News 2004
Virgin Mobile sees strong customer, revenue and margin growth in the first quarter to end June
29/07/2004
Virgin Mobile Holdings (UK) plc (“Virgin Mobile”), the UK’s largest mobile virtual network operator (MVNO), today announced its key performance indicators (KPIs) for the three-month period ended 30 June 2004.
Virgin Mobile has adopted a 31 March year-end. The company intends to report financial results on a full year and a half year basis and to report separate KPI statements following the first quarter to 30 June, and third quarter to 31 December.
Tom Alexander, Chief Executive of Virgin Mobile, said: “I’m delighted to report that the company has performed very well in the first quarter, delivering strong gains in customer numbers, revenues and margins.
“We are continuing to attract large numbers of customers from our competitors, which in turn is driving revenue growth. This, combined with our cost-effective marketing and increasing scale benefits, has resulted in margin that is significantly ahead of the result for the previous quarter. This has been achieved in our first full quarter under the new telecommunications supply agreement (TSA) with T-Mobile.
“These results are a great start to the year and we are confident of the continuing strength of our brand and business model going forward.”
Highlights:
- Unaudited revenue increased by 23.9% year on year to £123.6m, driven by the increase in the customer base (Quarter to 30 June 2003: £99.8m1)
- Margins significantly ahead of last quarter
- 287,196 net customer additions
- Total customers 4.248m, up 7.2% (Quarter to 31 March 2004: 3.9m)
- ARPU £142 (Quarter to 31 March 2004: £147) 1,2
Customer Growth
287,196 net customers were added in the quarter and total customers increased to 4.248m, up 7.2% (Quarter to 31 March 2004: 3.961m). Growth continues to be driven by the broad appeal of the Virgin Mobile brand, Virgin Mobile’s simple and compelling customer proposition, award-winning customer focus and broad distribution network. This growth was achieved despite strong competition in the pre-pay market.
This increase in customer numbers contributed to a 23.9% increase in revenue to £123.6m compared to the same period a year earlier on a like-for-like basis. As anticipated, Virgin Mobile’s strong growth in last Christmas’ quarter, which attracted lower ARPU customers, has resulted in a marginal decline of annualised ARPU and customer activity levels. Our low cost of acquisition, and efficient operating business model, allows us to pursue this strategy profitably.
ARPU/activity level
Average revenue per user (ARPU)2 on a pro forma basis1 declined marginally to £142 in the quarter compared with £147 in the quarter to 31 March 2004. Virgin Mobile continues to have one of the highest pre-pay ARPUs in the UK market and the lowest churn rate compared to its competitors. Churn rate3 for the quarter was in line with expectations at 15.2%. The proportion of customers using our services in the previous 90 days (Customer Activity Level4) was 79.8% compared to 81.8% in the previous quarter.
Outlook
Virgin Mobile has made a strong start to the year, with a good first quarter trading performance. The company is confident of its prospects and expects to benefit from a number of new initiatives during the remainder of the first half and beyond, including:
- Increasing customer uptake of international roaming services, which are available to Virgin Mobile pre-pay customers over this summer’s holiday period for the first time
- The recent launch of picture messaging and fast WAP (GPRS)
- Our continued expansion into independent dealer outlets
- The anticipated launch in August of the Virgin Mobile Bites service providing advanced data services to customers. The service is a bespoke entertainment portal designed to bring to life a new generation of phones including camera-enabled, colour screen handsets.
For further information contact:
| Virgin Mobile | Steven Day |
| 07931 777777 or | |
| 020 7484 4300 | |
| Finsbury | James Murgatroyd |
| Julius Duncan | |
| Don Hunter | |
| 020 7251 3801 | |
| Virgin Mobile | Pro forma3 months ended30 June 2004 | Pro forma3 months ended31 March 2004 | Pro forma12 months ended31 March 2004 |
| Total Customers (thousands) | 4,248.7 | 3,961.5 | 3,961.5 |
| Customer Activity Level (%) | 79.8 | 81.8 | 81.8 |
| Net Customer Additions (thousands) | 287.2 | 283.0 | 1,324.4 |
| Churn rate (%) | 15.2 | 14.0 | 14.0 |
| Turnover (£m) | 123.65 | 119.8 | 462.2 |
| ARPU (£) | 142 | 147 | 147 |
1 On a proforma, or like-for-like basis, that shows the effect of the new TSA as if it had been in operation during the whole period. 2 ARPU - Average Revenue Per User is calculated by dividing the total service turnover (before exceptional items) for the relevant 12 month period by the average of the active customer months in that period. 3 Churn rate - An annualised measurement of customers who disconnect or stop using Virgin Mobile services (excluding customer returns within the 28 day customer satisfaction guarantee period). Churn rate is calculated by expressing the sum of the number of disconnections during the relevant 12 month period and the number of customers who have stopped using services as a percentage of the average customer base for the period. 4 Customer activity level – Active customers expressed as a percentage of total customers. Active customers comprises gross connections (since the commencement of operations) net of disconnects, returns under the customer service guarantee and customers who have not used the network in the preceding 90 days. 5 Unaudited.
