Virgin Media hails growth 'turnaround'

Virgin Media signalled today that an era of upheaval marked by public rows with BSkyB was behind it as the cable TV company posted its strongest customer growth in more than a year.

The group, created by the merger of NTL and Telewest and the takeover of Sir Richard Branson's Virgin Mobile service, said it had added 13,000 new customers in the third quarter of the year. That increase marked a turnaround from the second quarter when the company lost more than 70,000 customers, hit by the spat with its satellite rival over the carriage on Virgin Media of basic Sky channels such as Sky One.

The acting chief executive of Virgin Media, Neil Berkett, who took over the company three months ago, hailed a "significant turnaround" in customer growth.

"I think we are at that inflection point and we have taken the first step on the stairs," he said.

He mentioned the "best customer, broadband and telephony growth since the cable merger in March 2006".

"With the cable merger integration expected to be complete by year end, we can focus on continuing to improve the fundamentals, enhancing our products, reducing our churn and delivering on our competitive strengths," he added.

Mr Berkett is widely tipped to get the permanent position at the top of Virgin Media but he insisted that was a decision for the board.

Asked about his chances, he said: "Obviously that's my preferred position."

Since moving from the chief operating officer role to replace Steve Burch, Mr Berkett said he had sought to focus more of the company's energy on keeping customers.

"I'm just a simple Antipodean, in my view you take four of five things and you do them right rather than doing 20 things at once," he said. "Keeping the customers is top priority."

Virgin's results showed that at the end of September it had an "on-net" customer base - which means the total number of subscribers to at least one of its cable services - of 4.8 million.

Broadband in particular drove up customer numbers and Mr Berkett said Virgin would continue to position its high-speed internet service as a "hero product". Virgin added 122,900 broadband customers in the third quarter, up from a gain of 50,500 in the three months between April and June.

In pay-TV, it added 20,400 customers, to give a total of 3,417,000 taking its cable service. Virgin said 6% of its digital TV subscriber base - 190,200 customers - had now signed up to its V+ personal video recorder service, the company's equivalent of Sky+.

Although there was progress across its products and with its bundles of services - such as mobile, fixed line telephone, broadband and TV - average revenue per user fell from £42.16 to £41.55.

Virgin said that was "due primarily to strong price competition" as it offered deals to new customers and discounts to existing ones.

Operating income was £47m, compared with £3m in the second quarter and a £9.6m loss in the corresponding period last year.

Virgin Media dropped its attempts to take over ITV last year after its arch rival Sky bought a 17.9% stake in the commercial broadcaster. Mr Berkett declined to comment on whether ITV would be back on Virgin's radar if regulators forced Sky to sell that holding.