Virgin Mobile buoyed by revenues growth

Virgin Mobile today reported strong growth in revenues as it outlined plans to reward higher-spending customers who buy its services in advance.

The group said it remained on course to make a maiden full-year dividend payment after profitability improved during the six months to September 30.

Despite the impact of price competition, Virgin lowered debts by £30m (€44.2m) and revealed it was on track to deliver “substantial improvements” to annual earnings.

And in a bid to tempt subscribers away from long-term contracts with rivals, the group announced it was launching a new pre-pay deal in October.

Virgin will offer higher-spending customers the chance to cut costs by signalling how much they will spend on text messaging or voice calls each month.

It said this new product, combined with a refreshed camera-phone range, would help to consolidate its market share.

In a trading update, Virgin Mobile said revenues in the half-year to September 30 were expected to be in the “mid-twenties”, but this would slow in the second half due to the impact of a cut in termination rates – the price that mobile phone firms charge each other and landline operators for putting callers through to their customers.

Chief executive Tom Alexander said the group had built on its first-quarter achievements, which included a 7.2% rise in new customers.

He said: “The combination of strong customer growth and our efficient operating model will result in margins for the first half being well ahead of the same period a year ago.”

Virgin, which employs 1,400 staff at three UK sites – Trowbridge, London and Daventry – had a total of 4.2 million customers at the end of June.

The company, which floated on the stock market in July, differs from rivals such as Vodafone as a “virtual operator” which uses the network of T-Mobile.

Around 95% of its business is derived from customers buying pre-pay vouchers to top up the credit on their mobile phones.