Virgin Media Q2 2016 results

Virgin Media Inc. (“Virgin Media”) is the leading cable operator in the U.K. and Ireland, delivering market leading ultrafast broadband, video and fixed-line telephony services to 5.7 million customers and mobile services to 3.0 million subscribers.

Operating and financial highlights*:

• Superior bundles, new build and continued low churn helped deliver organic customer additions of 24,000 in Q2, compared to a 12,000 loss in the prior-year period

  • Record Q2 organic customer additions of 31,000 in the U.K versus 8,000 loss in Q2 2015; approximately half of Q2 customer growth in the U.K. from new build
  • Combined U.K. and Ireland churn of 13.9% in Q2, with record low of 13.8% in the U.K.

• Q2 organic RGU additions increased significantly to 50,000, compared to a gain of 1,000 in Q2 2015
  • Improved RGU additions year-over-year across our product portfolio, driven by 39,000 broadband internet and 27,000 fixed-line telephony additions
  • U.K. RGU additions of 66,000 represent our best U.K. Q2 growth since 2008

• Q2 mobile net additions improved to 25,000, up from 7,000 in Q2 last year, while growth in postpaid mobile additions improved to 41,000, compared to 36,000 last year

• Project Lightning on track to build more than 500,000 new U.K. premises in 2016; 85,000 premises added in Q2

  • Customer penetration, ARPU and build costs remain in line with business plan

• Targeted investments to enhance our customer offer and drive sales in the U.K. and Ireland

  • Signed three-year sponsorship deal with Premier League football club, Southampton FC
  • Commenced roll-out of new TV interface & added more on-demand programming in the U.K.
  • In July, launched 4G and Freestyle mobile in Ireland with a selected range of handsets

• Announced proposed acquisition of UTV Ireland and programming agreement in Ireland with ITV plc

• Rebased revenue growth of 3% in Q2 (£1,197 million) and H1 (£2,375 million)

  • Increased sales and marketing delivering H1 volumes to drive H2 revenue and OCF growth

• Operating income decreased by 24% (£79 million) in Q2 and by 16% (£168 million) in H1

  • Lower operating income primarily due to increases in related-party fees and allocations and higher depreciation and amortisation

• Rebased Segment OCF growth of 1% (£533 million) in Q2 and 2% (£1,054 million) in H1

  • Growth negatively impacted by favourable nonrecurring items in the prior year including a £12 million reduction in local authority charges in H1 2015 (£7 million in Q2 2015)

• Property and equipment additions were 23.5% of revenue in Q2 and 23% of revenue in H1

• Long-term debt hedged against currency fluctuations

Commenting on these Q2 2016 preliminary results Virgin Media Chief Executive, Tom Mockridge, said: “More homes and businesses than ever before are voting with their feet and moving to the better quality ultrafast broadband offered by Virgin Media.

“Customers are fed up with the slower broadband offered by providers operating over the ageing national telephone network.

“The proof is in the pudding.  In areas with Virgin Media, more customers moved to us during the quarter than BT, Sky, TalkTalk and Vodafone combined.”
*The financial figures contained in this release are prepared in accordance with U.S. GAAP.

For the full Liberty Global release, go to: https://www.libertyglobal.com/pdf/press-release/Virgin-Media-Fixed-Income-Q2-2016-Report-FINAL.pdf