2011. Sales were up 2.8% to £1.03bn, which was boosted by a push on broadband. Neil Berkett, CEO of Virgin Media [pictured], said: 'This has been a quarter where continued strong demand for superfast broadband and TiVo has led to lower churn and meaningful cable customer growth. Combined with progress in our business division, we have again delivered solid financial progress with continued revenue and OCF growth, translating into strong Free Cash Flow and shareholder returns.'

Editor: Graeme Neill

Written by Mobile Today
Mobile Today


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