O2’s Q1 results last week revealed a revenue growth of 12.6 per cent for the quarter and the addition of 206,385 contract customers.
Its total UK mobile customer base is now 18.4 million, showing year on year growth of 3.7 per cent.
The number of prepay customers fell by 185,233 during the quarter leaving 11.4 million. O2 put this down to disconnections following the Christmas period, migrations to contract and the mature nature of the market.
Contract churn fell from two per cent the same time last year to 1.5 per cent, driven by retention activity and handset upgrades. Total customer ARPU was up five per cent from Q1 last year to £24.74.
The network attributed factors like the iPhone and strong “traditional handset” connections to its growth in contract customer numbers, as well as a tariff refresh. At the end of the quarter, contract customers made up 38.1 per cent of the total base compared with 35.5 per cent in March 2007, highlighting an increasing migration of customers from prepay to contract, driven by tariffs such as O2 Simplicity.
Simplicity has been so successful in the UK, according to Telefonica O2 Europe chief executive Matthew Key, that the model will be introduced to Germany and Ireland.
“Simplicity now accounts for over one third of all O2 online sales and customer numbers will shortly pass half a million. It has proved particularly popular in the family segment and has been an influential factor in the increasing trend of prepay to postpay migration amongst O2 subscribers,” said Key.