Ouch. It looks like Virgin Media’s mobile arm has let the side down if the latest set of quarterly results is anything to go by: the company has announced a massive goodwill writedown on Virgin Mobile in its second quarter financials. In short, Virgin Mobile is now worth £366 million less than originally thought in goodwill terms.
Such writedowns are a bit of a nebulous beast – who can really guess how much people’s warm and fuzzy feelings are worth towards a brand? – but wiping £366 million off Virgin Mobile’s value, even if it is purely on paper, has got to smart a bit.
That said, it doesn’t look like this is a major blow for Virgin Mobile. The decision to go ahead with the writedown comes as a result of declining values for mobile phone companies across the board, according to Virgin Media. Virgin Mobile’s got a few other reasons to be cheerful too: the company is planning to get into the tasty 3G data market, it’s doing better selling mobile contracts to cable customers and it’s squeezing more cash from its pre-pay customers as well as adding more post-pay users. It might be a knock, but Virgin shouldn’t have any difficulty in putting it behind them.
