Virgin Mobile USA quarterly loss narrows

By Gina Keating

LOS ANGELES (Reuters) - Virgin Mobile USA (VM.N) on Wednesday posted a narrower fourth-quarter loss as revenue rose on the addition of new subscribers.

In its second quarterly report since its initial public offering in October, Virgin Mobile USA posted a net loss of $14.7 million, or 30 cents per share, compared with a loss of $44.9 million, or $1.74 a share in the year ago quarter when it was privately held.

Before items the company said it posted a loss of 28 cents per share compared with a loss of 85 cents in the year ago quarter.

Net service revenue rose 8 percent to $293.6 million from $271 million a year earlier. Total operating revenue rose to $326.5 million from $298 million a year ago.

Analysts, on average, expected an adjusted loss of 35 cents per share, and total operating revenue of $342.4 million, according to Reuters Estimates.

In the fourth quarter, gross customer additions totaled 958,000 down from 1.29 million as a result of Virgin Mobile's decision not to engage in temporary price cuts during the holiday season.

Costs to add subscribers for the fourth quarter was $120.87, compared to $96.43 a year earlier, due in part to fewer additions in the 2007 quarter.

Churn, or average monthly turnover, for the fourth quarter declined to 5.1 percent from 5.6 percent. As of Dec 31, Virgin Mobile had about 5.1 million customers, an increase of 11 percent over the same period in 2006.

Average revenue per user for the fourth quarter was $20.14, compared with $22.16 in the year-earlier quarter, as customers cut back on usage due to difficult economic conditions, Virgin Chief Executive Dan Schulman said on a conference call with analysts.

The company said it expects "strong profitability growth in 2008."

Net customer additions for the first quarter were expected to be in the range of 5,000 to 20,000. Net service revenue for the first quarter were forecast at between $293 million to $303 million.

The company forecast adjusted earnings before interest, taxes, depreciation and amortization of between $22 million and $25 million, and earnings of 1 cent to 4 cents per share.

Virgin said last month it would post a full-year 2007 net loss $3 million to $6 million and fourth-quarter net customer additions of about 210,000.

Shares of Virgin Mobile dropped to $3.45 in after-hours trade after closing down 4.6 percent, or 20 cents, at $4.20 per share on Wednesday in regular trade on the New York Stock Exchange.

(Reporting by Gina Keating, editing by Phil Berlowitz, Leslie Gevirtz)