Virgin Media said yesterday it has cut its losses, added more customers and is on track for revenue growth after last year's bitter dispute with rival BSkyB.

The Hampshire-based cable company has reduced its monthly "churn rate" - the measure of customers dropping the group's service - to 1.2% during the first three months of 2008.

This rate peaked at 1.8% in the second quarter of last year following the row, which resulted in Sky pulling its basic channels off the Virgin broadcasting platform in March last year.

Discounting customers who move house from cable to non-cable covered areas, this leaves the cable business with annual churn rate of around 10% - on a par with its rival.

Virgin Media also added 4900 net new cable customers - its third successive quarter of customer growth despite the seasonally-quieter post-Christmas period.

The company said better billing systems and value for money had helped it retain more customers. Although cable revenues were 3% down to £618.2m year-on-year because of pricing competition, the decline slowed compared to previous quarters.

The group's overall operating losses narrowed to £4.6m compared with £15.3m a year earlier, while its operating cashflow - a measure studied closely by analysts to judge the company's ability to service its debts - was up 6% to £324.2m.

Chief executive Neil Berkett said the results reflected a solid performance, "better positioning ourselves for a return to revenue growth".

He added: "In particular, churn continued to decline, reflecting the emphasis that we have placed on this area."

The group was formed from mergers involving Telewest, NTL and Virgin Mobile and has 4.8 million customers. Virgin founder Sir Richard Branson is the largest shareholder in the business, with a 10.5% stake.

The company said it was the largest residential broad- band provider in the UK with 3.8 million customers and 88,400 net additions in the first quarter.