O2 adds 138,000 customers in Q1 as profit hits £337m

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Fourth successive quarter that operator has seen positive growth of its customer base, while the use of digital service channels have seen calls to customer service halve in the past five years

O2 added 138,000 new customers in Q1 while revenues and profits both rise 1.1 per cent from a year ago to hit £1.376 billion and £337 million respectively.

The customer breakdown is 133,000 contract and 5,000 new prepay additions, which has seen its overall base reach 24.6 million – up 4.4 per cent year-on-year.

It is the fourth successive quarter that O2 has seen positive growth in its customers base, with the firm claiming this maintains its position as the fastest growing operator.

Contract churn (excluding M2M) remained “the best in the market” at one per cent.

O2 said its growth continued to be driven by the appeal of a wide range of phones, tablets and wearables, as well as the flexibility of its Refresh tariff.

The first customers who signed up to Refresh in April 2013 and chose not to upgrade their mobiles have now had their bills automatically reduced by an average of £18 per month, equivalent to £216 per year.

Another contributing factor to this quarter’s financial results was O2’s continued investment in a range of customer service channels.

The average call volumes to customer service have nearly halved in the past five years, with the use of digital service channels like MyO2 and Web-Chat increasing 23 per cent and 20 per cent year-on-year respectively. Customer appointments with O2 Gurus also increased by a third in the quarter.

Its customer loyalty reward scheme, Priority, also proved popular in the first three months, with customers saving over £2 million by redeeming over one million offers. These included free cookies from Millie’s Cookies, free Valentine’s chocolate from Hotel Chocolat and lunches for £1 from Upper Crust and WH Smith. Boots will also be offering £1 lunches from the end of June.

O2 UK CEO Ronan Dunne (pictured) said its momentum in the quarter had been driven by a “relentless focus on our customers”, with the operator continuing to attract and retain more customers than its competitors.

The upgrading of O2’s 2G and 3G networks, as well as the rollout of 4G continued as part of the company’s five-year, £3 billion plus network modernisation programme. Bristol, Cardiff, Gloucester, Hull and Grimsby were among the to benefit from this work.

O2 also won large business contracts in the quarter with Yodel, Amey, East Sussex County Council and Hampshire County Council. It now provides services to around a third of local councils and over half of UK police forces.

Lastly, O2 now has over 11,000 free public WiFi hotspots, with over 13 million users. O2 WiFi Extra launched last month to allow its customers to automatically connect to the service if the WiFi signal is stronger than their 3G or 4G service.

O2 Just Call Me also launched in the quarter, an exclusive conferencing solution for business customers and the latest app to be launched as part of the operator’s SMB Digital portfolio that enables firms to pic from a range of products and services and create a bespoke package to suit their needs. Existing products include McAfee Multi Access, Microsoft Office 365 and TuGo for Business.

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