Profits soar at Virgin Mobile

MOBILE phones group Virgin Mobile, which specialises in 'pay as you go' deals, has reported a 27% rise in profits despite a sharp drop in money made per customer.

The company said pre-paid average revenue per user (ARPU) in the year to the of end of March had fallen to £127 from £147 a year ago. Bosses said many of the customers it poached from other networks were lower spenders, diluting its own ARPU rate. It also blamed a cut, ordered by regulator Ofcom, in interconnect rates, the amount networks charge each other for calls.

Britain's fifth-largest mobile phone company, which owns no network but uses that of German-owned partner T-Mobile, said pre-tax profits rose by 27.4% to £100.3m. The figure was slightly ahead of City forecasts of £99m.Underlying earnings per share for the year rose to 18.4p from 15p a year ago.

The company also revealed its total of active customers had risen 790,400 to 4.03m, up 24%. The total number of phones connected is now 5.36m, up 35% on a year ago.

The company also said it was 'bucking the trend' on the High Street, with gross sales up 20% since the start of the year

Virgin, which has previously solely focused on pay-as-you-go, announced earlier this month that it would take on the other networks on mobile phone contracts, where customers sign up for 12 months or longer in exchange for a free or discounted phone.

Tom Alexander, chief executive, said: 'This important product launch marks the next stage of Virgin Mobile's evolution, and triples the size of our addressable market in revenue terms. Pre-pay remains the primary engine of ourgrowth.'

Virgin floated on the stock market lat July at 205¼. The stock soared to a high of 280p in January but has since fallen back amid fears over tough competition in the sector. The shares leapt 12p to 222p in early trading.