O2’s mobile payments service O2 Wallet should hit the UK by the end of June, with the operator’s UK CEO Ronan Dunne revealing that tests to ensure its security are currently taking place.
Dunne said the service was ‘important for the sector and [financial services] space’ but would not reveal a launch date beyond late spring. He said: ‘We have had a trial process and are broadening out the trial base. A product in the financial services [sector] shouldn’t be like a standard voice product. It’s about people’s money and security. So there’s beta testing in a closed group, rather than extending it out to the market.’
He said the operator was continuing to work on its mobile payments joint venture with Everything Everywhere and Vodafone, despite the project being held up by the European Commission and objections from Three. The three companies are understood to have submitted their plans to Brussels this week for approval. If granted, the joint venture would become a platform for retailers to book adverts, market to consumers and offer deals. Dunne said: ‘We continue to prime the ramp for NFC handsets and develop the service. Nobody is sitting on their hands. We are continuing to build processes so we are driving both media and financial services hard.’
When asked if he was frustrated by the delay, which could see the venture launched after the London Olympics this summer, Dunne said: ‘That’s a call for the EU process, so it would be inappropriate for me to speculate in the meantime. We have our ducks in a row and it’s a question of working on the process. The Olympics is important but this is a game-changer for the sector. While we would all love it to be here it’s about the long-term view.’
Dunne was speaking to Mobile following the release of O2’s full year results. The operator’s mobile service revenues fell 3.7% to €6.20bn, down 3.7% on 2010. But it had a weak fourth quarter, with mobile revenues down 8.7% due to slower growth of its customer base. Operating income before depreciation and amortisation was €1.84bn, down 2.3% in organic terms. However, stripping out a 2010 restructuring expense of €72m, OIBDA grew by 1.5%.
Dunne said the business suffered from a ‘quiet’ start to the year. ‘Our momentum slowed a lot because of the propositions we had. We had to be quite tactical and price-oriented. But we sharpened
our pencil and did a tariff refresh in August.
‘People are looking at their budgets and making sure they won’t spend more than the £25 or £30 per month they have put aside. But we also feel we offer them more when it comes to a great experience and greater coverage.’
Dunne said a failure to grow the business at the beginning of the 2011 financial year had a knock-on effect on later quarters. However, he said there has been a greater appetite for smartphones, with 95% of new contract customers choosing a smart device. He singled out Nokia’s ‘return to form’ with the Lumia 800, as well as devices from HTC, Samsung and Apple. Dunne said manufacturers and operators need to strike a balance when it comes to subsidies. ‘We want to make sure we have a spread of price points to ensure as many customers as possible can enjoy smartphones but we need a return on investment so we can invest in our own industry, like in infrastructure, for example.
‘Telefónica has been working very closely with key manufacturers to make sure they move down the price range so it’s not just high-end phones that are available. One of the big drivers has been as smartphones come down into the lower and mid-end. That has given it a big boost.’
O2’s full year results
• ARPU during 2011 – 322.90 (down 6.6% or 3.5% without impact of MTRs)
• Q4 ARPU down 9.5% on 2010 (down 5.6% without MTRs)
• Voice ARPU during 2011 down 14.6% (9.2% without MTRs) and 17.7% in Q4
• Prepay ARPU down 15.8% to 310.10. Contract ARPU down 9.7% to 336.20
• Data ARPU up 5.1% to 310.70 during 2011 and by 2.2% during Q4
• 175,000 net contract additions in Q4, up 93% on 2010