Virgin Mobile UK reported fewer subscriber additions as the UK wireless market faces growing competition and slowed overall growth. The Mobile Virtual Network Operator's (MVNO) revenues, however, were up 18 percent, thanks in large part to Virgin's new strategy of converting subscribers to postpaid contracts. Despite the move to contracts, Virgin Mobile's ARPU slipped from £127 to £123. The MVNO's ARPU lags behind rivals like Vodafone, which claims that its customers spend on average £306 per year. Virgin Mobile UK's market value is roughly 11 times earnings.
Virgin Mobile is seen by most in the wireless industry as the success story and test case for the MVNO business model. The company's move in the UK away from prepaid to postpaid contracts could signal a market shift for other MVNOs. Some industry insiders predict that MVNOs in the US will also shift their efforts away from prepaid and over to postpaid once they build significant subscriber bases.
For more on Virgin Mobile UK's numbers:
- see this article from the Motley Fool