British cable company Virgin Media added just 24,800 television subscribers and 54,600 broadband customers in the last quarter, despite its ongoing marketing campaign. It reported an operating loss of £333 million in the last quarter after writing down £366 million goodwill in its mobile division. Virgin Media continues to see broadband as its ‘hero’ product, although is rather more candid with analysts than consumers.
Turnover of £990 million was down on the previous quarter and slightly down on the same quarter last year.
The goodwill impairment charge reflects the requirement for companies to assess the fair value of business units compared to the value carried on the books.
“In the face of a tougher national economic environment our business has demonstrated good resilience,” said the chief executive, Neil Berkett. “We continue to focus on improving our operational execution and driving unnecessary cost and inefficiencies out of the business.”
Later this year Virgin Media will roll out at 50Mbps broadband service. “We will continue to exploit our competitive advantages in leading next generation broadband in the UK and redefining the on-demand TV experience.”
In its high profile marketing campaigns Virgin Media disingenuously refers to its fibre-optic broadband network. The service is actually delivered over a hybrid-fibre coax network, with fibre-optic as far as the street cabinet, the connection to the customer being over a conventional coaxial cable. Interestingly, in the stricter regulatory environment of its financial announcement it did not mention the word ‘fibre’.
Neil Berkett told analysts: “We are positioning the superior quality aspects of cable over DSL Copper with some success.” He spent some time briefing them on the benefits of cable over competitors using DSL over telephone lines.
Despite promoting its high speed broadband capacity, three quarters of customers currently take the entry level 2Mb service, with only around 10% opting for the top tier 20Mbps option. Average broadband usage is currently around a gigabyte per home a month.
With additional cable bandwidth freed up by dropping analogue services, he said they could probably offer speeds of 200Mbps by 2012.
The BBC iPlayer is now available as part of the video-on-demand service on Virgin Media. The company noted that the free BBC service attracted 10.5 million views in June, representing over a quarter of video-on-demand views. Slightly less than half its 3.4 million digital television subscribers use video-on-demand services in any month.