O2 UK announced a fairly solid set of results for the half year to end of June 2011, but the second quarter saw revenue and profit hit by cuts in mobile termination rates (MTRs).
Mobile service revenues for the first half of 2011 were £2,746 million - down just 0.4% on the same period in 2010. OIBDA was £837 million, up 7.7% on 2010. The results for the second quarter of the year saw the impact of the cut in MTRs introduced in April. Mobile service revenues dropped 4.3% to £1,340 million, while OIBDA fell 1.2% in Euros, but was up 2.1 to £407 million after currency fluctuations between Euros and Sterling are taken into account. OIBDA margin for the quarter fell by 1.5 percentage points to 27.9%.
O2 UK CEO Ronan Dunne said: ‘We have delivered a solid financial performance in spite of a very challenging commercial environment and fragile consumer confidence. We continued to effectively execute our strategy for profitable growth witnessed by industry leading churn, customer satisfaction and brand consideration. We continue to focus on providing our customers with genuine, long-term value and experiences they won’t find elsewhere.’
The mobile customer base stood at 22,142.6 million (the total access base was 22.9 million customers) at the end of June, up 2.6% on the previous quarter. The number of contract customers rose by 6.1% to 10.674.6 million, while prepay numbers fell 0.7% to 11,468 million. In the first half of the year contract net additions reached 175,000 (with 25,000 coming in Q2).
Churn in the first half stood at 2.9% (up 0.3 percentage points year on year). Contract churn for the first half and second quarter was stable compared with the previous year at 1.2%.
Total ARPU for the first sixth months of the year stood at £20.4 - down 5.2% year on year with a decline of 7.5% year on year in the second quarter as MTR cuts hit. Voice ARPU for the first half was down 12.1% (down 16% in Q2), but data ARPU grew 5.2% in the first half (5.4% in Q2).
The company said demand for smartphones continues to grow along with the adoption of upper tier data packages, which saw non-SMS data revenues grow by 32% in the first six months of 2011.