While the UK’s biggest cable operator Virgin Media conspired to produce a set of figures that must have had everyone involved wondering why the company is up for sale, the continued volatility in the debt markets made it increasingly unlikely that the various consortia would be able to take biding for the $23 billion valued company all that seriously for the rest of the year.
While that may mean that Carlyle is left a clear run at the business, it can also mean giving Virgin more time to come up with counter proposals that put its investors at ease, and make it less likely they accept what is an under-valued offer for the business.
Virgin surprised the world by actually adding TV customers, albeit just 2,200 of them, despite being involved in a major public bust up with BSkyB over the price for carrying some of its channels. Virgin also managed to switch 40,000 customers from analog to digital, and although both the net additions and the digital additions were lower than last quarter, they were both positive in the darkest of times.
The number of services on average that each customer takes, despite Virgin offering the only quadruple play in the UK, remained static at 2.2 and the company had broadband additions of 45,800 around half of its previous quarter, but lost 56,900 fixed line phone customers (less than last time). Virgin Media also lost 46,500 mobile phone customers and now has 4.4 million.
The company also has some new sports channel additions that have not come into effect yet, but which will dilute the loss of the Sky channels considerably, and the company reports that 44% of its TV customers now use VoD compared to 36% previously.
Virgin itself, rather than Virgin Media, is also exploring the possibility of extending its brand to continental Europe with the UK’s Times this week reporting that the Virgin Group is in talks with France’s leading cable operator Num’ricable over the possibility of taking the Virgin name. What’s ridiculous about this is that the Carlyle Group has said that if it buys Virgin Media it would change the name, a move that would be likely to ruin a strong brand lead. Sir Richard Branson might feel that he can create a European cable ‘superbrand’ in co-operation with the private equity groups that own Numericable and dominate cable operators in both France, Benelux and Germany through a combination of partial participation in Virgin Media stock and a branding deal with his main company. Such an offer might hold at bay any serious attempt to force a Virgin acquisition through. Numericable is owned by private equity groups with the majority by Cinven, which was part of a consortium of private equity groups that tried to buy NTL (now Virgin Media) last August.