Virgin Media signs off with three new business deals

Wed Apr 24, 2013 2:59am EDT

LONDON, April 24 (Reuters) - Cable operator Virgin Media posted a 54 percent rise in first quarter free cash flow and announced a series of major business deals on Wednesday, showing the attraction of a company that is about to be sold to Liberty Global.

Virgin, which is to be sold to John Malone's Liberty for $15.75 billion in stock and cash, added 8,600 new customers during the three months to the end of March.

That was below forecasts of 15,000 new additions, but like previous quarters, the company increased levels of customer loyalty and extracted more cash from each user with a price rise, allowing it to drive the company's overall financial performance.

Virgin's Business division, which competes with the likes of BT to provide connectivity to regional governments and corporations, also signed three new large contracts with telecoms groups BSkyB, Telefonica and a third operator, which a person familiar with the situation said was Vodafone.

The solid operating performance meant free cash flow was up 54 percent to 135 million pounds ($206 million), slightly ahead of forecasts and benefiting from the heavy investment the company made into its broadband network last year.

"This positive momentum in the business positions us well for our planned merger with Liberty Global," outgoing Chief Executive Neil Berkett said.

The first quarter results are likely to be the last set made by Virgin before the deal completes.

Analysts at Goldman Sachs said the results showed that customers had accepted the price rise, and that the three new business wins helped a division which had otherwise slightly missed forecasts.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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