Usain Bolt produces fast start for Virgin Media

LONDON: Usain Bolt boosted Virgin Media Inc’s subscriber numbers in the first quarter, as an ad campaign fronted by the sprinter helped attract 21,200 net cable customers, 6,000 more than in the last quarter of 2011.

Finance Director Eamonn O’Hare said the group was “fast out of the blocks” at the start of 2012 as the ads for its fast broadband speeds resonated with customers.

“Customer retention, or churn, was at its lowest level for two years at 1.2 percent and the customer net adds at 21,000 was the highest number for two years,” he said in an interview on Wednesday.

Nearly 50 percent of the group’s new customers chose speeds of 30Mb or above, the group’s definition of superfast broadband, he said, and it added 242,000 customers to its connected TV service TiVo during the quarter.

New York-listed Virgin Media, which competes with BT Group Plc, BSkyB and TalkTalk, said revenue rose 2.4 percent to 1.0 billion pounds ($1.6 billion), while operating income was up 18 percent to 131 million pounds.

The cost of the ad campaign hit the group’s cash flow, however, with operating cash flow flat at 376 million pounds and free cash flow down 13 percent to 87.1 million pounds. Analysts at Espirito Santo said that although marketing costs weighed, the group’s operating trends were strong.

“Operating trends showed strong demand for TiVo, premium TV and superfast broadband products and importantly customer retention has started to improve with churn falling to 14.0 percent, the lowest level for two years,” they said.

They said operating cash flow was weaker than expected but saw little pressure on their full-year forecast of 1.66 billion pounds as costs reduce during the rest of the year.

Virgin Media has been focusing on attracting business customers to its cable network, an area that could become more competitive if mobile operator Vodafone succeeds in buying Cable & Wireless Worldwide.

O’Hare, however, said Virgin’s opportunity in the sector would be undiminished by the deal.

“We only have 5 percent market share in the enterprise sector,” he said, comparing this to 45 percent on the consumer side. “We are coming off a very low base.”