Virgin Media connected another 102,000 premises to its cable network during the first quarter of 2019 as the number of subscribers to its mobile service remained relatively static.
The company is currently in the middle of the single biggest network expansion in its history. The £3 billion ‘Project Lightning’ originally aimed to expand coverage to 17 million properties by the end of 2019.
According to these most recent figures, Virgin Media's UK footprint now stands at 14.51 million premises (15.4 million in Ireland) with the total number of customers reaching 5.534 million across both countries.
An additional 59,000 broadband, landline or television services were taken out during the quarter, with Project Lightning cited as a direct cause.
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Virgin Media results
"From an operating perspective, Virgin Media continued to deliver improved subscriber trends,” said Mike Fries, CEO of parent company Liberty Global. “During the first quarter, Virgin Media delivered nearly 60,000 RGU additions, a 32 per cent year-over-year improvement driven by 26,000 new customer relationships. On the innovation front, we are pushing the envelope in the U.K.”
However Virgin Media revenues were down 0.1 per cent to £1.28 billion, while the addition of 26,000 mobile subscribers was offset by a contraction of the lower-yielding pay-as-you-go customer basis. When this is taken into account, Virgin Media lost 7,000 mobile subscribers, leaving the total figure at 3.1 million.
“Our Q1 ARPU performance at Virgin Media was impacted by lower install and telephony usage revenue, the timing of certain PPV events and increased promotions in response to market dynamics,” added Fries. “However, our competitive position remains strong and we continue to extend our reach with Project Lightning, where we are building 400,000-500,000 new premises every year.”
Virgin Media is growing in importance to Liberty Global, which is undergoing a significant restructure. It is in the process if divesting cable assets in Germany and Switzerland, while it has entered into a joint-venture with Vodafone in the Netherlands.
Virgin Media contributes significantly to the wider group’s total $2.87 billion revenues, but speculation is growing about the unit’s future with CEO Tom Mockridge set to step down in favour of COO Lutz Schuler later this year.
Schuler’s priority will be to oversee the completion of Project Lightning as well as the possible transformation into a wholesale communications provider. It had been reported that Liberty was considering a move into wholesale but there are no concrete plans to do so.
“Virgin Media now remains the crown jewels in Liberty Global’s portfolio, but also a problem child,” says Paolo Pescatore, an analyst with PP Foresight.
“Moves to divest other assets shows a desire to leave Europe by maximising the value of each asset. However, acquiring Virgin Media would not cheap for any party and would require significant long-term investment to compete with BT other smaller aggressive fibre broadband providers.
“Latest moves to strengthen Virgin Media’s portfolio suggests that Liberty Global is committed to the UK for the short to medium term. Given the renewed push towards convergence and importance of owning fixed and mobile assets (due to 5G and more), it is feasible that it might acquire or merge with a UK mobile operator.”
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