Virgin Media – second quarter 2010 results – record revenue growth – strong OFC performance, £700 million capital return

Wednesday, 28 July 2010 15:44

Virgin Media announces results for the quarter ended June 30, 2010.

Financial performance driven by strong revenue growth in all segments

• Total revenue up 7.1% to £964m; strongest revenue growth since merger over four years ago

− Revenue growth in all areas, including improved performance in both Mobile and Business

• Third successive quarter of double-digit percentage OCF2 growth, up 12.9% to £370m

− Sale of VMtv completed on 12th July. VMtv treated as discontinued operations in Q2-10 and prior periods adjusted accordingly; OCF including VMtv3 was £382m

• Operating income increased to £80m from £9m

• Free cash flow4 up 37.3% to £109m

Strong operational performance driven by ARPU and best Q2 customer5 net adds since merger

• Cable ARPU, up 4.9% to a record £45.88

• 9,100 total new customers in traditionally the weakest quarter for growth, compared to 27,800 customer loss a year ago

− Cable gross additions of 188,600, up 18.2%

• 120,800 product net additions, up 26.2%; HD customers up 79.7% to 1.2m

• Churn remains flat at 1.3%; triple-play penetration increased to 62.4% and quad-play penetration increased to 11.3%, reflecting continued success with our bundling strategy

• Continued product differentiation, expansion of network and investment in growth channels resulted in strong revenue growth

Continued improvement of Company's capital structure

• Target leverage ratio of approx 3.0x Net Debt6 to OCF within two to three years

• Initial Capital Return programme of up to £700m

− Up to £375m for stock buyback over next 12 months; Accelerated Stock Buyback programme of £125m as decisive first step

Neil Berkett, Chief Executive Officer of Virgin Media, said: "A growing base of customers, combined with increased ARPU and improvements in Business and Mobile revenues, drove strong revenue growth and a double digit year-on-year percentage increase in OCF for the third successive quarter.

This performance was driven by our ability to offer households and businesses an increasingly differentiated range of digital services. Going forward, we'll continue to differentiate our propositions by proactively exploiting the advantages of our network and our mobile capability.

"Confidence in our long term ability to deliver strong free cash flow, along with the recent completion of our refinancing, enables us to announce today an initial Capital Return programme that complements our existing debt reduction schedule, without compromising our ability to make further strategic investments in the business."