Virgin Mobile ups profit

Predicts further rev growth

By Tim Richardson, 26th May 2005

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Virgin Mobile says it has been unaffected by a broader slowdown in consumer spending even though the amount of cash spent by each user is down on last year.

Takings over the last year were up 15 per cent from £453.3m to £521.3m while operating profit was also up from £48.6m to £53.7m.

Reporting numbers for the year to March, Virgin Mobile - which is predominantly a pre-pay business but recently unveiled a contract service - said the number of active users were up 24 per cent to 4.03 million from 3.24 million.

The snag for Virgin Mobile - which doesn't own its own network but instead piggybacks on T-Mobile's infrastructure - is that the average amount of revenue (ARPU) it gets from each punter is sliding. In 2004, ARPU was £147 but this year it's fallen to £127, blamed in part to a decline in interconnect fees (call charges between operators).

With ARPU falling and competition from no-frills rivals such as easyMobile yet to bite, Virgin Mobile is looking to drive down costs.

Even so, Virgin Mobile chief exec Tom Alexander is extremely chipper today: "In the past three years we've tripled our revenues, and 2005 has been our best year yet. Our strong performance shows Virgin Mobile has the ability to sustain sector-leading service revenue growth within a competitive environment."

Looking ahead, Virgin Mobile remains "confident in achieving strong growth" for the year ahead and expects to increase revenue by around 15 per cent over the year. ®