8/3/2011 12:16:00 PM
Operators look to a better second half of the year
On the whole, the results for the first half of 2011 at Vodafone, Everything Everywhere and O2 don’t look too bad – holding steady or down a touch in terms of revenue and profit. But much of that came from a strong first quarter and disguised a fairly poor second quarter.
Vodafone did buck the trend on revenue in Q2 showing strong underlying growth, while Everything Everywhere pleasantly surprised the market by also showing underlying growth.
O2 has only just crept into growth when the cuts in MTRs are excluded.
So what can we read about the state of the market in the first half results? Clearly the tough economic climate is having an impact on the consumer’s willingness to part with what’s left of his or her disposable income. The impact of a heavy cut in MTRs in April also made itself felt in Q2, hitting everyone’s revenues, profit and ARPU. O2 CEO Ronan Dunne also points to a lack of real excitement and innovation in terms of devices and propositions in the first half of the year.
The huge losses in the prepay segment look to be the result of a number of factors: the networks tightening up on box breaking, disconnecting old numbers and generally cleaning up their prepay base. Some have obviously moved onto a contract deal in the case of Vodafone and Everything Everywhere. Others must have jumped ship. Three’s siren-like ‘all-you-can-eat’ data tariff appears to be working as a customer acquisition strategy, as well as putting heavy competitive pressure on its rivals.
With voice revenues under pressure like never before, data is the way forward. Data revenues are climbing and in some cases are beginning to offset the decline in voice. The networks are increasingly gearing their offerings around the higher margin smartphone and data opportunity.
The networks will be looking to boost their performance in late Q3 and Q4. They will be hoping that the arrival of the iPhone 5 later in the year, along with other new handsets from the likes of RIM, Samsung, HTC and perhaps the Nokia Windows phones, will add some sparkle to a lacklustre market.