Virgin Mobile ups customers, drops profits
Float costs bite
Virgin Mobile, the newly listed mobile operator, announced a 40 per cent rise in its half yearly earnings, driven by a substantial increase in subscriber numbers. The company now boasts over 4.6m subscribers, and said 647,500 of those had signed up in the last six months.
Operating profit fell from £44.7m last year, to £35.6m. This was due to £11.7m in exceptional items relating to the company's stock market float in July. In addition, the company reported a slight downturn in average revenue per user (ARPU) during the last six months. As of 30 June, this was at £142, but by 30 September, had fallen to £137. Virgin said this reflected the "exceptional customer growth" over the six month period.
The percentage of active customers was also slightly lower, with 78.2 per cent of the customer base having used their phone in the preceeding 90 days. Virgin says this is due a particular upgrade promotion, whereby pre-pay users are sent a second SIM with free minutes when they buy a new handset. The second SIM quickly becomes inactive.
Looking ahead, Virgin said that while profits in the second half of the year will beat those in H2 2003, they will be lower than the figures it has reported today. It said the next six months would see the full impact of Ofcom's rate cut - a forced 30 per cent reduction in the the price mobile networks can charge other operators to connect with their customer.