Virgin was the surprise turn of the two. After losing 70,000 customers in the second quarter, in the wake of a row with Sky over programming, it was expected to shed about 30,000 more in the three months to September. Instead, it embarrassed a few analysts by actually gaining an extra 13,000 customers. This helped profits hit £47m, up from a measly £3m last quarter. Acting boss Neil Berkett called it a ‘significant turnaround’ – and the City certainly liked what it saw.
Which is more than can be said for BT this morning. It’s not that the company’s results were terrible – revenues were up 3%, while sales of its ‘new wave’ services jumped 10% to £1.9bn. But CEO Ben Verwaayen’s restructuring programme, which involves removing some 5,000 middle managers and bringing in more customer-facing staff, is really starting to bite. The plan ought to save money eventually, but there’ll be some short-term pain before the long-term gain. Net profit slumped 29% to £339m, which prompted a big fall in its share price.
With standard telephony revenues declining, both companies seem to be banking on broadband to drive growth. And both had plenty to smile about here – BT’s overall broadband revenues jumped 12%, while Virgin managed to sign up another 116,000 people to its own service. With a total base of about 3.6m, Virgin now claims to be the largest residential broadband provider in the UK – although BT seems to think it’s providing broadband to 4m homes, so they can’t both be right.