Virgin lost 36,000 cable customers in second quarter

Virgin loses broadband customers

Virgin Media lost 36,000 broadband customers in the second quarter, offsetting the increase in spending by remaining customers.

The British company, which has the country's fastest broadband connections and also provides TV and telephony services, increased sales by two per cent to £986m.

Virgin also announced a £850m share buyback and debt repayment programme and said it was on track to meet its debt target of thtrr times operational cashflow over the next one to two years.

Virgin Media shares were down three per cent in London, where they are thinly traded, with their main listing in New York.

"We believe this weakness will prove temporary and VMED's pricing power in consumer cable will sustain strong FCF growth, with large share buybacks emphasizing management's confidence," Goldman Sachs analyst Tim Boddy wrote.

Chief executive Neil Berkett said he was satisfied with the results in a seasonally weak quarter when the British economy grew just 0.2 per cent.

"We are acquiring and growing data-savvy, data-hungry customers," he said, adding that the current quarter demonstrated that "the confidence level of consumers has not really lifted".

Virgin Media competes with telecoms provider BT and satellite broadcaster BSkyB to supply broadband, broadcast and on-demand TV and mobile and home telephony.

By mid-2012 it aims to offer broadband speeds of 100 megabits per second to all homes on its network, which covers about half of Britain's households.

Virgin Media's second-quarter operating cashflow rose six per cent to £392m, beating expectations, and free cashflow rose 13 per cent to £123m.

Average revenue per cable user rose three per cent to £47.35 per month, while average monthly churn - the percentage of customers leaving - rose slightly to 1.4 per cent.

But Virgin Media struggled to grow revenues in some of its less core services.

Mobile revenues fell by three per cent despite high customer growth because of regulatory changes to connection fees, while business sales were flat as lower voice and wholesale revenues set off the benefit of higher data revenues.

New York-traded Virgin Media shares have risen three per cent this year so far, outperforming a six per cent decline in the European media index .

Its London-traded stock is little changed from the start of the year

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