Termination rate cut impact overshadows EE service revenue boost

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Underlying service revenues grew 2.9 per cent at Everything Everywhere in Q1, but the impact of the Mobile Termination Rate cut pushed actual revenues down 2.5 per cent to £1.5 billion

Underlying revenue at Everything Everywhere (EE) rose 2.9 per cent year on year due to a shift towards post paid customers and the number of customers who used smartphones.

However, cuts to Mobile Termination Rates (MTRs) pushed down service revenue at Everything Everywhere by 2.5 per cent year on year to £1.503 billion for the first quarter of 2012.

During the quarter the operator added 151,000 new postpaid customers, taking the proportion of customers on contracts up to 49 per cent, compared to 45 per cent in the same quarter a year ago.

Churn stood at 1.2 per cent, compared to 1.3 per cent in Q1 2011.

The proportion of post paid customers using smartphones rose 14 percentage points year on year to 71 per cent, helping drive a 14 per cent increase in non-voice revenues, which now account for 45.5 per cent of customer ARPU.

Data revenue alone rose 10 percentage points to 27 per cent of ARPU.

Underlying blended ARPU including post and pre-paid customers was up 4.5 per cent excluding the MTR cut, but down 1.1 per cent once the cut was taken into account.

EE CEO Olaf Swantee (pictured) said: “We are seeing improved underlying service revenues, driven by rapid data revenue growth, as we successfully upgrade customers to smartphones and higher value postpaid agreements.

“We continue to make major strides improving our current network experience such as better signal sharing and faster 3G data services, and we plan to start to introduce 4G LTE for the benefit of UK consumers and businesses by the end of the year, pending regulatory approval.”

EE said the first quarter had seen it carry out a number of restructuring activities, including a mast reduction programme, head office restructuring and a 38 per cent reduction in head office space, and the consolidation of handset supply chain and warehousing for the Orange and T-Mobile brands.

The firm said it was on target to achieve the £3.5 billion in synergy savings the merger of the two brands is meant to deliver.

EE said that is was continuing its network investment programme, and had completed the rollout of the HSPA 21 Mbps technology which is designed to offer 50 per cent faster data speeds.

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