Virgin Media Inc. (VMED)
Q1 2008 Earnings Call
May 5, 2009 8:00 am ET
Richard Williams - Director, Investor Relations
Neil A. Berkett - Chief Executive Officer, Director
Rick Martin - Group Treasurer
James F. Mooney - Chairman of the Board
David Gober - Morgan Stanley
Jerry Dellis - J.P. Morgan
Nick Lyall - UBS
Steve Martin - Areton Research
Wilson Fry - Merrill Lynch
Thomas Eagan - Collins Stewart
Jay Forman - Bay Street Research
Ivek Conna - Deutsche Bank
Previous Statements by VMED
» Virgin Media, Inc. Q4 2008 Earnings Call Transcript
» Virgin Media Q3 2008 Earnings Call Transcript
» Virgin Media, Inc. Q2 2008 Earnings Call Transcript
Thank you, Operator. Good morning or afternoon to you all and welcome to Virgin's Q1 results call. I am Richard Williams, Director of Investor Relations and with me today are Neil Berkett, our CEO; Jim Mooney, our Chairman; and Rick Martin, our Group Treasurer.
Please can I draw your attention to the Safe Harbor statement on slide two and remind you that some of the statements made today may be forward-looking in nature and that actual results may vary significantly from these statements. I would also ask you to refer to our latest filings with the SEC for applicable risk factors.
Now I will turn you over to Neil.
Neil A. Berkett
Thanks, Richard and thanks for joining the call, everybody. Unfortunately our CFO, Jerry Elliott, is currently on medical leave for family health concerns. We expect he will be away for two to three weeks, so today Rick Martin, our Group Treasurer, will be deputizing for him. Richard will also join for the Q&A session.
I am pleased to say that today’s first quarter results show encouraging progress operationally and financially against our key strategic priorities. On my first slide, I set out some key highlights. Financially, we continue to improve revenue trends with the third successive quarter of year-on-year consumer on-net revenue growth. OCF was well within our guidance at £312 million and free cash flow of £62 million was up slightly on the previous quarter.
Operationally, we delivered 1% year-on-year growth in ARPU to well over £42 and churn is down again to a record low of 1.1%. RGUs are up 6% year-on-year at a record £12.6 million and triple play is up to 57%.
Following some price rises from our competitors, we’ve announced some of our own price rises. These will take effect in May and will further underpin ARPU growth and support our investment in improving product quality. We’ve also begun to implement the restructuring plans we announced in November last year to create a fully integrated customer focused organization and we are on track to deliver operational improvements and our targeted annual savings.
Turning to our strategic priorities, which are to lead the next generation broadband market in speed and quality, to lead and redefine the mid-market TV experience through video-on-demand, and to leverage our position in mobile. We continued to make great progress in the quarter. Our broadband tier mix improved strongly and our 50 meg rollout is on plan.
We’ve continued to add content to our BOB services and have delivered a record usage of 55 million views per month in the last quarter. And in mobile, we continued to experience strong contract net adds.
At the end of the quarter, we disposed of our [fit-up] business and as a result, all of our financials reflect this as discontinued operations, with appropriate adjustments of prior period figures.
Before we go into the detailed operational and financial results, I want to touch on some of the other growth opportunities that we see which give us the scope to further enhance ARPU, stimulate customer growth, and improve customer loyalty. We continue to use our strong cash flow to exploit the capabilities of our network, improve our consumer offering, and lay the foundations for future growth.
As I mentioned, we’ve already announced price rises which reflect the success we have had in improving the richness and quality of our products, which will drive further improvements in ARPU. And the third significant extinction to the cable network in over a decade, we’ve identified around 0.5 million homes whose proximity to our access network make them a commercially attractive opportunity over the next few years. We plan to begin by extending our coverage by over 50,000 homes in 2009.
We are working to ensure our TV services stay ahead of changes in the consumer behavior. We expect to increase our HD content steadily to complement our existing linear and on-demand lineup. We are currently negotiating with several broadcasters with a view to launching at least five new HD channels in the third quarter.
We have unique network strengths, so we are working to exploit them further. For example, we’ve recently had some positive results from our video-on-demand advertising trial and this offers the potential for an attractive new revenue stream in the future.
We are also investing in a series of value-added services that take advantage of the power of our broadband product and enhance our proposition. For example, we recently launched a network storage facility that enables customers to back up and store their digital files. We also allow our broadband subscribers toward a free photo prints and we are developing other differentiated value-added services which will exploit our network strengths.
Looking further ahead to the next generation of TV, we are working on capitalizing on technological convergence by developing a prototype next generation screen-based interface that combines traditional broadcast content with on-demand programming, web-based entertainment, and interactive features in a simple and user-friendly format. We believe these elements will enable us to differentiate our offering even further and drive further growth over the coming years.