NTL hit by strong competition

Fierce competition in the telephone and broadband markets in the UK left its mark on customer numbers at cable operator NTL today.

The group, which merged with Telewest earlier this year, lost a net 18,900 customers in the quarter compared with a net gain of 25,800 during the first three months of the year. The performance was also in contrast to the 62,500 of net customer additions in the same quarter last year.

Carphone Warehouse and BT have stoked up competition in recent months, while BSkyB launched its broadband service after the end of the quarter.

Announcing second quarter figures today, NTL said it expected the pressure to remain on customer numbers during the second half of the year.

It said it achieved “good growth” in broadband subscriber numbers, although the addition of 104,900 new customers compared with 191,400 in the previous quarter.

NTL has responded to competition with the creation of an enlarged company following its recent acquisition of Virgin Mobile – a move which will offer consumers a one-stop shop for cable TV, broadband internet access, fixed telephone and mobile phone services. It will be Virgin branded.

Today’s figures provided the first chance to gauge the impact of the tie-up between NTL and Telewest.

Revenues rose to £884.3m (€1.3bn) for the second quarter to June 30, compared with £611.4m (€907m) during the first three months of the year.

The company said that churn, or the number of people who left the company, stood at 1.5% during the period – up from 1.3% in the previous quarter.

It blamed the losses on increased house moves and seasonal factors, but also said 10,000 to 15,000 customer losses were down to “competitive pressure”.

The firm reported operating profits before depreciation rose to £293.3m (€435.5m) during the period – up from £198.4m (€294.6m) – as it saw a rise in the number of “triple play” customers.

The number of NTL customers who subscribed to all three TV, broadband and phone services increased to 37% compared with 35% during the previous quarter.

Chief executive Steve Burch said: “We are delighted with today’s strong operational and financial results. They show continued evidence of improvements in our consumer business.”

The company plans to make £250m (€371.2m) in cost savings by 2007 as part of the Telewest deal and Mr Burch said £15m (€22.2m) had already been secured during the quarter. In May, the company announced how it planned to cut its workforce by 6,000 by the end of next year following the merger with Telewest.