Virgin Media beats expectations

Virgin Media, which competes with pay-TV company BSkyB and broadband providers such as BT Group, said it added 38,300 net cable customers in the quarter and the average amount they were paying per month was up 5.3 per cent to 45.01, also a record.

The results were boosted by strong demand for broadband and pay-TV and the number of existing customers upgrading to take additional products.

Those taking three services of either pay TV, broadband, fixed and mobile telephony was up at 61.9 per cent of the base, while the monthly churn rate, or the percentage of those leaving the service, was held at a record low of 1.1 per cent.

"We've got a rhythm about us now," chief executive Neil Berkett said. "To produce results showing strong customer growth as well as strong financial performance is very pleasing."

Virgin Media shares have risen more than 130 per cent in the last 12 months after the group moved its focus to offering faster broadband speeds and technologies such as on-demand programming, rather than competing with Sky for exclusive programming.

Mr Berkett said Virgin traditionally saw a fall in net customer additions in the second quarter, due to students and others moving house and off the cable network, and he said that would probably be the case this year.

"It's possible we'll be there (at negative growth) or around the break even mark ... and then return to growth in Q3 and Q4," he said.

"We've got a high operational leverage, so we only need a small amount of revenue growth, given the gross margin we produce, to produce a couple more digits of OCF growth," Mr Berkett said.

Execution Noble analyst Andrew Hogley welcomed the strong OCF performance and customer additions across the board.

"We're happy with our buy recommendation," he said.