Mobile termination rate cuts hit turnover and total customer numbers fall, but underlying revenues inch up and proportion of contract customers increases
Revenues at Everything Everywhere (EE) were £1.7 billion for the quarter ending September 30, as the firm showed modest underlying revenue growth.
Excluding the impact of Ofcom’s decision to phase out mobile termination rate payments announced in March, the figure represented a small 0.6 per cent increase on the same quarter of 2010.
However, including the impact of the rate cuts, revenues were down 4.3 per cent.
EE said that total customer numbers fell 1.4 per cent to 27.541 million compared to the same period a year ago, but were down just 0.2 per cent compared to the preceding quarter.
The fall was primarily down to a 227,000 drop in pre-pay customers. However, contract customers rose by 185,000, taking the firm’s proportion of its total customer base on contracts to 47 per cent.
T-Mobile recorded its fourth successive quarter of growth in contract customers.
EE said total contract customer churn was “industry leading” at 1.1 per cent. The firm also said that 65 per cent of its customers were now using smartphones.
Average revenue per customer was steady compared to the same quarter of 2010 at £19.3 when taking into account the MTR cut. However, it was up 2.2 per cent when the cut was taken into account.
The firm said it was on course for £3.5 billion of efficiency savings by 2014.
EE has reduced the number of senior management roles by 25 per cent following the merger, with a significant number of those coming under the leadership of new CEO Olaf Swantee, who took over at EE in September.
Swantee said: “Despite ongoing economic pressure and the impact of regulated cuts to mobile termination rates, our business performance is in line with our current expectations.
“The success we’ve had adding nearly 900k postpaid customers in the last year is helping to drive underlying service revenue growth.
“I am particularly pleased that we are attracting high numbers of new smartphone customers and have the lowest customer churn in the industry.”