Virgin Media Inc.
) reported mixed financial results for the fourth quarter of
2012. In the reported quarter, average monthly churn rate was
1.1% compared with 1.3% in the year-ago quarter. Moreover, those
who opted for Virgin Media's services have shown their 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 fourth quarter of 2012, Virgin Media
) developed next-generation Internet-connected TV platform for
approximately 1.33 million customers, which is 35% of the
company's total installed TV base. In the fourth quarter, the
company added a net total 187,300 Internet TV customers. Pay-TV
customer base grew by 59,900 in the last quarter. The company is
gradually rolling out 100 Mbps broadband services.
Net income from continuing operations, in fourth-quarter 2012,
was approximately $105.6 million or 39 cents per share compared
with $75.8 million or 25 cents per share in the prior-year
quarter. Quarterly earnings per share of 39 cents fell below the
Zacks Consensus Estimate of 41 cents. On the revenue front, it
moved up 1.6% year over year to $1,680 million and was also well
above the Zacks Consensus Estimate of $1,633 million.
Quarterly cost of sales was $655.5 million, up 0.7% year over
year. Selling, General, and Administrative expense were $309.7
million, remaining same year over year. Quarterly operating
expense was $1,342.5 million, down 3.1% year over year. Quarterly
operating income was $337 million, up 25.4% year over year.
During fiscal 2012, Virgin Media generated approximately
$1,679.4 million of cash from operations, down 9.5% year over
year. Free cash flow in fiscal 2012 was around $414.3 million,
down 47.9% year over year.
At the end of fiscal 2012, Virgin Media had approximately
$332.2 million of cash and cash equivalents compared with $472.4
million at the end of 2011. Total outstanding debt, at the end of
fiscal 2012, was around $9,149.4 million compared with $9,577.3
million at the end of 2011. Debt-to-capitalization ratio was 0.65
at the end of 2012, compared with 0.90 at the end of 2011.
During the fourth quarter of 2012, Virgin Media gained 101,200
net new consumer Cable products, which raised its total consumer
product base to 12,246,800. Net consumer product addition for
Broadband segment was 62,700, resulting in total product base of
4,272,200. Within the Broadband segment, over 2.17 million
customers subscribed to either 30 Mbps or higher services.
Currently, this figure constitutes 51% of total cable Broadband
subscribers. In the reported quarter, Virgin Media added a net
419,400 customers using superfast (30 Mbps or higher tier)
In the fourth quarter, Virgin Media added 36,800 triple-play
customers with a penetration rate of 64.9%. Net consumer product
addition for Television segment was 17,100, resulting in total TV
consumer product base of 3,795,500. Similarly, net consumer
product addition for Telephony segment was 21,400, resulting in
total Telephony consumer product base of 4,179,100. At the end of
2012, quad-play subscriber base increased 11% year over year to
During the fourth quarter of 2012, Virgin Media gained a net
42,700 Cable subscribers. Total Cable subscriber base as of Dec
31, 2012 was 4,894,300, up 1.9% year over year. Net subscriber
addition in the Mobile segment was 38,100. Total Mobile
subscriber base as of Dec 31, 2012 was 1,708,900, up 12.1% year
Quarterly total revenue of the Consumer segment was
approximately $1,412.4 million, up 2.8% year over year. Within
the segment, Cable revenue was $1,154.8 million, up 3.8% year
over year. ARPU (average revenue per user) of Cable services
increased 2.1% year over year to $78.94 in the reported quarter.
Mobile revenue was around $231.2 million, up 0.6% year over year.
ARPU of Mobile services declined 2.1% year over year to $24.44 in
the reported quarter. Non-Cable revenue was $26.5 million, down
17.6% year over year.
Business segment revenue, in fourth-quarter 2012, was nearly
$267 million, down 4.5% year over year. Within this segment, the
high-margin Retail data revenue was $121.2 million, up 2.2% year
over year. Retail voice revenue was $54.6 million, down 14% year
over year. LAN solutions revenue was $13.6 million, remaining
same year over year. Wholesale data revenue was $69.6 million,
down 5.3% year over year. Wholesale voice revenue was $8.1
million, up 78.6% year over year.
Yesterday, in a significant strategic move, Virgin Media came
out with a joint press statement with
Liberty Global Inc.
), that the two companies have entered into an agreement par
which, Liberty Global will acquire a 100% stake in Virgin Media
in a cash and equity deal. The deal is implying a total
consideration of approximately $15.8 billion or an enterprise
value of nearly $23.3 billion.
Both the companies are expecting the deal to be completed by
the second quarter of 2013 subject to customary regulatory
approval. If this deal gets approved, then Virgin Media will
become a formidable challenger to BSkyB, the largest pay-TV
operator of the U.K. BSkyB is partially controlled by
LIBERTY GLBL-A (LBTYA): Free Stock Analysis
NEWS CORP INC-A (NWSA): Free Stock Analysis
TIVO INC (TIVO): Free Stock Analysis Report
VIRGIN MEDIA (VMED): Free Stock Analysis
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