Virgin Media's Usain Bolt Ad Campaign Attracts 21,200 New Customers

Date : 04/25/2012 @ 5:48AM
Source : Dow Jones News
Stock : Virgin Media Inc. (MM) (VMED)
Quote : 51.0  0.0 (0.00%) @ 2:05AM

Virgin Media's Usain Bolt Ad Campaign Attracts 21,200 New Customers

Virgin Media Inc. (MM) (NASDAQ:VMED)
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Virgin Media Inc.'s (VMED) high profile advertising campaign featuring Jamaican sprinter Usain Bolt discussing the company's superfast broadband helped attract 21,200 new customers in the first-quarter of 2012, Chief Financial Officer Eamonn O'Hare said Wednesday.

But the new customers didn't come cheap, with Virgin Media's marketing costs rising 49% to GBP52.6 million in the first quarter from GBP35.2 million a year earlier.

The company's television advertisement, which featured Bolt imitating British entrepreneur Richard Branson and discussing the company's plans to double broadband speeds for customers for free, was "a key driver behind another solid quarter of revenue growth" of 2.4% to GBP1.01 billion, O'Hare said. It is also the first time revenue has broken through the GBP1 billion mark in the first quarter, he added.

Branson, who founded Virgin Group, can also be seen in the background of the television advertisement.

Virgin Media also booked a 1.7% increase in average revenue per user to GBP46.95 in the quarter ended March 31 from a year earlier, and greater customer loyalty with its best subscriber retention for two years.

"People are getting double the utility for the same amount of money, and we've communicated that really effectively and quite punctually with the Usain Bolt ads, and I think that's resonated with the customer base," he told Dow Jones Newswires.

Virgin Media has doubled the broadband speeds of around 250,000 customers, representing around 6% of its 4.1 million cable broadband base, as of April 24.

The superfast broadband base increased by 146,700 to 843,600 in the first quarter, representing around 20% of its cable broadband base. Demand also remained strong for its combined television and broadband platform powered by TiVo.

The 21,200 new customers in the first quarter of 2012, is up 5% from a year earlier, and takes its total cable customer base to 4.8 million as at March 31. However, that's still well below British Sky Broadcasting Group PLC's (BSY.LN) 10.47 million customers. BT Group PLC's (BT.A.LN) pay-television service, BT Vision, has around 680,000 customers.

BSkyB counts News Corp. (NWS) as its biggest shareholder with a 39.1% stake. News Corp. also owns Dow Jones & Co., publisher of this newswire and The Wall Street Journal.

Still, Virgin Media's free cash flow, one of the main figures tracked by U.K. analysts, was down 13% to GBP87.1 million because of the higher marketing costs.

Virgin Media's net profit more than doubled to GBP7.0 million in the first quarter from GBP3.3 million a year earlier, thanks to higher revenue and a sharply lower tax bill.

Virgin Media Chief Executive Neil Berkett expects "continued steady progress across the company" for the rest of 2012, which "combined with the underlying resilience of our business model, will translate into strong cash flow and shareholder returns."

O'Hare said "the company has a lot of momentum", but declined to provide any specific guidance for 2012.

Even though Virgin Media operates solely in the U.K., its primary listing is on the Nasdaq Stock Market in the U.S., a legacy of its merger in 2006. In London, Virgin Media shares were up 8 pence, or 0.5%, at 1482 pence, valuing the company at GBP4.14 billion at 0907 GMT.

 
-By Lilly Vitorovich, Dow Jones Newswires; 44-0-207 842 9290; lilly.vitorovich@dowjones.com 
 

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