Virgin Media Notification of Second Quarter 2011 Results

[Ignitionnet]

Probably find VM are unashamedly indifferent to the customer loss.

http://investors.virginmedia.com/ima...DetailsID=1113

They were largely low value customers.

• 36k net customer loss
• 90% of which were single or dual-play
• 29% of churn were single-play
• 25k net quad-play add

http://www.guardian.co.uk/media/2011...6000-customers

I do have some issue with the idea that it's not in their psyche to chase unprofitable business though. Think Mr Berkett needs to remind his retentions teams of that one.

[spych102]

After watching the Q&As Berkett & co defined low value customers as those spending less than £40 per month. That must include a huge number of lost mid market customers. One insightful investor question asked if they had increased prices too much thus creating customer churn. I'm not an expert but I think that these figures are far worse than the VM board and Investor Relations people are spinning. I'm not saying they are about to go bust, just that the figures are disappointingly mediocre.

My other observation of VM, and this comes from personal experience, is that as soon as there is even the slightest expense regarding connecting a customer to their network they desperately peddle cheapo ADSL services rather than investing in that potential customer. To me that is not concentrating on acquiring and retaining high value customers. So, either they forgot to communicate their strategy to sales, which is unlikely, or they are trying to pull the proverbial wool over investors' eyes.

[denphone]

Originally Posted by spych102

After watching the Q&As Berkett & co defined low value customers as those spending less than £40 per month. That must include a huge number of lost mid market customers. One insightful investor question asked if they had increased prices too much thus creating customer churn. I'm not an expert but I think that these figures are far worse than the VM board and Investor Relations people are spinning. I'm not saying they are about to go bust, just that the figures are disappointingly mediocre.

My other observation of VM, and this comes from personal experience, is that as soon as there is even the slightest expense regarding connecting a customer to their network they desperately peddle cheapo ADSL services rather than investing in that potential customer. To me that is not concentrating on acquiring and retaining high value customers. So, either they forgot to communicate their strategy to sales, which is unlikely, or they are trying to pull the proverbial wool over investors' eyes.

Remember a lot of these customers were low value student customers who will come back when they go back to university later in the year.

[spych102]

That is a very good point Denphone and it is one that Berkett made too. What would interest me is if they quantified it or whether they just used it as a throw-away defensive point. I must admit I just skipped to the Q&A, maybe I'll take another look.

[Horizon]

Originally Posted by spych102

I'm not an expert but I think that these figures are far worse than the VM board and Investor Relations people are spinning. .

I agree.

I found Berkett's body language very telling in this afternoon's web cast. He may be talking the talk and saying how wonderful things are, but he looked very unhappy, bordering on angry in my opinion.

Yes, this quarter is usually bad for vm, but to lose 36K customers is not good at all, and I don't believe its all down to students and people moving off-net that Berkett claims.

Tivo is a vast improvement over cable's previous EPG efforts. VOD (on demand) is great, when it works. But all this is a means to an end. What good is a better TV guide, if you don't have the content? The lack of news on HD channels and SD channels is deafening.

The competition commission is to report next month into Sky's dominance over first run Hollywood film rights. Sport and films are what drives subscriptions. If vm cannot get their hands on Sky's films at a better rate and/or launch their own film service, as Berkett has always wanted. Then VM will never grow tv subs much beyond what they are now.

[denphone]

Originally Posted by Horizon

I agree.

I found Berkett's body language very telling in this afternoon's web cast. He may be talking the talk and saying how wonderful things are, but he looked very unhappy, bordering on angry in my opinion.

Yes, this quarter is usually bad for vm, but to lose 36K customers is not good at all, and I don't believe its all down to students and people moving off-net that Beckett claims.

Tivo is a vast improvement over cable's previous EPG efforts. VOD (on demand) is great, when it works. But all this is a means to an end. What good is a better TV guide, if you don't have the content. The lack of news on HD channels and SD channels is deafening.

The competition commission is to report next month into Sky's dominance over first run Hollywood film rights. Sport and films are what drives subscriptions. If vm cannot get their hands on Sky's films at a better rate and/or launch their own film service, as Berkett has always wanted. Then VM will never grow tv subs much beyond what they are now.

Lets see what the next 2 quarters do and also lets see what virgins tv plans are for the rest of the year before passing kneejerk reactions.

[Pauls9]

Originally Posted by denphone

Remember a lot of these customers were low value student customers who will come back when they go back to university later in the year.

Not sure what it's like these days, but banks used to put up with unprofitable student accounts, knowing that if they treat them right, the students will turn into very profitable customers in future. Perhaps VM should follow this logic?

