Virgin to reward high spenders

VIRGIN Mobile, the recently floated telecoms arm of Sir Richard Branson's empire, today outlined plans to reward higher-spending customers who buy its services in advance.

And in a bid to tempt subscribers away from long-term contracts with rivals, the group announced it was launching a new pre-pay deal in October.

Virgin will offer higher-spending customers the chance to cut costs by signalling how much they will spend on text messaging or voice calls each month.

In a trading update, Virgin Mobile said the percentage growth revenues in the half-year to 30 September were expected to be in the 'mid-twenties', but this would slow in the second half due to the impact of a cut in termination rates - the price mobile phone firms charge each other and landline operators for putting callers through to their customers.

The company also said it would be in a position to pay dividends by the end of its financial year next March.

As promised at its July float, it has cleared all the court hurdles to enable a payout this year.

The group said first-half results should show revenue growth, improved margins and rapid pay down of debt. Virgin also said it will take a hit on the cuts in call charges from fixed lines to mobiles.

Despite the impact of price competition, Virgin lowered debts by £30m and revealed it was on track to deliver 'substantial improvements' to annual earnings.

Chief executive Tom Alexander said the group had built on its first-quarter achievements, which included a 7.2% rise in new customers.

'The combination of strong customer growth and our efficient operating model will result in margins for the first half being well ahead of the same period a year ago,' he said.

Virgin, which employs 1,400 staff at three sites - Trowbridge, London and Daventry - had a total of 4.2m customers at the end of June.

The company, which floated on the stock market in July, differs from rivals such as Vodafone as a 'virtual operator' which uses the network of T-Mobile.

Around 95% of its business is derived from customers buying pre-pay vouchers to top up the credit on their mobile phones.