LONDON (Reuters) - Strong demand for superfast broadband and the connected TV service TiVo lifted Virgin Media's first half results on Tuesday, boosting cash flow and masking an overall loss of customers in the traditionally quiet second quarter.
Virgin, which provides broadband, TV and telephony services, has been helped since the start of the financial year by the high-profile ad campaign fronted by Usain Bolt, the face of the London Olympics.
Chief Executive Neil Berkett said the group had also benefited from beating rivals in offering superfast broadband and TiVo which allows customers to record and find on-demand programming.
"We're very pleased with the performance," he told Reuters in an interview. "It is a tough market and I don't think the market will shift significantly in the short to even medium term.
"I'm in no way dismissive (to the challenges) but I'm comfortable that we're in a strong position."
Virgin posted a 5 percent jump in second quarter operating cash flow on Tuesday, making up for the 14,700 customers who dropped the service in the second quarter compared with a forecast provided by the company for a loss of 13,000.
Demand for superfast broadband was strong, with 31 percent of broadband subscribers taking the superfast service, while 25 percent of the TV base was using TiVo.
The upgrade to the premium services raised the average revenue per user by 3.1 percent to 48.82 pounds, which helped lift the group's sales and operational cash flow to 412 million pounds ($639.06 million) in the quarter.
"The company reported a disappointing 14,700 customer losses, albeit a significant improvement on the 36,000 customer losses they experienced in 2011, but likely worse than they would have hoped given the heavy advertising and promotions throughout the first six months of the year," Bernstein analyst Robin Bienenstock said.
"We are in no doubt that TiVo is a great product that has been very well promoted, but we think the UK wireline market is getting more competitive in nearly all aspects; the increasing geographical and product overlap is likely to place a squeeze on both price and costs, which will be to the detriment to margins across the industry." ($1 = 0.6447 British pounds)
(Editing by David Cowell)