Melanie keeps Virgin on top

SIR Richard Branson's Virgin Mobile appears to be punching above its weight and winning a greater share of new mobile customers at the expense of larger rivals.

In the three months to 31 December, Virgin added 264,000 customers to its network, increasing its base by 22% over the previous quarter to 1,445,492.

The City estimates the total UK market will grow by more than 1.5m in the quarter. If correct, Virgin will have boosted its share of new customers to 18% from 17% in the September quarter and 11% in the June period.

The performance is underpinned by a heavy advertising campaign that features former All Saints singer Melanie Blatt making an unorthodox use of a photocopier. Also, other operators do not appear to be competing as aggressively for new customers as the UK market reaches saturation point.

Because almost 43m of the 60m population now own a mobile, operators are keen to grow user revenues rather than boost the number of subscribers.

Virgin's performance comes at the same time as speculation that trading during the crucial Christmas period has been weaker than expected. Sales of mobile phones were always expected to be well below the near-6m sold in the run-up to Christmas in 2000, but reports of weak retail demand have weighed heavily on phone retailer Carphone Warehouse.

Sir Richard Branson said Virgin was growing its customers without dramatic price cuts and said it would become profitable early this year. 'This is a fantastic end to 2001, our second year of trading. We have continually outperformed the market.'

Virgin has average user revenues of about £15 a month, lower than the average £22, although it has much lower costs. A true picture of the market will not emerge until Vodafone, Orange, and BT Cellnet and One2One release their subscriber figures over the next four weeks.