O2 contract adds fall but Refresh maintains customer loyalty


Operator sees 135,000 mobile contract customers join in Q1 as its Refresh tariff maintains market-leading churn of 1.1 per cent

O2 saw new contract customer additions fall by more than 100,000 in Q1 compared to the same year ago but saw its Refresh tariff maintain its market-leading position in loyalty.

The operator added 135,000 new contract customers in the first three months of this year (72,000 excluding M2M), which is said reflected a lower volume of gross additions in the market. This compared to 222,000 additions in Q4 2013 and 251,000 additions in the same quarter last year.

Overall, its mobile contract customer base grew seven per cent year-on-year to 13.1 million, which O2 said it achieved despite a slower overall market in the quarter with fewer handset launches.

The operator lost 208,000 prepay customers in the quarter, with that base now standing at 10.5 million. This led to a total mobile customer increase of three per cent from the same period in 2013 to 23.6 million by the end of Q1. Contract customers made up 55 per cent of this number, up two per cent yearly.

O2 said its Refresh tariff, which enables customers to change their handset when they want without penalty, has encouraged more customers to stay. Churn was 1.1 per cent, which it claimed is the lowest in the market. Over the coming weeks, O2 Refresh will be extended to customers buying tablets with the option of no upfront payment. Smartphone penetration increased three per cent year-on-year to reach 55 per cent (10.567 million customers).

Revenue remained relatively stable at £1.36 billion, down slightly at o.3 per cent from last year, while mobile service revenue was down 0.8 per cent annually to £1.07 billion – the same decrease experienced in the pervious quarter. CapEx amounted to £158 million, up 8.3 per cent yearly.

Since launch last August, O2’s 4G network is now available in 191 towns and cities across the UK, covering 41 per cent of the UK population. Last month it announced that 25 per cent of its 2G and 3G masts would be upgraded to deliver increased call quality and data connectivity for customers.

Belfast and Lisburn in Northern Ireland will be the next cities to benefit from this work over the coming weeks, with 4G activation by the summer.

Elsewhere, O2 Priority (Moments, Tickets and Sport) was used seven million times in Q1, with customers taking advantage of more than 1,000 offers. THe top offer was a free coffee from Cafe Nero, which was redeemed by around 80,000 of its customers and in turn saving them over £150,000. O2 said that within the next few weeks, it will be launching a range of new Priority offers.

O2 UK CEO Ronan Dunne said: “We continue to drive growth, satisfaction and loyalty among our customers. We are also matching the accelerating customer demand for connectivity with huge investment in our network and services.”