Cable ISP Virgin Media Reaches 4536200 UK Broadband Subscribers

Cable operator Virgin Media (Liberty Global) has today released their latest Q1-2014 (calendar) results, which reported that the provider’s total broadband ISP subscriber base had grown by +25,700 subscribers in the quarter (up from +21.9k in Q4-2013) to reach 4,536,200 customers. But rumours of a Virgin National (Virgin.net ADSL) sale continue to loom overhead.

As usual most of the broadband growth came from Virgin’s cable (DOCSIS) platform, which accounted for 4,415,800 customers (+40,100 in the quarter), while their defunct Virgin National (Virgin.net / ADSL) platform declined again by -14,400 to total 120,400 subscribers (not quite as bad as the -17.2k lost in Q4 2013). The fate of Virgin’s old ADSL service has also been called into question after a recent report suggested that it could be sold (here).

It’s also worth remembering that Virgin Media recently gobbled Smallworld Fibre Limited (“Smallworld“) during Q1 2014, which had a cable network that passed approximately 44,900 homes in western Scotland and the northwest of England. Smallworld accounted for 6,000 customer relationships and 14,700 RGUs (comprising 3,700 television, 5,300 internet and 5,700 telephony RGUs).

As a result the operator, which has just launched a new range of quad-play bundles with SIM-only mobile services as an option (here), also revealed that their cable network now passes 12,572,000 homes across the United Kingdom (up from 12,520,100 in Q4-2013). Take note that Virgin’s “homes passed counts are based on census data that can change based on either revisions to the data or from new census results“.

Virgin’s Broadband Base – Summary

Now 3.4 million, or 77%, of our 4.4 million [CABLE] internet customers take superfast broadband services of 30 Mbps or faster, an increase of 189,700. A third take speeds of 60 Mbps or above, up from 27% a year ago. Peak internet use across our network is now more than 60% higher than a year ago as customers do more online and connect more devices. A representative sample of our superfast broadband customers indicates approximately twice as many households are connecting five or more devices to their home broadband than a year ago.

On the financial front and Virgin’s Average Monthly Revenue Per Customer Relationship has climbed to £49.26 from £48.21 last quarter and their quarterly revenue from Internet services stood at £241.2m (up from £221.1m in Q4 2013), with total revenue of £1,043.8m. However it’s noted that VM’s operating income was just £19 million, which is mostly related to the Liberty Global acquisition (i.e. £160 million increase in depreciation and mortization expense).

In March 2014, the UK government also announced a change in legislation with respect to the charging of VAT in connection with prompt payment discounts. The change took effect on 1st May 2014 and Virgin “currently believe this legislative change will result in a reduction in revenue, OCF and operating income of approximately £28 million to £30 million from the effective date through the end of 2014, and will affect the phasing of our growth over the next three quarters.”