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LONDON - UK broadband and digital tv company Virgin Media is bracing itself for a customer exodus on the back of its dispute with its rival Sky.
The row is a result of "customer confusion" and problems signing up new users after the removal of Sky's channels from Virgin's television platform.
The Virgin Media service was launched to much fanfare this year as an alternative to Sky in the UK pay-TV market that also offered consumers broadband, telephony and mobile phone services as part of the one package.
The launch represented a rebranding of the NTL: Telewest cable operator after its acquisition if Virgin Mobile.
Yet despite spending more than £25m on the relaunch over the past three months, Virgin Media reported a slowdown in new customer additions in the television market and a significant decline in its overall customer figures.
It added 36,100 new television customers during the first quarter, less than the 38,500 it added over the Christmas period, while overall, it shed nearly 47,000 as a result of its poorly performing fixed-line telecoms division.
Steve Burch, the chief executive of Virgin Media, also warned it could lose television customers over the next three months as a result of its disagreement with Sky.
The row between Virgin Media and Sky relates to the carriage fees that the companies charge each other to broadcast channels.
Virgin has accused Sky of trying to stifle competition by charging excessive fees for its basic channels.
Virgin has taken legal action against Sky and has removed its rival's channels as a result, leaving Virgin Media customers without access to hit shows such as Lost and 24.
Mr Burch said it is too early to tell how many customers have left Virgin Media as a result of the removal of Sky's channels.
He said it was the right decision to remove Sky's channels but he would be willing to reopen discussions with its rival.
"I hold out hope. We would prefer to have the channels back on," he said.
The number of defections will soon become apparent.
Virgin turned off Sky's channels on March 1 but customers have to wait 30 days to disconnect from the service.
Despite making significant progress in selling multiple services as part of one package, Virgin Media's telephony business suffered as a result of Carphone Warehouse offering free broadband to its fixed-line telephone customers.
Virgin lost 63,000 voice customers during the first three months of the year and has since moved to stop the rot with more competitive packages.
In the mobile market, Virgin added nearly 55,000 contract customers, although it lost more than 60,000 subscribers overall as pre-pay users continued to defect to other operators.
The company notched up an operating loss of more than £15m during the period with revenue down 5 per cent at £1bn.
Virgin Media has moved to address its problems in the telephony space by launching an advertising campaign featuring the US comic Ruby Wax.
The company is also sponsoring the latest series of Big Brother after Carphone Warehouse pulled out of its deal to support the reality TV show after the scandal surrounding the celebrity version of the show this year.
The sponsorship will feature both Virgin Media and Virgin Mobile logos as the company looks to continue to increase its profile, while also targeting younger users with its mobile phone services.
In contrast, Sky reported its strongest net new customer numbers for six years last week, with 132,000 telephony customers joining the company.
Virgin Media is also set to face more competition in the TV market, with BT ready to launch its BT Vision television service into the mass market.
- INDEPENDENT
