Will O2 retain its leading position in 2010?

Will O2 retain its leading position in 2010?


The mobile phone industry might have got off relatively lightly during the recession compared with other markets, but it’s not been an easy year for anyone. So you have to hand it to O2 – the only operator to increase revenue in the first nine months of this year. It also managed to increase its customer base by 5.7% year on year and gained 292,061 net mobile additions in Q3.

O2 has grown and outperformed the rest of the industry by taking market share. The exclusivity deal on the iPhone certainly helped it achieve that. But as Telefónica Europe CEO Matthew Key has admitted, it will be difficult for O2 to repeat that performance in 2010 thanks to the wider availability of the iPhone, coupled with fierce price cuts and marketing by rivals.
And that’s not the only issue that may dent O2’s performance next year. Like all the other networks, even O2 saw its overall ARPU decline in 2009. Voice and text revenues are falling. Data traffic is climbing fast, but intense competition means the revenues it generates will not make up for the drop in voice and text revenues.

O2 is surely right to be looking outside its core offering to find new revenue sources. It has plenty to go for in the enterprise arena with its Joined Up converged offering, despite Vodafone’s dominance in this area. M2m is also a key target and this is timely, as this market finally looks to be taking off.

In the short term, O2 cannot afford to let anything slip in the voice, text and data areas. The data battle is largely about providing reliable coverage, so the company’s £100m spending blitz to improve its 3G coverage hasn’t come a moment too soon. Next year is going to be a more even fight.

Written by Mobile Today
Mobile Today


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