TiVo and broadband boost Virgin Media in Q4

February 8, 2012 4:28 AM EST

Cable operator Virgin Media posted fourth quarter results ahead of expectations and showed it could generate strong cash flow as customers flocked to its new TV service and fast broadband offerings.

Much like its rival BSkyB , the cable operator has focussed on selling more products to existing customers in recent quarters and attracting fewer but possibly more valuable users than growing its base for the sake of it.

Like BSkyB, the strategy appears to be paying off, as the number of customers taking its new smart TiVo TV service more than doubled in the fourth quarter with 273,000 net additions. It also saw strong demand for superfast broadband.

Overall, the group attracted 15,000 new net cable customers in the three months to the end of December, helping it to post strong financial results.

Revenue for the quarter was up 2 percent to 1 billion pounds, broadly in line with forecasts, while operational cash flow and free cash flow were both up strongly and ahead of expectations.

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"In a fast-changing industry and an uncertain economic environment, our 2011 results demonstrate the underlying resilience of Virgin Media's business model, with modest revenue growth driving robust operating cash flow and record free cash flow," Chief Executive Neil Berkett said.

"Our next accelerated stock repurchase of $250 million (157 million pounds) shows our ability and commitment to translate the cash generative characteristics of our business into shareholder value.

(Reporting by Kate Holton; Editing by Paul Sandle)