Virgin Media O2 claims strong strategic and operational progress in Q3

UK comms provider publishes third-quarter results highlighting accelerated Ebitda growth since merger of mobile telco and cable operator

In the face of what its CEO said was an increasingly challenging macroeconomic backdrop, Virgin Media O2 has reported a third quarter of 2022 that it says has been one of strong strategic and operational progress supporting the firm’s delivery for the rest of the year and beyond.

For the third quarter ended 30 September 2022, Virgin Media O2 posted transaction adjusted revenue of £2.588bn, slipping 0.6% year on year. Total revenues were flat when excluding a 3.7% decline in handset revenue, while total Mobile revenues increased by 2.1% to £1.496bn, with Service revenues increasing 4.3%. This was offset by declines in Consumer Fixed of 2.0% to £851.2m due to a change in customer mix alongside continued decline in the B2B Fixed business line.

The revenues were the engine for third-quarter transaction-adjusted Ebitda (earnings before interest, taxes, depreciation and amortisation) increasing 8.6% year-on-year to £991.2m, excluding £15.8m of opex CTC. In the third quarter 2022, transaction-adjusted Ebitda margin improved to 38.3% compared to 35.1% in the third quarter of 2021 and transaction-adjusted Ebitda less capex increased by 9.2% year on year to £420.9m, before opex and capex CTC of £77.0m.

In terms of customer growth, the results showed that the company’s total fixed fixed-line (cable) customer base stood at 5.8 million at the end of Q3 2022, with additions of 12,300 in the quarter. The company also added 19,100 broadband connections and the average Virgin Media broadband speed was 261Mbps, said to be 4x faster than the national UK average, and increasing 29% on a yearly basis.

The company invested £570m of capital in its network infrastructure and customer experience in the third quarter of 2022, bringing the total to more than £1.5bn for the year so far. Virgin Media O2 says its network now passes 16 million (54%) of fixed-line premises in the UK. Some 115,000 premises were built in Q3 for the Project Lightning programme. The company said it was on track to build to more than 500,000 premises in 2022.

The company also said that the fibre joint venture between Infravia and Virgin Media O2 parents Liberty Global and Telefónica was on track for clearance in the fourth quarter. It said this would allow it to extend Virgin Media O2’s footprint to 80% of the UK and present a scaled wholesale fibre opportunity that would present the biggest challenge to BT Openreach.

Looking at convergence offers, the company surpassed one million customers on its Volt bundles in less than a year since they were launched. It also added 628,700 mobile connections in Q3, a figure that included wholesale customers. Virgin Media O2’s retail mobile connections – including contract, prepaid and internet of things – now stands at 33 million, while mobile contract additions of 46,500 in Q3 took the company’s total mobile contract base to 16 million.

By the end of the quarter, O2 5G services were available in more than 800 towns and cities and the company said that it was on track to reach 50% of UK population in 2023 using O2’s position in low-band spectrum.

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