Virgin Media ‘positioned well’ for merger, says CEO

As Virgin Media's profits rise in Q1 2013, CEO Neil Berkett says the firm's balance sheet positions it well for the merger with Liberty Global

UK telecoms giant Virgin Media today announced its first quarter results for 2013, showing positive figures as it waits for its merger deal with Liberty Global to finalise.  

The deal for the US firm to buy Virgin Media for £15bn was announced at the start of February and will see Liberty Global make a more aggressive push into the European market, creating a global brand with 25 million customers across 14 countries.

However, the acquisition is not expected to close until the end of the second quarter – June 2013 – so Virgin Media remained independent for the first three months.

Non-GAAP profit – or what it calls OCF – was up by almost 6% to reach £399m for the quarter. However, this rose to £406m when costs relating to its merger were removed.

Revenues also rose by 3.6% to hit just over £1.04bn for the three-month period.

Virgin Media managed to accrue a net 8,600 cable customers – broadband, TV and home phone subscriptions – over the three-month period, with the average revenue per user (ARPU) up 5.2% to £49.38.

Superfast broadband proved particularly popular, with 337,900 users signing up for the speeds of 30Mbps or more. Virgin Media now has 2.5 million customers using the faster connections, accounting for 58% of its cable broadband subscriptions.

However its B2B arm, Virgin Media Business, showed a 4.1% drop in revenue, down to £163.4m. It signed a significant 10-year deal with Telefonica UK to provide backhaul for 1,500 of its sites though, along with a five-year deal with Sky to provide its backhaul as well – both of which it hopes to see reflected in results during the second half of 2013.

“We have had a good start to the year with accelerated revenue growth, improved churn and strong cash-flow growth,” said Neil Berkett, CEO of Virgin Media. “The great value we provide through our collections packages… has seen new customers join and our existing customers stay loyal to us.

“This positive momentum in the business positions us well for our planned merger with Liberty Global."

Berkett will leave the company when the deal is done after five years in the role. However, on top of the $19.6m severance pay he will be entitled to, the CEO will also have claims to $13.5m in long-term incentive pay-outs – which are being paid automatically because of the takeover – and the equivalent of $53.7m in share options he has built up.

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