O2 experiences best customer growth for 18 months in Q2

Ronan Dunne, who led O2 UK for nine years, left in September

Operator added 240,000 customers in Q2 with record low contract churn, but revenue and profits fell

O2 added 240,000 new subscribers in Q2, up 20 per cent from last year and representing its best customer growth for 18 months.

Some 134,000 of these (100,000 excluding M2M) were contract customers, rising 10 per cent year-on-year, which now accounts for 61 per cent of its total mobile base of 25.2 million. It also grew prepay number by 106,000 subscribers.

Contract churn was down 0.1 per cent from last year to a record low of 0.8 per cent.

O2 said this continued to be driven by its Refresh tariff, perks through O2 Priority and the new ‘More for you’ campaign launched in the quarter, which continued to maintain its brand awareness.

Revenue and profit down

Revenue fell 4.4 per cent year-on-year to £1.346 billion, which O2 said was primarily due to a market-wide slowdown in handset sales.

Profits were down four per cent from 12 months ago, which the operator said reflected continued investment in the customer base, offset by lower functional costs. Profit margin remained broadly stable at 26.6 per cent.

Elsewhere, O2’s 4G network now covers 91 per cent of the UK population outdoors (up 18 percentage points year-on-year), which has been supplemented by its WiFi network, which grew to 13,800 hotspots in the quarter and now has over seven million active users.

From a private and public sector perspective, O2 won accounts with the likes of Mercedes Benz, Admiral, Kier Group, Carter Thermal Industries, Marie Curie and Sussex Police.

‘Like New’ launch

O2 has also today launched ‘Like New’, a service offering customers a choice of pre-owned phones. These will come through the two million devices it has so far received through O2 Recycle and those traded in for new devices from customers.

All phones will be quality assured and guaranteed for 12 months with a 14 day return policy.

O2 financial results follow the news last week that CEO Ronan Dunne (pictured) will be stepping down from the top role to be replaced by chief financial officer Mark Evans on August 1, although Dunne will remain with the business until September as part of the integration period.

Customer growth and loyalty

“Our Q2 results show that in an ultra-competitive market we continue to drive strong customer growth and unrivalled customer loyalty. Our ‘More for you’ campaign highlights the services and perks that set us apart from our competitors and our ‘Like New’ proposition leverages our trusted brand status.

“Our focus for the rest of the year is to continue to deliver for our customers through our innovative products and services and the experiences that only come with being part of O2.”