Virgin Mobile USA reports 301% rise in Q1 profit - Mobile World Live

Virgin Mobile USA reports 301% rise in Q1 profit

23 OCT 2009

Virgin Mobile USA, the country’s largest MVNO, has reported better-than-expected first-quarter profit as the firm’s prepaid and hybrid tariffs appeared to resonate with increasingly cost-conscious consumers. Net income rose 301 percent to US$19.1 million (US$0.19 a share) compared to US$4.7 million (US$0.07 a share) in 1Q08, a period before Virgin Mobile’s acquisition of rival MVNO Helio in August 2008. Operating revenue rose 2 percent to US$337.3 million. According to Reuters, analysts on average had expected earnings of US$0.10 a share, excluding items, on revenue of US$359.4 million. The MVNO added over 600,000 new customers in the quarter (gross) for a total customer base of 5.2 million. Churn was reduced from 5.1 percent in the year earlier period to 4.8 percent, but ARPU fell slightly from US$20.14 to US$20.08.

In a statement, CEO Dan Schulman talked up the success of Virgin Mobile’s hybrid plans, which accounted for 55 percent of gross customer additions in the quarter. The hybrid plans offer customers a fixed number of minutes per month without a contract. “We also brought to the market differentiated text messaging bundles and our ‘Pink Slip Protection’ programme [a payment protection plan for contract customers that lose their jobs] to help our customers weather the current economic storm,” said Schulman. The company also launched a US$49.99 unlimited plan last month in order to target US consumers that are scaling down their spending due to the credit crunch. The firm increased its guidance for adjusted EBITDA and free cash flow for 2009. Reuters reports that its share price rose 29 percent in response to the results.

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