BoAML: Good Q3 results from Virgin Media

23 Oct 2012  |  Stuart Corke 


Bank of America Merrill Lynch latest earnings review for Virgin Media still classes the stock as an underperformer, despite good Q3 results.

The bank states that the financial results are in line with estimates but the highlight was a very good churn rate that resulted in good cable additions. The churn performance was 1.4% per month, annualised to 16.8% was good due to seasonality in Q3 being tough and Virgin Media's increased prices in the previous quarter.

The analyst report goes on to say that the performance is driven by two factors. Firstly, Virgin Media's TiVo push designed to make the sub base 'sticky' ahead of the YouView launch and secondly, the doubling of broadband speeds.

However, BoAML believe Virgin Media missed key performance indicators on mobile contract net additions and the average revenue per user (ARPU) declined to £14.72 from £15.21.

Overall revenue was £1,028 million which is up 2.7% year on year but £3 million below forecast. EBITDA (earnings before interest, tax, depreciation and amortization) grew 6.1% year on year to £423 million and £1 million above forecast.

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