Virgin Mobile USA Reports 23% Rise in Subscriber Base

Virgin Mobile USA has reported that during the third quarter 2007, Virgin Mobile USA's net service revenue increased 25% versus the prior year period to US$301.4 million, driven by a 23% increase in end-of-period customers compared to a year ago, as well as a 30% increase in non-voice service revenues compared to the third quarter 2006. Virgin Mobile USA's net service revenue for the nine-month 2007 period increased 25% to US$933.5 million. This was driven by growth in the customer base, as well as by a 34% increase in non-voice service revenues during the first nine months of 2007 as compared to the first nine months of 2006.

Virgin Mobile USA reported a net loss for the third quarter 2007 of $7.3 million, compared to a net loss of $5.1 million for the third quarter 2006.

"Our results reflect the fundamental strengths of our business model," said Daniel H. Schulman, Chief Executive Officer, Virgin Mobile USA. "Demand for our service is strong, as evidenced by the high growth in our customer base, and our focus enables us to maintain the lowest customer acquisition costs in the wireless industry, and industry-leading churn of 4.9% for the third quarter. With capital expenditures at just 2% of net service revenues, Adjusted EBITDA less capex grew to approximately $71 million in the first nine months. This high cash generation is the hallmark of a mobile virtual network company at scale."

"We are receiving positive indications from our retail partners as we enter the seasonally strong fourth quarter," added Schulman. "The Virgin Mobile brand and proposition continues to attract considerable demand, and we look forward to a strong holiday season."

In October 2007, Virgin Mobile USA successfully completed its initial public offering, using $195 million of proceeds to repay debt. As a result, Virgin Mobile USA's interest payments and debt amortization are expected to significantly decline going forward. Interest expense for the third quarter was $14.3 million. As adjusted to reflect the debt repayments related to the IPO, interest expense for the quarter would have been $9.2 million, or reduced by 36%. Interest expense for the first nine months of 2007 was $41.8 million. As adjusted to reflect the debt repayments related to the IPO, interest expense for the period would have been $27.1 million, or reduced by 35%.

John Feehan, Chief Financial Officer of Virgin Mobile USA commented, "The successful completion of our recent initial public offering has created an improved capital structure by allowing us to reduce our total debt by $195 million. We believe our enhanced capital structure, combined with our strong free cash flow-generating MVNO model, will continue to expand our profitability going forward."

Posted to the site on 16th November 2007