Virgin loses 133,000 subs in Q1, will add 6,000 retail sites

Virgin Mobile USA blamed increased competition in the first quarter of 2009 for a net subscriber loss of 133,000 and quarterly revenue of $337 million, well below Wall Street expectations of $359 million but 4 percent above its first-quarter 2008 results. The MVNO finished the quarter with 5.2 million total customers, up from 5.1 million in first quarter 2008. Here's a breakdown of the operator's key quarterly metrics:

Subscribers: Virgin Mobile added 630,259 new subscribers in first quarter, compared with gross customers adds of 795,575 in the first quarter of 2008. The company said the decrease was a result of competition as well as its focus on hybrid plans and adding higher-value customers. In the first quarter, 55 percent of Virgin's gross adds were hybrid plans.

ARPU: Average revenue per user for the first quarter of 2009 was $20.08, slightly lower than the $20.14 the operator recorded in the first quarter of 2008. However, the company said it is increasingly attracting higher-ARPU customers with its hybrid plans. Management said Virgin's new $49.99 hybrid plan represented 65 to 70 percent of gross adds in May.

Data ARPU: Virgin Mobile's data ARPU was $4.42 per month, up 33 percent year over year. Virgin executives said that the company is seeing a big shift from voice to messaging; monthly messaging volume grew 120 percent. Initially, Virgin executives said that this trend will have a negative effect on ARPU, but in the long term they expect it to result in lower churn and higher-value customers.

Churn: Churn was 4.8 percent for the quarter, which was flat compared with the fourth quarter of 2008 but down from 5.1 percent in the first quarter of 2008. According to Julien Blin, an analyst with JBBresearch, prepaid carriers in the U.S. have seen an improvement in churn (with the exception of TracFone and MetroPCS), indicating that there is a growing interest in prepaid.

Retail: Virgin Mobile USA CEO Dan Schulman said the company will increase its retail distribution by adding 6,000 retail sites that will sell handsets and top-up cards. Some of these retail sites will be with existing partners and some will be new. Schulman said that the company has seen a substantial jump in gross add volumes from master agents.

For more:
- see this press release [1]

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