Virgin Media revs up for Liberty Global merger

Virgin Media - which is imminently set to be scooped up by US cable giant Liberty Global - reported a good start to its financial year this morning.

It told the City that revenue had climbed to £1.04bn for the three months ended 31 March 2013 - up 3.6 per cent from £1.01bn for the same period a year earlier.

The telco said it had added 8,600 subscribers to its services over the course of Q1, down from a net addition of 21,200 in Virgin Media's 2012 first quarter.

However, average revenue per user (ARPU) increased a healthy 5.2 per cent from last year's £46.95 to £49.38.

Earnings before interest, taxes, depreciation and amortisation and other one-time charges rose from £376.5m last year to £398.5m.

Despite the telco making a profit these days, the company still has a huge debt pile, which now stands at an eye-watering £6.1bn.

Virgin Media also revealed that during the quarter it had bagged "major backhaul contract wins" from BSkyB, Telefonica and an unnamed mobile network operator. Financial terms of those deals were kept secret. It said:

During the quarter, we signed a significant ten-year deal with Telefonica UK for the provision of backhaul to 1,500 sites.

We have also secured significant orders under a framework agreement to support the creation of a UK-wide Aggregation Network for another large UK mobile network operator. This means that we now have material backhaul contracts with all the UK mobile network operators.

Additionally, we've secured a significant five-year backhaul contract with Sky, a major UK ISP.

Virgin Media boss Neil Berkett, who will exit the telco with £42m once Liberty Global completes its acquisition of the Hampshire-based company, said that VM's good Q1 results positioned the firm well for its planned merger.

Last week, competition officials at the European Commission waved through Liberty Global's £15bn bid to buy Virgin Media without challenging the proposed takeover by US billionaire John Malone's multinational. The acquisition is expected to be completed in the second quarter of this year. ®