Virgin Media Inc.
) reported strong financial results for the first quarter of
2013. In the reported quarter, average monthly churn rate was
1.1% compared with 1.2% in the year-ago quarter. Moreover, those
who opted for Virgin Media's services have shown preference for
the company's high-margin bundled services with super fast
broadband offerings. Virgin Media currently has a Zacks Rank #3
Another major growth area is the company's next-generation TV
services. At the end of the first quarter of 2013, Virgin Media
) developed next-generation Internet-connected TV platform for
approximately 1.5 million customers, which is 40% of the
company's total installed TV base. In the reported quarter, the
company added a net total of 171,900 Internet TV customers. The
Pay-TV customer base grew by 13,700 in the last quarter, which is
87% of the company's total installed TV base. The company is
gradually rolling out 100 Mbps broadband services.
Net income from continuing operations, in first-quarter 2013,
was approximately $211.8 million or 70 cents per share compared
with $11.2 million or 3 cents per share in the prior-year
quarter. On the revenue front, it moved up 3.6% year over year to
Quarterly cost of sales was $651.8 million, up 2.5% year over
year. Selling, General, and Administrative expense were $330.3
million, up 1.8% year over year. Quarterly operating expense was
$1,361.4 million, up 2% year over year. Quarterly operating
income was $228.5 million, up 14.4% year over year.
During the first quarter of 2013, Virgin Media generated
approximately $466.7 million of cash from operations, up 44.3%
year over year. Free cash flow in the reported quarter was around
$200.7 million, jumped 370% year over year.
At the end of the first quarter of 2013, Virgin Media had
approximately $485.9 million of cash and cash equivalents
compared with $332.2 million at the end of 2012. Total
outstanding debt, at the end of the reported quarter, was around
$9,319.1 million compared with $9,149.4 million at the end of
2012. Debt-to-capitalization ratio was 0.64 at the end of the
last quarter, compared with 0.65 at the end of 2012.
During the first quarter of 2013, Virgin Media gained 24,500
net new consumer Cable products, which raised its total consumer
product base to 12,271,300. Net consumer product addition for
Broadband segment was 37,400, resulting in total product base of
4,309,600. Within the Broadband segment, over 2.5 million
customers subscribed to either 30 Mbps or higher services.
Currently, this figure constitutes 58% of total cable Broadband
In the reported quarter, Virgin Media added a net 337,900
customers using superfast (30 Mbps or higher tier) broadband
services. Net consumer product loss for Television segment was
13,400, resulting in total TV consumer product base of 3,782,100.
Similarly, net consumer product addition for Telephony segment
was 500, resulting in total Telephony consumer product base of
4,179,600. As on Mar 31, 2013, triple-play and quad-play
subscriber penetration was 65% and 16% respectively.
During the first quarter of 2013, Virgin Media gained a net
8,600 Cable subscribers. Total Cable subscriber base as of Mar
31, 2013 was 4,902,900, up 1.6% year over year. Net subscriber
addition in the Mobile segment was 35,100. Total Mobile
subscriber base as of Mar 31, 2013 was 1,744,000, up 9.8% year
Quarterly total revenue of the Consumer segment was
approximately $1,340.6 million, up 5.2% year over year. Within
the segment, Cable revenue was $1,106.9 million, up 7% year over
year. ARPU (average revenue per user) of Cable services increased
5.2% year over year to $75.31 in the reported quarter. Mobile
revenue was around $210.2 million, down 0.5% year over year. ARPU
of Mobile services declined 2.4% year over year to $22.27 in the
reported quarter. Non-Cable revenue was $23.6 million, down 18.4%
year over year.
Business segment revenue, in first-quarter 2013, was nearly
$249.2 million, down 4.1% year over year.
On Apr 15,
Liberty Global Inc.
) received European Union's regulatory approval for its proposed
acquisition of Virgin Media. On Feb 2013, Liberty Global decided
to acquire a 100% stake in Virgin Media, in a cash and equity
deal. The deal is worth around $15.8 billion or an enterprise
value of nearly $23.3 billion. The deal is now being weighed by
the U.S. regulator and is expected to be closed by the second
quarter of 2013.
If this deal finally matures, then the merged entity will
become a formidable challenger to BSkyB Group plc, the largest
pay-TV operator of the U.K. BSkyB is partially controlled by
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