Speed-hungry customers push Virgin into profit
Cable company's high-speed broadband and TiVo service drive profit
A surge in superfast broadband customers and high demand for its TiVo service have driven Virgin Media to its first-ever profits, the company announced in its results for 2011.
The five-year-old ISP said it had attracted 579,000 new customers to its high speed services (more than 30Mbits/sec) over the year, which helped push it towards a full-year net income of £75.9m.
Overall, the company signed 30,000 net new customers to its cable internet products, suggesting a large amount of switching between services.
The profit might have been a tiny percentage of Virgin's £4bn revenue, but the company said the results were the reward for a strategy of targeting higher-spending consumers with faster services.
“Our strategy of focusing on customers who want more from the digital world is paying off,” said Neil Berkett, Virgin Media's CEO.
As consumers spend longer online and connect multiple devices they are making use of the greater bandwidth that faster speeds provide
“With the number of TiVo customers doubling in the final quarter of the year, our new TiVo service is attracting both new and existing customers," said Berkett, saying the company now has 435,000 TiVo customers. "Demand for better broadband also continues to grow fast, with around half of new customers choosing superfast speeds.”
The switch to faster services is significant because of the additional revenue created, with the XXL 50Mbits/sec tariff priced at £25.50 compared with £14.50 for the 10Mbits/sec connection.
According to Virgin, half of new customers in the last quarter of 2011 signed-up for broadband packages of 30Mbits/sec or more, with superfast customers up by 133,000 in the quarter, and 579,000 for the year.
Virgin said nearly 1.2m customers subscribed to tiers of 20Mbits/sec or above, “which represents over 28% of our cable broadband base”.
The company claimed 700,000 subscribers on 30Mbit/sec or above, with 200,000 customers on the 50Mbits/sec or 100Mbits/sec tiers.
“As consumers spend longer online and connect multiple devices, often concurrently with others in the household, they are making use of the greater bandwidth that faster speeds provide,” the company said.