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Customer exodus hits Virgin Media

Sky gloomy

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Virgin Media (VM) took another sound kicking from Sky last quarter, losing customers and money in the battle for broadband and pay-TV supremacy.

The firm's cable network surrendered 70,300 net customers during the three months to 30 June. VM estimated 40,000 of the refugees were motivated by Sky's withdrawal of the Basics package that includes the Sky One and Sky News channels.

The dispute is headed for a High Court showdown. VM reckons the impact on customer numbers will be mostly limited to this set of results.

Losses actually narrowed for VM to £119m from £195.8m a year earlier. Total revenue for the group was lower too, however, once the recent inclusion of Virgin Mobile was taken into account. The group brought in £848.7m for Q2 2007 versus £884.3m for 2006.

Average revenue per user slid from £42.75 to £42.16. VM blamed falling use of home phone services.

Searching for light in the gloom, VM claimed it has snatched back the lead from BT in the tit for tat battle for the nation's top residential broadband provider - a sideshow compared to its travails against Sky. VM now supplies 3.5 million home punters (3.2 million cable, 300,000 ADSL), compared to BT Retail's total of 3.8 million lines, some of which are used by businesses.

The bid by Virgin Media's backers to take the firm private, which it's hoped will allow it to act more decisively and deal with its crippling debts, also suffered a blow this week. Volatility in the debt markets that feed the private equity sector with cash for their multi-billion pound deals meant Virgin was forced to delay sale negotiations.

The full earnings release is here. ®

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