Additions down, churn up at Virgin Mobile

Virgin Mobile released their quarterly report yesterday, and let’s just say that as far as subscriber numbers go, it wasn’t all that pretty. They did report earnings of $0.07 per share, so that’s a positive. At least that’s what CEO Dan Schulman is telling us. But, as fans of the consumer side of the business, we’re more interested in the subscriber data. So let’s see where Virgin Mobile fell short of last year. Gross additions — the total number of new activations — was at 795,575, down from 881,756 from the same period last year. Net customer additions were at 17,722, way down from 309,721 last year. This is because of an increased churn rate: 5.1 percent this year, up from 4.0 percent last year. Their average revenue per user also fell, from $22.41 to $19.93. Overall, subscribers grew to 5,103,685. Yet, the company remains positive. From Schulman:

“We executed against our business plan in the first quarter, delivering a strong start to the year,” said Dan Schulman, Chief Executive Officer, Virgin Mobile USA. “While the current economic environment presents challenges, our business performed above our expectations, producing strong profitability and cash flow, even as we increased our marketing spend by $7.5 million year over year, to support the launch of our new voice and data plans. “We believe our new service plans, which will be in all of our channels by the end of the second quarter, represent some of the best value available to wireless consumers today. These offers provide compelling value and present a clear choice for consumers. Early indications are positive, with our monthly plans representing 38% of gross additions for the new offers in April, and average ARPU on the new monthly plans of approximately $40.”

The company expects to add between 130,000 and 160,000 net customers in the second quarter. Their new minute plans should catch on soon, too. I personally think they’re a good value, especially with the rollover balances. ]]>