News 2006
Key performance indicators (KPIs) for the three months to 31 December 2005
01/02/2006
KPI highlights
- Service revenue up 20.3% on Q3 last year (H1 FY06: 8.7%)
- Rising 12 month rolling ARPU up to £123 (H1 FY06: £121)
- Total active customers increased 12% to 4,346,000 (Q3 FY05: 3,879,000)
- Strong customer growth with 193,000 net active additions (Q3 FY05: 276,000)
Tom Alexander, Chief Executive of Virgin Mobile, said:
"I am delighted to report another strong set of results for Virgin Mobile this quarter. Our top line service revenue growth continues to be industry leading, with our highest year on year growth for over twelve months. Our continuing strategy of attracting high quality customers in the prepay segment fuelled our growth during the quarter.
“Our entry into the contract market gathered pace during the quarter, with the number of distribution outlets doubling and the launch of our contract advertising on television featuring Kate Moss. We will continue to roll out our contract proposition to further outlets over the next quarter, with additional expansion planned for FY2007.
“We begin 2006 in a strong position, with industry leading revenue growth, rising ARPUs and a growing customer base, and therefore look with confidence to the future. Our discussions with ntl about a potential offer are ongoing and we will make further announcements about these in due course.”
Service Revenue growth and rising ARPU
Service revenue growth continued to gain momentum with a market leading 20.3% growth over the quarter compared to a year ago. This represents a significant increase on our underlying H1 2006 service revenue growth of 17.9%, with well over half the growth being generated from the prepay segment. Reported service revenue growth also benefited from the first full quarter without any comparative impact from the Ofcom interconnection rate cuts.
On a 12 month rolling basis, blended ARPU rose to £123; an increase of £2 per customer from £121 at 30 September 2005, reflecting a continuation of recent trends. Monthly ARPU rose for the fourth consecutive quarter, as a result of our successful launch into the contract market and our targeted approach to acquisition of prepay customers.
Non-voice services revenues remain unchanged quarter on quarter at 32.6% of service revenue.
Connections Growth
During the quarter, our active customer base grew strongly with 193,000 net active connections (Q3 FY05: 276,000), driven primarily by a high level of prepay connections at Christmas along with the continued growth in our contract base. Our active customers reached 4,346,000 (up 12.0% year on year).
Our approach to the prepay market during this period was consistent with the strategy adopted in previous quarters, remaining focused on acquiring and retaining high spending customers. This strategy has continued to deliver strong customer growth, with both ARPU and service revenue growth also rising as a result. While this strategy of connecting customers to higher quality handsets incurs commensurately higher SACs, we expect prepay SACs over the second half of the year to be broadly in line with the first half.
Churn on the active customer base, adjusted for temporary connections, marginally increased to 27.5% (H1 FY06: 26.9%). This rise represents a deceleration of the churn growth as it trends towards the industry average.
Quarter ending | 31 Dec 2004 | 31 Mar 2005 | 30 Jun 2005 | 30 Sep 2005 | 31 Dec 2005 |
|---|---|---|---|---|---|
90 day active customers (thousands) | 3,880 | 4,032 | 4,109 | 4,153 | 4,346 |
Net 90 day active customer additions (thousands) | 276 | 152 | 77 | 44 | 193 |
Active customer churn (1) (%) | 22.6% | 24.0% | 26.9% | 27.5% | |
Average revenue Per User ("ARPU") (£) | £132 | £127 | £123 | £121 | £123 |
Non-voice service revenue as a percentage of service revenue (%) | 29.7% | 31.2% | 31.5% | 32.6% | 32.6% |
Cautionary Statement Regarding Forward-Looking Statements
This document contains certain forward-looking statements. We have based these forward-looking statements on our current plans, expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about us. Forward-looking statements speak only as of the date they are made. If any one or more of the foregoing assumptions are ultimately incorrect, our actual results may differ from our expectations based on these assumptions. Also, the sector and markets in which we operate may not grow over the next several years as expected, or at all. The failure of these markets to grow as expected may have a material adverse effect on our business, operating results and financial condition and the market price of our ordinary shares.
CONTACTS
Investors and Analysts
Mike Thomas, Head of Corporate Finance & Investor Relations
Press
Steven Day, Corporate Affairs Director,
Finsbury
James Murgatroyd or Don Hunter
