O2 growth on iPhone and BlackBerry sales

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O2 UK recorded positive growth last quarter, again, with good contract additions, strong iPhone and BlackBerry sales, and market-beating churn

Telefónica O2 posted continued growth in a contracting UK market last quarter, with the addition of 307,500 contract customers in the period.

Revenues were up six per cent (adjusted down from 10.7 per cent because of termination rate cuts) to €1.782 billion in the period, compared with the year ago quarter, and its profit (OIBDA) was up 5.1 per cent to €470 million.

Profit margin is running at 26.4 per cent, up from 25.8 per cent. But ARPU was down three per cent to €25.30 – down 4.5 per cent among contract users and 11.3 per cent on prepay.

O2 UK lost 57,400 prepay customers, reflecting the market trend for prepay-to-contract migration. Its contract base now stands at 10.061 million customers. Contract churn was 1.1 per cent.

Its total base reached 21.6 million customers at the end of June, 2010, excluding its Tesco Mobile MVNO numbers, an increase of 4.5 per cent year-on-year.

Telefónica Europe chairman and chief executive Matthew Key (pictured) said UK growth was down to increased smartphone sales, notably of Apple iPhone and RIM BlackBerry devices.

Key said the firm had shifted three million iPhone handsets to date in the UK, with numbers in the first half of 2010, since the broader distribution of the device, outstripping sales in the same six-month period in 2009.

Key said: “In fact, in the first half of this year, O2 sold more iPhones compared to the same time last year when we had exclusivity and, in total, we have now sold three million iPhones into the UK.”

In total, including M2M connections also, O2 customers in the UK grew 5.3 per cent to 22.3 million during the quarter compared to a year ago.

Overall, Telefónica Europe increased revenue 14 per cent year-on-year to €3.8 billion (£3.2 billion) in the second quarter, with operating income also up 31 per cent to €384 million (£321 million).

For the year so far, revenue was up 10.8 per cent from €6.6 billion (£5.5 billion) to €7.3 billion (£6.1 billion).

In the second quarter, the group’s total customer base was up 14.6 per cent to 54.5 million, with mobile subscriptions increasing six per cent year-on-year to 45.2 million. Of that contract customers grew 10.4 per cent and prepay added 2.2 per cent.

Internet and data subscriptions grew 181.7 per cent, from 1.6 billion to 4.4 billion, including 177.3 per cent growth for broadband customers across Europe, from 1.4 billion to 3.8 billion.