O2 reports further growth in Q3 2010

O2 reports further growth in Q3 2010

O2 UK increased its customer base and saw further growth in revenue and customer numbers in the third quarter of 2010 thanks to improvements in mobile service revenues and sales of smartphones to both new and existing customers.

The company reported a 5.6% increase in revenue for the nine months of year on year to €5,317m (2009: €4,871m). Revenue for Q3 2010 was €1,901m (2009: €1,677m).

Speaking to Mobile, O2 UK CEO Ronan Dunne said: ‘There has been a lot of noise about the changing shape of the market with Everything Everywhere, but we have concentrated on keeping our head down and making sure we don’t get distracted. We are concentrating on delivering the best customer service. We are the UK’s leading service brand in our sector with 22 million paying customers.’

Operating income before depreciation and amortization (OIBDA) stood at €1,365m for the first nine months of 2010, a growth of 8.3% year on year and up 9.4% year on year for Q3 to €481m.

The company said OIBDA in the third quarter was negatively impacted by higher commercial costs following the launch of the iPhone 4. OIBDA margin for the first nine months was 25.7% (up 0.6 percentage points year on year)

O2 UK’s total customer base (excluding Tesco Mobile) at the end of September was 22 million, up 4.8% on 2009 with net additions of 352,000 in the third quarter – a rise of 20.4% year-on-year and an increase of 658,000 in the first nine months.

The majority of the growth continued to come from the contract segment with 236,000 customers added in Q3. The prepay segment also saw net additions of 115,000, a turnaround from Q2 which saw net disconnections.

The company maintained its strong record in low churn rates. Total churn was 2.6%, while contract churn was just 1.1% in the first nine months. In Q3, total churn was 2.7% and contract churn was 1.2% - flat over the previous year.

O2’s total ARPU for the first nine months showed a 2.7% decline to 25.1 euros, while Q3 was down 2.0%. If the impact of mobile termination rates is excluded then ARPU grew by 1.4% over the nine months to September.

O2 was not exempt from the continuing pressure on traditional revenues with voice ARPU down 7.6% to 15.1 euros in the nine months to September; Q3 voice ARPU decreased by 5.3%.

However, the decline is being offset to some extent by increases in data ARPU, which saw 5.7% growth year on year to 10 euros (up 3.4% in Q3) largely thanks to non-P2P SMS ARPU (up 29.0%).

The company said growth was driven by increased smartphone and mobile broadband usage, which partly compensated for the decline in SMS ARPU.

The latter was hit by the proliferation of bundled offers, in particular unlimited SMS tariffs.
Written by Mobile Today
Mobile Today

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