Jefferies: VMED Q1 In-Line, But No Commitment To Extend Buyback Program

Jefferies reports that while Virgin Media, Inc.'s VMED Q1 is in-line, there was no commitment to extend to the buyback program. “This morning's results are in-line with expectations: Q1 revs £982m (JEFFe £983m), clean OCF £376m (£378m), FCF £100m, (£99m),” Jefferies writes. “Other highlights are Q4 cable ARPU +2.6% to £46.16 clean (JEFF £46.52) and churn stable at 1.2% (Q4: 1.3%). “Q1 revs growth has come in +5.7% y/y adjusted for the VMTV disposal (Q4 +6.6%). Q1 revs are £2m ahead of cons, £1m below JEFFe. OCF grew 7.6% pro forma in Q1 (vs 9.9% in Q4). Q4 OCF was in-line with, £2m below JEFFe. OCF growth has now slowed by 6pp from the +14.1% delivered in Q1 2010. OCF margin in Q4 was +70bp at 38.3% (vs +60bp Q4, +140bp Q3). As in Q3 and Q4, operating leverage was mainly driven by SG&A cost control (SG&A -4% y/y). FCF almost doubled in Q1 due to lower cash capex (-£19m y/y) and lower interest (-£9m y/y) in addition to OCF growth.” Virgin Media closed Tuesday at $28.09.