Virgin Media Inc.
) reported solid financial results for the second quarter of 2012,
beating the Zacks Consensus Estimates. In the previous quarter,
average monthly churn rate was 1.4%, remaining same year over year.
However, those who still opted for Virgin Media's services have
shown their preference for the company's high-margin bundled
services with super fast broadband offerings.
Another major growth area is the company's next-generation TV
services. At the end of the second quarter of 2012, Virgin Media
) developed next-generation Internet-connected TV platform for
approximately 938,800 customers, which is 25% of the company's
total installed TV base. This figure is expected to cross 1 million
by the end of this month. In the second quarter, the company added
net 261,700 Internet TV customers. Paying TV customer base grew by
37,800 in the last quarter. The company is gradually rolling out
100 Mbps broadband services.
Net income from continuing operations, in second-quarter 2012,
was approximately $100.5 million or 34 cents per share compared
with a net income of $161.3 million or 49 cents per share in the
prior-year quarter. Quarterly earnings per share of 34 cents beat
the Zacks Consensus Estimate by a penny. Second quarter total
revenue of around $1,595 million was up 4.2% year over year,
slightly above the Zacks Consensus Estimate of $1,591 million.
Quarterly cost of sales was $626.3 million, up 3.4% year over
year. Selling, General, and Administrative expense was $328.7
million, up 3.8% year over year. Quarterly operating expense was
$1,316.2 million, down 0.4% year over year. Quarterly operating
income was $279 million, up 33.1% year over year.
During the first half of 2012, Virgin Media generated
approximately $688.3 million of cash from operations, down 20.6%
year over year. Free cash flow in the first half of 2012 was around
$335.5 million, down 3.2% year over year.
At the end of the first half of 2012, Virgin Media had
approximately $296.6 million of cash and cash equivalents compared
with $472.4 million at the end of 2011. Total outstanding debt, at
the end of the first-half 2012, was around $9,240.4 million
compared with $9,206.6 million at the end of 2011. At the end of
the first half of 2012, debt-to-capitalization ratio was 0.92
compared with 0.90 at the end of 2011.
During the second quarter of 2012, Virgin Media lost 2,900 net
new consumer products, which reduced its total consumer product
base to 12,068,600. Net consumer product addition for Broadband
segment was 4,000, resulting in total subscriber base of 4,152,600.
Within the Broadband segment, over 1.3 million customers subscribed
to either 30 Mbps or higher services. Currently, this figure
constitutes 31% of total cable Broadband subscribers. More than
590,000 customers are using 50 Mbps tier or100 Mbps tier services.
In the previous quarter, Virgin Media added a net 459,800 customers
using superfast (30 Mbps or higher tier) broadband services.
Net consumer product deletion for Non-Cable segment was 23,000,
resulting in total consumer product base of 365,300. Net consumer
product addition for Mobile segment was 53,900 and total consumer
product base of 1,641,900. The company's bundled service offerings
received increasing market traction. At the end of the previous
quarter, triple-play and quad-play penetration climbed 64.6% and
15.4% respectively of the total customer's base.
During the second quarter of 2012, Virgin Media lost a total of
14,700 Cable subscribers. Total Cable subscriber base as of June
30, 2012 was 4,812,100, up 0.6% year over year. Net subscriber
deletion for the non-Cable segment was 14,400. Total non-Cable
subscriber base as of June 30, 2012 was 218,600, down 18% year over
year. Net subscriber addition in the Mobile segment was 53,900.
Total Mobile subscriber base as of June 30, 2012 was 1,641,900, up
21.9% year over year.
Quarterly total revenue of the Consumer segment was
approximately $1,337.3 million, up 3.2% year over year. Within the
segment, Cable revenue was $1,097million, up 3.5% year over year.
ARPU (average revenue per user) of Cable services increased 3.1%
year over year to $75.84 in the reported quarter. Mobile revenue
was around $211.9 million, up 2.9% year over year. ARPU of Mobile
services surged 4.1% year over year to $23.1 in the reported
quarter. Non-Cable revenue was $28.6 million, down 6.6% year over
Business segment revenue, in second-quarter 2012, was nearly
$257.9 million, up 9.8% year over year. Within this segment, the
high-margin Retail data revenue was $115.6 million, up 8.3% year
over year. Retail voice revenue was $54.8 million, down 6.6% year
over year. LAN solutions revenue was $13.2 million, remaining same
year over year. Wholesale data revenue was $66.3 million, up 33%
year over year. Wholesale voice revenue was $8.1 million, up 153%
year over year.
We maintain our long-term Neutral recommendation on Virgin
Media. Currently, it holds a short-term Zacks #3 Rank (Hold) on the
TIVO INC (TIVO): Free Stock Analysis Report
VIRGIN MEDIA (VMED): Free Stock Analysis Report
To read this article on Zacks.com click here.