Telefónica O2 UK’s total base, excluding Tesco Mobile and other wholesale activity, increased 4.6 per cent compared with the year-ago quarter to 21.4 million, with a 12.1 per cent leap in its contract vase. It added 195,000 contract customers in the period, losing 138,000 prepay customers at the same time.
Its net additions in the quarter stood at 56,000, taking its total UK base to 21.4 million customers.
It said 46 per cent of its base is on contract. Its contract churn was 1.1 per cent in the quarter. Total churn decreased 0.2 percentage points over the previous year to 2.6 per cent.
UK revenue was €1.634 billion in the quarter, up 4.6 per cent on the first quarter of 2009. Service revenue was €1.503 billion, up 5.6 per cent. Profit (OIBDA) was €414 million, up 9.9 per cent from €376 million. Margin was also up to 25.3 per cent.
Telefónica Europe chairman and chief executive Matthew Key said: “As the ‘home of the smartphone’, we are ahead of the learning curve in understanding customer behaviour which allows to offer great user experience. Not only are independent tests increasingly naming O2 as the superior mobile data operator, but our market leading churn is proof that customers continue to stay with us regardless of any smartphone exclusivity.
“Furthermore, our focus on capturing the mobile internet opportunity to drive further revenue growth is already bearing fruit, as showed by a 44 per cent increase in non-SMS data revenues.”
Telefónica Europe increased its revenues by 7.4 per cent to €3.486 million (£2.969 million) in the first quarter of the year, compared with the same period last year.
Most revenue came from its German operations, it said. The Group said the increase in revenues was down to higher smartphone penetration and a surge in mobile internet usage.
The total customer base was at 53.9 million at the end of March – 44.6 million of which are mobile customers. Around 48 per cent are contract customers, it said. The total customer base increased by 15.5 per cent year-on-year, due to growth in its fixed and mobile broadband bases.
ARPU also increased by 35 per cent during the period.
Key said: “Telefónica Europe once again delivered strong revenue growth and increased profitability despite an uncertain economic climate in highly competitive markets and the negative impact of mobile termination rates.
“We maintained our excellent momentum across key growth drivers, with increased smartphone penetration and mobile internet usage. We continue to outperform our competitors in key markets – most significantly in Germany, where O2 notably gained 357,000 net additions in the first quarter, while in the UK our financial performance is clearly ahead of other operators.
“The group has further enhanced its portfolio with the recent acquisitions of Jajah and HanseNet.
“Our customer base continues to grow faster than the competition, driven by a strong performance in the postpaid segment led by Telefónica O2 Germany’s outperformance and Telefónica O2 UK’s record-breaking levels of churn.
“Telefónica Europe’s total customer base reached 53.9 million – a 15.5 per cent year-on-year growth – on the back of the continued expansion of fixed and mobile broadband customers, while our mobile customer base climbed to 44.6 million, up 6.6 per cent year-on-year. Significantly, nearly half of all our mobile customers now in the contract segment.”
He said of its Irish business: “Telefónica O2 Ireland kept its commercial focus on contract mobile customer base, with a strong continued demand for smartphones and the lowest churn level in more than two years. We performed strongly on contract net adds in the quarter, which reached 10,068, 25 per cent higher than in the same period of 2009.”