[spych102]

Originally Posted by denphone

Lets see what the next 2 quarters do and also lets see what virgins tv plans are for the rest of the year before passing kneejerk reactions.

I agree as the product offering should be an absolute killer - they now have the best TV and the best superfast internet. The only thing they can get wrong is price, especially considering their continuing problems with negative brand equity.

---------- Post added at 16:36 ---------- Previous post was at 16:34 ----------

Originally Posted by Pauls9

Not sure what it's like these days, but banks used to put up with unprofitable student accounts, knowing that if they treat them right, the students will turn into very profitable customers in future. Perhaps VM should follow this logic?

I agree and I think to be fair with their 9 month contracts they do this.

---------- Post added at 16:48 ---------- Previous post was at 16:36 ----------

Originally Posted by Horizon

I agree.

The competition commission is to report next month into Sky's dominance over first run Hollywood film rights. Sport and films are what drives subscriptions. If vm cannot get their hands on Sky's films at a better rate and/or launch their own film service, as Berkett has always wanted. Then VM will never grow tv subs much beyond what they are now.

Although whingeing to the regulators to give them more Sky channels is a bit pathetic. They have an exclusive monopoly for cable in the UK, one day, when they are rolling in profit, Ofcom is going to expect some payback.

[gcampbell]

Does anyone know how the second quarter of this year compares to previous years - did a little looking and found a 9,100 increase in customers last year and a 27,000 drop the year before.

Can anyone confirm or correct?

[Ignitionnet]

Originally Posted by Pauls9

Not sure what it's like these days, but banks used to put up with unprofitable student accounts, knowing that if they treat them right, the students will turn into very profitable customers in future. Perhaps VM should follow this logic?

What logic is there to follow? Students sign up for 9 months, go back home, then return to uni the following year where if happy they'll take VM. It's not like a bank account it's a fixed term deal.

[spych102]

Originally Posted by gcampbell

Does anyone know how the second quarter of this year compares to previous years - did a little looking and found a 9,100 increase in customers last year and a 27,000 drop the year before.

Can anyone confirm or correct?

Below are the quarterly figures for net cable customers since NTL and Telewest were included in the same figures. They show that this has been the worst quarter since the 3 months to June 2007.

3 Months to Net Change (Cable customers)
30-Jun-11 -36,000
31-Mar-11 20,200
31-Dec-10 17,100
30-Sep-10 14,100
30-Jun-10 7,100
31-Mar-10 38,300
31-Dec-09 28,600
30-Sep-09 8,100
30-Jun-09 -26,200
31-Mar-09 7,100
31-Dec-08 14,800
30-Sep-08 8,300
30-Jun-08 -19,500
31-Mar-08 4,900
31-Dec-07 24,400
30-Sep-07 13,000
30-Jun-07 -70,300
31-Mar-07 -46,900
31-Dec-06 -37,000
30-Sep-06 -37,300
30-Jun-06 -18,900

[GrimUpNorth]

I think what's more telling isn't the headline 36000 'lost' customers, but the changes in TV subs. The 22000 connects in the corresponding quarter of 2010 has become 21000 disconnects in 2011. Must go someway to explaining the dramatic Tivo pricing chahge. Of course this pricing might have been in the plan all along - do 50000 of you fancy lending me £50 for the next few months?

Cheers
Grim

[Sirius]

Originally Posted by Pierre

No 'cos Sky Atlantic is not very good.

Originally Posted by gcampbell

This is your opinion, many others disagree and I believe disagreed to such an extent they felt it necessary to cancel their virgin media contracts.

I agree with him, Its poop and yes i have watched it.

[spych102]

My gut instinct tells me that the lack of Sky Atlantic is not a major reason for churn. At the end of the day it's just another channel with American imports and there are plenty more where that came from. As Grim says it's the pricing that's the key and probably a pervading sense of rip off Britain.

[gcampbell]

Originally Posted by spych102

My gut instinct tells me that the lack of Sky Atlantic is not a major reason for churn. At the end of the day it's just another channel with American imports and there are plenty more where that came from. As Grim says it's the pricing that's the key and probably a pervading sense of rip off Britain.

There aren't plenty more of the same quality as on Sky Atlantic - some people can be very dismissive of the channel if they like, but there are many others who see it as a gaping hole in VM's TV service.

I too have watched the channel and 'poop' does not describe the standard of programme on it, I would describe it as 'great'.

It will be interesting to see the figures for the next couple of quarters to see how many of these 36,000 come back.