O2 hails direct sales, knocks rivals

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Telefónica O2 UK improved retail connections by 16 per cent in its first financial quarter of 2010, compared with the year-ago period, and increased sales from its website by around 20 per cent.

Chief executive Ronan Dunne reflected O2 UK had, again, outrun its rivals in terms of quarterly revenue and profit growth, even if it scored fewer contract additions  (176,000) in the period than Vodafone (262,000) and Orange (221,000).

He also pointed to O2’s record churn in the quarter, of 14.4 per cent on a rolling basis, compared with Vodafone’s 17.7 per cent and Orange’s 20.2 per cent.

Dunne explained O2’s performance: “We had another record quarter for churn – and there is a significant gap to the competition still. In terms of net contract additions, Vodafone came first, as you would expect in the quarter in which it launched the iPhone, and we put on more than Orange and T-Mobile combined.

“Orange won off T-Mobile in contract and T-Mobile won off Orange in prepay. The way those two have traded in the last few months is essentially for Orange to run as the contract brand and T-Mobile as the prepay brand. There has been a lot of trading between the two effectively, which is an expensive exercise if you are buying customers you already own.

“The joint venture company appears keen to maintain the growth of those brands within the indirect channels, where they are very competitive. We are taking more business direct, by contrast, which is very much part of our strategy for balanced distribution.”

He added: “O2 is still the biggest brand in the market; it is a bigger brand in terms of customer base than any other in Britain. In any sector. We are more profitable than the joint venture also – Orange does not report its quarterly UK profit but, unless it has made a staggering jump, then we are around 10 per cent clear, as we were at the last count.

“Our strategy has not changed. We continue to drive profitable growth and to outperform the market. It is logical that we will therefore gain market share from our competitors. We have picked up revenue share again in the last quarter.”

 

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