Feeds

Virgin faces customer exodus over Sky battle

Round one

Secure remote control for conventional and virtual desktops

Virgin Media admitted today that its battle with Sky over TV rights made it suffer in the broader convergence war.

During the firm's quarterly earnings call, chief executive Steve Burch told investors that although the impact of losing shows like 24, Lost, and The Simpsons was not big in the first quarter, he was expecting more trouble over the next three months.

"We're not really sure what the impact in Q2 will be, but we're flagging up the possibility that TV additions may not be as strong and could be negative," he said.

Virgin only lost the Sky channels on 1 March, and disconnections take 30 days. To have an impact on these results, which run to 31 March, angry customers would have had to quit Virgin before the switch-off.

In Q1 the overall five million-plus customer base across TV, mobile, broadband, and home phone shrank by 47,000 customers. Despite a £25m marketing and rebrand splurge, Virgin's consumer revenue slid to £637.3m from £644.4m the previous quarter. It blamed the slip on its shrinking subscriber base, and a drop in how much each customer spends on average (ARPU).

Burch fingered Virgin's fixed line telephone arm as being particularly feeble, and weak enough to scratch out the boost in ARPU which higher penetration of triple and quad-play bundles should have delivered.

Business revenues dropped too, from £168.8m in Q4 2006 to £163.0m for the first three months of this year. The combined result was an operating loss of £15.3m, compared to a £9.2m profit last quarter.

There were some diamonds in the rough. The broadband spike of Virgin's four-pronged assault performed better, adding 97,600 new punters in Q1. The rollout of 20Mb/s and trials of 50Mb/s continued, which Virgin noted is an example of its "inbuilt advantage" as cable monopoly holder. BT's 21CN will max out at 24Mb/s for customers lucky enough to live close to an exchange, and will not be complete until 2011. The national telco has complained that it is not economical to lay faster lines because regulations force it to open its network to competitors.

More than 3,410,000 broadband connections are now supplied over cable, compared to about 3.2 million dealing with BT Retail. Virgin's recent decision to roll out stringent bandwidth throttling across the national network could drive departures, however.

Virgin also managed to reduce its churn slightly, from 1.7 per cent to 1.6 per cent, though several observers have noticed this is still some way off Sky's customer-retention rates.

Virgin maintained its stance over the TV dispute with Sky, which is now headed for the High Court. "Should Sky want to come back and negotiate in good faith we are open to that," Burch said. The clash over how much Virgin should pay for Sky channels has been interpreted as first blood of a long campaign in the converged services market.

Virgin's earnings report is here. ®

Protecting against web application threats using SSL

More from The Register

next story
Brit telcos warn Scots that voting Yes could lead to HEFTY bills
BT and Co: Independence vote likely to mean 'increased costs'
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
New 'Cosmos' browser surfs the net by TXT alone
No data plan? No WiFi? No worries ... except sluggish download speed
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Blockbuster book lays out the first 20 years of the Smartphone Wars
Symbian's David Wood bares all. Not for the faint hearted
Bonking with Apple has POUNDED mobe operators' wallets
... into submission. Weve squeals, ditches payment plans
This flashlight app requires: Your contacts list, identity, access to your camera...
Who us, dodgy? Vast majority of mobile apps fail privacy test
Apple Watch will CONQUER smartwatch world – analysts
After Applelocalypse, other wristputers will get stuck in
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
Security and trust: The backbone of doing business over the internet
Explores the current state of website security and the contributions Symantec is making to help organizations protect critical data and build trust with customers.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.