Virgin Media Inc.
) reported strong financial results for the first quarter of 2011,
easily beating the Zacks Consensus Estimates. In the previous
quarter, average monthly churn rate was 1.2%, 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 first quarter of 2012, Virgin Media
) developed next-generation Internet-connected TV platform for
approximately 677,100 customers, which is 18% of the company's
total installed TV base. In the first quarter, the company added
net 242,000 Internet TV customers. Paying TV customer base grew by
50,600 in the last quarter. The company is gradually rolling out
100 Mbps broadband services.
Net income from continuing operations, in the first quarter of
2012, was approximately $11.2 million or 3 cents per share compared
with a net income of $7.3 million or 2 cents per share in the
prior-year quarter. First quarter adjusted EPS of 37 cents handily
beats the Zacks Consensus Estimate of 30 cents. Quarterly total
revenue of approximately $1,610 million was up 2.4% year over year,
almost in line the Zacks Consensus Estimate of $1,612 million.
Quarterly cost of sales was $667 million, up1.4% year over year.
Selling, General, and Administrative expense was $340.5 million, up
9.1% year over year. Quarterly operating expense was $1,400.5
million, up 0.4% year over year. Quarterly operating income was
$209.4 million, up 18.4% year over year.
During the first quarter of 2012, Virgin Media generated
approximately $339.4 million of cash from operations, down 21.9%
year over year. Free cash flow in the reported quarter was around
$44.8 million, down 74.1% year over year.
At the end of the first quarter of 2012, Virgin Media had
approximately $225.8 million of cash and cash equivalents compared
with $472.4 million at the end of 2011. Total outstanding debt, at
the end of the last quarter, was around $9,249.1 million compared
with $9,206.6 million at the end of 2011. At the end of the first
quarter of 2012, debt-to-capitalization ratio was 0.92 compared
with 0.90 at the end of 2011.
During the first quarter of 2012, Virgin Media added 113,700 net
new consumer products, which raised its total consumer product base
to 14,047,800. Net consumer product addition for Broadband segment
was 72,800, resulting in total subscriber base of 12,071,500.
Within the Broadband segment, over 850,000 customers subscribed to
either 30 Mbps or higher services. Currently, this figure
constitutes 20% of total cable Broadband subscribers. More than
250,000 customers are using 50 Mbps tier or higher tier
Net consumer product deletion for Non-Cable segment was 23,200,
resulting in total consumer product base of 388,300. Net consumer
product addition for Mobile segment was 64,100 and total consumer
product base of 1,588,000. 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% and 15%
year over year, respectively.
During the first quarter of 2012, Virgin Media gained 21,200
Cable subscribers. Total Cable subscriber base as of March 31, 2012
was 4,826,800, up 0.13% year over year. Net subscriber deletion for
the non-Cable segment was 15,200. Total non-Cable subscriber base
as of March 31, 2012 was 233,000, down 14.6% year over year. Net
subscriber addition in the Mobile segment was 64,100. Total Mobile
subscriber base as of March 31, 2012 was 1,588,000, up 25.7% year
Quarterly total revenue of the Consumer segment was
approximately $1,337.3 million, up 1.5% year over year. Within the
segment, Cable revenue was $1,085.3 million, up 1.8% year over
year. ARPU (average revenue per user) of Cable services inched up
1.7% year over year to $75.1 in the reported quarter. Mobile
revenue was around $221.6 million, up 1.2% year over year. ARPU of
Mobile services inched up nearly 1.8% year over year to $25.4 in
the reported quarter. Non-Cable revenue was $30.4 million, down
6.4% year over year.
Business segment revenue, in first-quarter 2012, was nearly
$272.6 million, up 7.1% year over year. Within this segment, the
high-margin Retail data revenue was $127.7 million, up 22% year
over year. Retail voice revenue was $59.8 million, down 3.9% year
over year. LAN solutions revenue was $15.4 million, remaining same
year over year. Wholesale data revenue was $58.1 million, down
13.6% year over year. Wholesale voice revenue was $11.7 million, up
102.8% 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
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