Virgin Media triples losses as pandemic eats into finances
Virgin Media almost tripled its losses in the three months to 30 June, as the coronavirus crisis dented revenue despite record customer sign-ups.
The results
Net loss at the Liberty Global-owned firm swelled 285 per cent to £203.9m during the quarter, up from £53m during the same period last year.
Revenue declined 3.5 per cent year on year to £1.23bn, with income streams temporarily affected by the coronavirus crisis.
Adjusted earnings before tax, depreciation and amortization (Ebitda) sank 1.4 per cent to £527.6m over the quarter, with Virgin Media citing Covid-related costs for the dip.
Virgin Media said residential cable revenue dipped 2.4 per cent compared to the same period last year, due to sports subscription cancellations following the suspension of sporting events during the pandemic.
Residential mobile revenue decreased 8.8 per cent year on year in the second quarter, as consumers chose to keep in touch online rather than on the phone, and handset sales stalled while shops were shuttered.
The group’s other revenue plunged 42 per cent in the three months to June, due to a slump in advertising revenue in Virgin’s broadcast business in Ireland.
Why it’s interesting
The downbeat financial figures disguised the robust performance for Virgin Media’s customer base during the quarter.
Virgin Media added 24,000 new customers during lockdown, up from a loss of 6,000 customers in the same period last year.
The telco saw a 50 per cent increase in data consumption in the three months to June, as Brits turned to their screens for work, rest and play during the four-month lockdown.
The company today announced it has become the UK’s largest gigabit broadband network, as it pushes on with plans to bring gigabit speeds to more than 15m homes by the end of 2021.
Homes across Leeds, Bradford, Glasgow and their surrounding areas will now benefit from Virgin Media’s gigabit broadband, following the rollout of gigabit connectivity in Edinburgh and Liverpool last month.
Lutz Schuler, chief executive of Virgin Media, said: “The government is clear that it wants shovel-ready projects to help level-up the economy — the truth is Virgin Media has never put its shovel down and will keep pushing forward to play our role in these tough times.”
Paolo Pescatore, telecoms analyst at PP Foresight, said: “Everyone is jumping on the bandwagon in the race to deploy fibre broadband at scale. Virgin Media now ups the ante and throws down the gauntlet to rivals.”
It comes after Virgin Media in May announced plans to merge with British telecoms giant O2 to create a multi-play broadband giant valued at £31.4bn.
Virgin Media today said it was making “great progress” with the merger, and that it is working closely with the European Commission and UK regulators “to ensure a smooth review of the transaction”.
The company also announced its decision to permanently close its 53 retail stores, with staff being redeployed to customer service roles in a move that will create 1,000 new jobs.
What Virgin Media said
Lutz Schuler, chief executive of Virgin Media, said:
“Despite the challenges of Covid, we kept pushing forward to adapt as a business and give our customers more; this included creating more than 1,000 UK customer service roles.
“These efforts, and the essential role of our services, are really clear in these results. We’ve seen the best second quarter cable additions since 2016 and record mobile contract subscriber growth for the quarter, alongside positive improvements in customer satisfaction with increases in network use and TV viewing.
“We enter the second half of the year with our head held high. Despite there being uncertainty as we ease out of lockdown, we are focused on where we’re heading. We’ll keep delivering for our customers and making sure the country has the connectivity it needs and deserves.”