Everything Everywhere records record postpaid adds in Q4 as customers move away from prepay, but MTR cuts take their toll on revenues and total customer base falls
Everything Everywhere (EE) reported a 2.1 per cent fall in turnover from £7.05 billion to £6 .78 billion during 2011 due primarily to the £259m impact of the mobile termination rate cut.
Excluding the MTR rate cut, 2011 revenues were up 2.1 per cent, and full earnings including the impact of the regulatory change were up 1 per cent to £1.17 billion, compared to £1.16 billion in 2010.
For Q4, the firm reported a 4.6 per cent year-on-year fall in turnover from £1.8 billion to £1.72 billion.
The results were boosted by a record 313,000 contract additions during Q4, taking total contract adds for the year to 894,000 and increasing the firm’s total contract customer base by 7.5 per cent to 12.8 million at the end of the year.
The firm claims its post paid churn for the year of 1.1 per cent was better than any of its rivals, driven by the sharing of 3G signal between the T-Mobile and Orange brands.
However, EE’s total customer base fell over 1.5 per cent over the year due to a 8.3 per cent fall in prepay customers from 15.3 million to 14 million.
At 48 per cent, almost half of EE’s customers are now on postpaid, with many opting for higher value smartphone contracts, said the firm.
Total smartphone penetration among contract customers increased from 51 per cent to 68 per cent over the course of 2011.
EE said the shift from prepaid to contract smartphone customers meant underlying ARPU was up 2.1 per cent.
However, contract ARPU was down 6.7 per cent to £32.9 and prepay ARPU was down 11.8 per cent to £6.7.
EE said it achieved £278 million in operational savings during the year and was on course to meet both its target of £445 million in annual efficiency savings and its £3.5 billion synergy savings target by 2014.
EE CEO Olaf Swantee said: “Our focus on operational excellence has generated solid performance over the year as we accelerated network and organisational integration to deliver planned cost savings.
“As a result of network sharing and customer experience improvements, we are seeing good commercial momentum and are capitalising on the smartphone and data opportunity to drive underlying growth.”