Virgin set to push home phones

Virgin Media is set to launch a marketing attack on gaining and retaining home phone customers after chief executive Steve Burch revealed telephony as an underperforming business.

A briefing note issued by analysts Lehmann Brothers yesterday (Tuesday) reveals that Burch sees telephony as a "weakness." He told analysts that while everything else had been "going according to their expectations" the home phone unit has failed to deliver.

The company posted a net loss of 64,000 telephone subscribers when it announced its end of year results last week. Burch ascribed this loss to customers who only subscribed to the home telephone service defecting to the Carphone Warehouse-owned Talk Talk service and taking advantage of "free" broadband.

The marketing focus on clawing back telephone subscribers is earmarked for July.

Carphone chief executive Charles Dunstone started a broadband price war in April last year when he launched "free" internet access for customers of Talk Talk’s fixed-line phone service.

Six months after the launch, Dunstone revealed he was expecting losses of £70m, £20m more than expected, because of the popularity of the service and because it struggled to cope with customer demand.

By October, it had attracted 65,000 broadband customers and at the time he said that over 15,000 people were joining each week.

BSkyB and mobile phone operator Orange responded with similar "free" services last summer.