Virgin Media 2011 Annual Report Download - page 65

(2) During the second half of 2010, we reviewed our credit and collections reporting processes and aligned the way we measure
disconnections with our underlying operational process. As a result, we estimate that reported gross disconnects decreased by 6,300
customers, representing 15,300 products, and 4,900 customers, representing 11,000 products, during the third and fourth quarters of
2010, respectively.
(3) Customer churn is calculated by taking the total disconnects during the month (excluding any data cleanse activity) and dividing them by
the average number of customers during the month. Average monthly churn during a quarter is the average of the three monthly churn
calculations within the quarter.
(4) The monthly cable average revenue per user, or cable ARPU, is calculated on a quarterly basis by dividing total revenue generated from
the provision of telephone, television and internet services to customers who are directly connected to our network in that period together
with revenue generated from our customers using our virginmedia.com website, exclusive of VAT, by the average number of customers
directly connected to our network in that period divided by three. The average number of customers is calculated by adding the number
of customers at the start of the quarter and at the end of each month of the quarter and dividing by four.
Summary Mobile Statistics
Selected statistics for our mobile customers, for the three months ended December 31, 2010 as well as for
the four prior quarters, are set forth in the table below. Between December 31, 2010 and December 31, 2009, the
number of mobile customers decreased by a net 105,800 customers. Contract customer net gains of 261,100 were
offset by net losses of 366,900 prepay customers. The growth in contract customers reflects our strategy of using
our own sales channels and cross-selling mobile contracts to our cable and non-cable customers. The decline in
prepay customers reflects increased competition in the prepay market and our strategy not to focus heavily on
retaining market share in the prepay market due to higher churn, low tariffs and lower overall lifetime value.
Three months ended
December 31, September June 30, March 31, December 31,
2010 2010 2010 2010 2009
Contract mobile customers(1):
Opening contract mobile customers ...... 1,154,700 1,097,200 1,030,900 949,700 872,600
Net contract mobile customer
additions(2) ........................ 56,100 57,500 66,300 81,200 77,100
Closing contract mobile customers ....... 1,210,800 1,154,700 1,097,200 1,030,900 949,700
Prepay mobile customers(1):
Opening prepay mobile customers ........ 1,912,300 1,976,200 2,028,900 2,225,000 2,323,300
Net prepay mobile customer
disconnections(2) .................... (54,200) (63,900) (52,700) (196,100) (98,300)
Closing prepay mobile customers ........ 1,858,100 1,912,300 1,976,200 2,028,900 2,225,000
Total closing mobile customers: (1) ....... 3,068,900 3,067,000 3,073,400 3,059,800 3,174,700
Mobile average revenue per user (3) ....... £ 15.16 £ 15.01 £ 14.36 £ 13.70 £ 14.00
Mobile ARPU calculation:
Mobile service revenue (millions) ........ £ 138.7 £ 138.6 £ 131.9 £ 127.7 £ 132.9
Average mobile customers .............. 3,050,000 3,077,700 3,061,800 3,106,300 3,164,400
(1) Mobile customer information is for active customers. Prepay customers are defined as active customers if they have made an outbound
call or text in the preceding 30 days. Contract customers are defined as active customers if they have entered into a contract with Virgin
Mobile for a minimum 30-day period and have not been disconnected. Contract mobile customers include customers who have taken
either a mobile service or a mobile broadband contract.
(2) Contract net adds in the three months ended June 30, 2010 includes 9,300 customers who have been taking contract services since
joining but had previously been recorded as prepay customers. A corresponding reduction is included in prepay net adds in the same
quarter.
(3) Mobile monthly average revenue per user, or Mobile ARPU, is calculated on a quarterly basis by dividing mobile service revenue
(contract and prepay) for the period by the average number of active customers (contract and prepay) for the period, divided by three.
The average number of customers is calculated by adding the number of customers at the start of the quarter and at the end of each month
of the quarter and dividing by four.
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