Virgin Mobile USA (NYSE: VM) Q2 profit jumped 296 percent from last year to $21.8 million, as premium handset sales grew strongly. Sales of phones priced over $50 jumped to 25 percent of sales from 15 percent in the previous quarter. Virgin Mobile says they come with “higher data usage, better churn, and significantly higher lifetime value”.
Service revenue dipped one percent to $290 million as customers down-shifted to lower price plans – including its new $49.99 Unlimited tariff, which took 21 percent of May and June gross adds – and the “shift from minutes to messaging”. The company’s previous unlimited plan was adopted by only three percent of customers.
But the play for long-term, high-value customers on cheaper packages has meant fewer sign-ups. Q2 gross customer additions are down 26 percent from last year to 535,558, due to “intensified competition and the company’s strategic focus on high lifetime value customer acquisition”. And average revenue per customer fell three percent to $18.98-a-month.
Data revenue has grown to 22 of service income, form 18 percent a year ago. Interest outgoings on debt used to acquire Helio have now eased by 38 percent since last year. The company’s earnings did not mention its proposed buy-out by Sprint Nextel.