UPDATE 2-UK's Virgin Media loses customers, average spend up
* Q2 cable customers down 36,000 at 4.78 mln, ARPU up 3 pct
* Sales up 2 pct at 986 mln pounds
* Operating cash flow up 6 pct at 392 mln pounds
* Shares down 3 percent (Adds shares, analyst comment, details on segments, debt)
By Georgina Prodhan
LONDON, July 27 (Reuters) - Britain's Virgin Media lost 36,000 cable customers in the second quarter, offsetting some of the benefit of an increase in average spend by those who remained.
Virgin Media, which has Britain's fastest broadband connections and also sells TV and telephony services, increased sales by 2 percent to 986 million pounds ($1.62 billion), broadly in line with analysts' forecasts.
The company also announced a new, larger-than-expected 850 million-pound share buyback and debt repayment programme and said it was on track to meet its debt target of 3 times operational cashflow over the next one to two years.
Virgin Media shares were down 3 percent 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 percent.
"We are acquiring and growing data-savvy, data-hungry customers," he told Reuters in a telephone interview. Asked about the current quarter, he said: "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 -- fast enough to download a music album in 5 seconds -- to all homes on its network, which covers about half of Britain's households.
Virgin Media's second-quarter operating cashflow rose 6 percent to 392 million pounds, beating expectations, and free cashflow rose 13 percent to 123 million pounds.
Average revenue per cable user rose 3 percent to 47.35 pounds per month, while average monthly churn -- the percentage of customers leaving -- rose slightly to 1.4 percent.
But Virgin Media struggled to grow revenues in some of its less core services.
Mobile revenues fell by 3 percent 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 3 percent this year so far, outperforming a 6 percent decline in the European media index . Its London-traded stock is little changed from the start of the year. ($1=0.610 pounds) (Reporting by Georgina Prodhan; Editing by Greg Mahlich and Will Waterman)
- U.S. war veteran released by North Korea returns home |
- South Korea to make announcement on air zone; expansion is anticipated |
- Pro-Europe protesters gather for rally in Kiev
- Pennsylvania newlyweds "just wanted to murder someone together:" police
- Obama defends interim Iran deal, seeks to assure Israel