O2 ‘takes fight back to the market’ with strong Q1 results

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Operator added 223,000 contract customers in the first three months of this year, its highest since the third quarter of 2010 and best Q1 performance since 2009

O2 said it had “taken the fight back to the market” after it added 223,000 contract customers in Q1 2012. It’s the operator’s highest number of contract additions since Q3 2010 and best Q1 performance in contract since 2009.

This was an increase of 48 per cent compared to what it achieved in the same quarter a year ago. The operator’s contract base now stands at 11.16 million subscribers, accounting for around 50 per cent of its total customer base of 23.3 million subscribers.

O2 said this performance was the result of its continued focus on high-value customer retention, which led to a 40 per cent increase year-on-year in upgrades.

It lost 65,000 prepay customers in the three month period, resulting in total net additions amounting to 158,000 in the quarter, double what was achieved in the same period a year ago.

However operating income fell 33.2 per cent year-on-year to £268 million. O2 said this was a result of the increased commercial activity to regain momentum in the market.

Revenues fell six per cent year-on-year to £1.38 billion, which O2 said was impacted by a difficult trading environment and regulation. It added that excluding the impact from mobile termination rate cuts, revenues would have decreased three per cent year-on-year in the first quarter.

Smartphone penetration rose 41 per cent in the first quarter, up eight percentage points year-on-year, representing more than 80 per cent of handset sales. O2 said that over 82 per cent of new customers chose one of its top two tier data bundles during the quarter.

Contract churn stands at one per cent, down 0.1 percentage points year-on-year and 0.2 percentage points from the previous quarter.

ARPU fell 8.1 per cent year-on-year to £18.33, which O2 said was driven by customers optimising bundles and moving to cheaper tariffs, as well as lower mobile termination rates.

Contract ARPU fell 10.2 per cent from Q1 2011 to £28.79, while prepay ARPU decreased 10.2 per cent year-on-year to £7.96. However data ARPU rose 1.3 per cent year-on-year to reach £8.77. This was also up from the £8.59 figure posted in Q4 2011.

The Tesco Mobile joint venture, which is not included in the operator’s total customer base, added 137,000 customers to reach three million customers. This was an increase of 18 per cent compared to Q1 2011.

O2 UK CEO Ronan Dunne (pictured) said: “These results show that we have taken the fight back to the market and regained commercial momentum.”

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