Bundled deals swell Virgin Media customer base

Bundled deals swell Virgin Media customer base

Virgin Media saw customer numbers swell by 8,100 in Q3 and their average spend soar to a record high, beating analysts forecasts on its operating cash flow.

Virgin Media said demand for faster broadband and on-demand TV had increased average customer spend 5%, with average revenue per user (ARPU) rising to £44.24 per month.

Bundled deals have soared with the number of customers taking 3-for-1 deals on either pay-TV, broadband, fixed and mobile telephony hitting a record 59.5%, compared with 54.7 % a year ago. Customers taking four products stands at 10.1 %.

Meanwhile churn remained flat at 1.5% a month.

The growth in Virgin Media customers and customer spend sees Q3 revenue up 1.3%  at £953m, while operating cash flow was up 7% at £348m.

This belied analysts’ forecasts of net customer additions of 8,000, revenue of £942m and operating cash flow of £337m.

However Virgin Media chief executive Neil Berkett cautioned against reading signs of economic recovery into the figures. He said ‘Our product set is stronger than it's ever been so I'm not surprised that we're seeing an uplift in terms of demand. But I don't think we're seeing any significant recovery in the broad economic outlook ... What we're seeing is an improvement in our operations.’

Under Berkett, Virgin Media has pushed hard to sell bundled packages of broadband, TV, mobile and fixed line.

The group’s superfast broadband offering has seen 39,000 broadband net customers added in the quarter to give it 3.77m broadband customers in total, with over 20,000 taking the fastest 50 Mb product.

The TV service added 37,000 net customers, giving it a total 3.71 million users, with an average of 66 million video-on-demand views watched per month.

The new products gave Virgin Media 8,100 net new customers on its cable network making a total of 4.74m customers.

Analyst John Strand of Stand Consult told Mobile Virgin Media’s bundled deals had served it well. However he sounded a note of caution. ‘Virgin Media’s TV products are strong and appear to be the main key driver for selling complimentary products. However TV prices are under pressure and in the long term, as competition increases, it is a market that will be squeezed as prices on 3-for-1 deals come closer to what consumers used to pay for one product.’

Written by Mobile Today
Mobile Today


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