Virgin Media to Expand UK Cable Broadband Network, But Bleeds Subscribers

National UK cable provider Virgin Media (Liberty Global) has suffered a traditionally dismal second quarter (Q2-2014 Calendar) after seeing their total broadband subscriber growth decline by -12,000 to total 4,524,200 customers, which is a reverse from the +25,700 added in Q1. But the good news is that their network will soon reach another 100,000 homes, albeit only in East London.

Virgin claims that the latest development will be their “largest, single network expansion” (they already cover over half of all London homes) and most of those expected to benefit will be in the East London areas of Bethnal Green, Isle of Dogs, Newham and West Ham. Homes in Stratford, Poplar, Stepney, Bow and East Ham will follow.

Most of the areas are identified as being close to the company’s existing network, which should make for an easy expansion (Hyperoptic and BT have also been rolling out FTTP/B in some parts of the same areas). A spokesman for Virgin Media also told ISPreview.co.uk, “Work is underway now. The first homes will go live in September and we expect to complete this programme in 2015.”

It’s noted that Hackney residents are also benefitting from free public WiFi as part of a partnership with the Council. The free service has been available in Town Hall Square, Hoxton Square and Gillett Square since early 2014. Not forgetting their WiFi network on the London Underground stations.

Tom Mockridge, Virgin Medias CEO, said:

“Extending our network into East London means 100,000 more homes will benefit from the UK’s fastest most widely available broadband for the first time.

This is a significant investment for Virgin Media and our largest, single network expansion project to date. We are very proud to be supercharging East London, helping thousands of people make the most of the UK’s exciting digital future.”

Boris Johnson, The Mayor of London, said:

“London is earning a reputation for being the Tech capital of Europe and that is why we need to ensure every Londoner is able to access superfast broadband services. It has become a utility that every Londoner expects and this latest expansion is a further welcome step towards making that aim a reality. Improving the connectivity of this great city will be a key part of the Infrastructure Plan for London that my team will be consulting on over the remainder of this summer.”

Meanwhile it’s important to put the latest subscriber fall into context because Q2 has traditionally been a weak period for Virgin Media due to students cancelling their contracts in order to move back home for the summer. Indeed on some level today’s fall is actually good news because it marks a slight improvement over the -15,500 lost at the same time last year and Virgin usual rebounds in Q3 as new students return.

Elsewhere most of the decline came from Virgin’s slower non-cable based Virgin National (Virgin.net / ADSL2+) broadband subscribers, which is no longer sold by the provider and saw its customer base shrink by -11,700 in Q2 to total just 108,700 (better than the -14,400 lost in Q1). Back in May 2014 there were reports that Virgin Media was considering a sale of these subscribers (here), but so far nothing has happened.

By comparison Virgin’s primary cable (EuroDOCSIS / DOCSIS3) base has been quite stable and the provider only lost -300 customers to total 4,415,500. Separately Virgin stated that their cable network now passes 12,539,700 homes, which is slightly down from the 12,572,000 recorded in Q1, but take note that their “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

At quarter end, 2.1 million, or 47%, of our 4.4 million internet subscribers took superfast speeds, an increase of 424,400 in Q2. We have continued to see strong demand for our higher speed tiers. In Q2, over 40% of new internet acquisitions subscribed to 100 Mbps or higher speeds, including almost 15% that subscribed to our top tier offering of 152 Mbps, which is double the top speed offered via VDSL providers.

It should be noted that Virgin Media has adjusted their definition of “superfast” from 30Mbps to 50Mbps, which reflects their on-going speed boost for existing customers and the fact that their entry-level product is now a 50Mbps service. Under the old definition, Virgin’s superfast broadband base would have been 3.6 million at June 30, 2014 and the increase in the quarter would have been 144,400.

On the financial front and Virgin’s Average Monthly Revenue Per Customer Relationship has climbed to £49.95 from £49.26 last quarter (mostly due to the Feb 2014 price rise) and their quarterly revenue from Internet services stood at £255.2m (up from £241.2m in Q1 2014), with total revenue of £1,054.4m (up from £1,043.8m in Q1). Meanwhile their operating income stood at £39 million in Q2, which is an improvement from £19m in Q1.