O2 added over one million contract customers last year to take its total customer base to 21.3 million lines, a 5.1 per cent increase year-on-year.
The operator added 338,455 customers in the final quarter of 2009 with 235,486 being contract subscribers, a 5.6 per cent increase year-on-year. The contract segment made up 44.9 per cent of its total customer base compared to 41.5 per cent a year earlier.
O2 said that this was mainly down to churn reduction and increased commercial activity on a range of devices, with a particular focus on smartphones. It added that SIM-only propositions and prepay to contract migrations also contributed to growth in the segment.
Churn decreased to one per cent in the quarter, described by O2 as “a record low”. The contract churn in 2009, at 1.1 per cent, was o.1 per cent lower than in the previous year. Total churn for the year remained “stable” compared to the previous year at 2.6 per cent, showing a 0.1 per cent year-on-year improvement in Q4.
Traffic last year grew 15.6 per cent to 53,856 minutes, a 15.4 per cent increase year-on-year in the quarter. O2 said this can be explained by contract customer base increase, coupled with continued utilisation of their voice bundle, as well a the higher year-on-year usage of voice packages from prepay customers due to the adoption of tariffs such as “Unlimited”.
Revenues grew 3.5 per cent in the 12 months compared to the previous year in local currency to £5.6 billion. iPhone sales also topped two million last year.
However total ARPU for the year declined by 4.4 per cent year-on-year due to mobile termination rate cuts and the increasing number of non-voice accesses and SIM-only tariffs in its base.
Telefónica Europe chairman and chief executive Matthew Key said: “In the United Kingdom, Telefónica O2 UK defied a shrinking market, reporting strong financial results and gaining share in 2009 through a consistent approach to our core mobile business while expanding into new areas.
“This positive evolution was mainly due to our unwavering commitment to putting our customers at the heart of everything we do – reflected in our industry-leading rates of churn. Increased commercial activity on a wide range of devices, wiyth a particular focus on smartphones, was also a significant driver of growth in the year.”