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Product category: General insurance
News Release from: uSwitch | Subject: Insurance
Edited by the Insidemoneytalk Editorial Team on 11 May 2007

Virgin's 'Threesome' yet to reap
rewards, says uSwitch.com

Despite big brand launch, revenue has dropped by £59.7 million

Operating losses have risen to £15.3 million Churn rate is still higher than arch rival Sky Following today's first quarter results from Virgin Media, Chris Frost, Communications Expert at independent price comparison and switching service uSwitch.com, comments: "Revenue for the company has fallen by over 5% this quarter and operating losses for the period have risen to £15.3million Despite Virgin Media seeing increased take up of their triple play packages from 34.9% to 42.9% of its customer base, over the last year ARPU has remained fairly constant as customers have been receiving discounted packaged deals

This is good news for their 5,143,200 customers who are receiving better value for money, but not for the pockets of Richard Branson.

"Virgin Media will be disappointed that their highly publicised £25million rebrand seems to have had little positive impact on the size of their customer base, losing almost 47,000 customers in the past three months.

While not as low as its rival Sky, churn has fallen from 1.7% to 1.6 % per month and is expected to rise further over the next quarter.

The short term incentives, such as discounted packages offered by Virgin Media during their public spat with Sky have temporarily served to retain dissatisfied customers, but this may not remain the case over the next few months.

Virgin Media admit that they will see a significant net loss of customers in Q2 as the 30 day notice period pushes the impact of the channel dispute into April.

Boosting their off-net strategy is one way that Virgin Media is attempting to address levels of churn - enabling customers moving out of cabled areas to remain loyal to the brand." Frost continues: "Virgin media have seen high cable broadband net additions, partly assisted by the special offers such as standalone broadband for just £10 a month.

However, this has significantly impacted on Virgin Media's telephony offering as customers taking advantage of this deal do not need to sign up to a fixed line service.

The net subscriber loss of 63,400 cable home phone customers over the quarter has not helped the overall decline in revenue.

Customers should expect to see stronger marketing of the telephony offering this quarter as Virgin Media try to reposition the home phone element of the triple-play deal.

"Virgin Media is rightly looking to take advantage of its capability to offer high bandwidth connections, trialling speeds of 50Mb and now rolling out a 20 Mb service.

However, speeds on the cable network will be limited between 4pm and midnight for traffic which Virgin considers "potentially abnormal" .

Virgin Media says the top five per cent of its heaviest downloaders will be affected - but150,000 broadband users is a significant.

At a premium of £37 a month, are these customers really getting a deal which keeps them loyal?.

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