Virgin Media O2 Q1 flat
May 2, 2024
Virgin Media O2 has reported Q1 revenue of £2.6 billion (-0.5 per cent YoY) – primarily driven by handset revenue decline offsetting mobile service revenue increase and stable fixed line consumer revenue
Further highlights include:
• Improved service revenue performance across mobile and consumer fixed ahead of price rise implementation, low-margin handset and B2B fixed revenue headwinds driving a 4.3 per cent revenue decrease excluding nexfibre construction. Adjusted EBITDA decreased 1.6 per cent excluding nexfibre construction as Virgin Media O2 invests in future growth drivers
• Trading update: Low customer activity quarter driving stable fixed-line customer base and net reduction in mobile contract base
• Network evolution: Increased network investment as deployment of 5G and fibre continued at pace. FTTP homes serviceable footprint increased by 194,000 in Q1, as Virgin Media O2 build accelerates by 80 per cent year-over-year
Lutz Schüler, CEO of Virgin Media O2, said: “While there is much to do in the remainder of the year, we are gathering momentum in accelerating fibre build and marketing the nexfibre footprint, launching new services to enhance and improve customer experience, and progressing wider IT efficiency programmes as we continue our digital transformation. Ahead of price rise implementation, we delivered improved service revenue growth across both mobile and consumer fixed. Our teams also continue to innovate as shown by the targeted launch of 5G Standalone and a new 2Gbps broadband service on the nexfibre network in Q1, highlighting the future evolution of our networks as demand rises and new technologies emerge. Our performance in Q1 sets the foundations for our full year guidance as we make key investments to support future growth.”
Service revenues supported by offering enhancements
The fixed-line customer base ended the quarter at 5.8 million, with a small net reduction of 2,000 in Q1 primarily driven by lower gross additions, as a slowdown in customer activity in the fixed market offset growth in nexfibre areas. Virgin Media’s premium ARPU per fixed-line customer relationship was broadly stable for the second consecutive quarter at £46.25, ahead of price rises being implemented in Q2. The broadband customer base grew by 5,300 in Q1, while growth in broadband speeds continued, as average download speeds increased 17 per cent year-over-year to 368Mbps. In line with its continued broadband innovation, Virgin Media O2 became the first major UK provider to publicly launch a residential 2Gbps service in February, with the new services initially available across the nexfibre network.
The contract mobile base reduced by 74,500, ending Q1 at 16 million. This was driven by a reduction in handset sales and disconnections related to the decommissioning of a legacy billing system, while Q1 O2 monthly contract churn remained stable at 1.2 per cent. Total mobile connections grew to 45.1 million, as growth in IoT and wholesale were partially offset by a reduction in contract and prepaid connections.
Ramping up fibre build pace to upgrade the UK’s digital infrastructure
Virgin Media O2 continued the evolution of its fixed and mobile networks. The total serviceable fixed network footprint increased by 194,000 FTTP homes in Q1, continuing high-quality build to the nexfibre network and representing an increase in build pace of 80 per cent year-over-year. Following the end of the quarter, the milestone of one million nexfibre premises built was achieved in April, highlighting the ramp up of the Virgin Media O2 fibre build capability. The pace of fibre upgrade activity across the existing Virgin Media O2 footprint also increased year-over-year, as planning for the fixed NetCo announced last quarter continued. In mobile, investment in 5G coverage and capacity also continued in Q1, as next generation 5G Standalone was switched on in 14 cities across the country.
Reducing e-waste while supporting communities
In March, the company announced that O2 Recycle had expanded its scope to cover games consoles, in addition to mobiles, tablets and other devices. Unwanted tech can be sent to O2 Recycle, where the device can be repaired, refurbished and resold, or recycled – with zero parts going to landfill. Additionally, Virgin Media O2 and environmental charity, Hubbub, are providing hundreds of recycled tablets and smartphones to help people in need, powered by free O2 mobile data.
More to follow…