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Cable broadband making more money than cable telly

Easier piping stuff than providing it, says Virgin Media

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Virgin Media makes the bulk of its money from its cable customers in the UK according to the company's quarterly filing with the US Securities and Exchange Commission (SEC).

And a mild increase in revenues from its cable broadband business fuelled the last quarter for the telecom and media company. For the three months ended 30 September 2011, Virgin Media's broadband revenue increased to £685m ($1.09bn), compared to £662.6m ($1.05bn) in the same period last year. Virgin Media put the healthy income in the cable sector down to "selective" price increases, discounts to newbies and successful sales of new products to existing customers.

Money from Virgin Media's fibre-optic cable services made up 68.5 per cent of its total revenue for the quarter.

Overall, the company's quarterly earnings were up compared to last year. It made a revenue of £1bn in this quarter ending the 30 September, an increase of 2.2 per cent on the £978.4m revenue it made in the same period in 2010.

But the rise in cable broadband was offset by lower profits from mobile customers and from its TV division. "In our consumer segment, cable customers account for the majority of our revenue," VM said in the report, going on to specify that "cable broadband internet is more profitable than our television services".

Revenue from cable television makes up a significant chunk of Virgin's income, but customer uptake there has declined slightly since last year, falling to 3,762,100 from the 3,766,700 average customers Virgin had in the same quarter last year.

In contrast, cable broadband subscribers have shifted up to 4,072,900 from 3,969,800 in the same period in 2010.

Revenues from cable telephone services have fallen slightly too.

Customers who subscribe to multiple Virgin Media services bring in more profit for the company than those who simply use a single service. In mobile, contract customers brought in much better returns than the pay-as-you-go ones.

Rumours today that Virgin TV will drop the American channel Current TV from its offering to UK customers next year are possibly a sign that Virgin Media is more willing to invest in the areas that bring in bigger bucks.

Though VM didn't confirm or deny that the channel was closing, only telling us that "Current TV is contracted to be on our service until early 2012", and "we constantly review our channel line-up to ensure we are providing our customers with content they want to watch and enjoy".

Otherwise the media company has made some savings by implementing cuts packages from 2008, including ditching properties and bringing rental costs down and making some cuts to staff.

Virgin Media's sales to business customers were up slightly from last year, but 84.4 per cent of its profits are still from the consumer sector. ®

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