After a difficult second quarter O2 UK’s revenues picked up for the three months ending 30 September. Mobile service revenues stood at €1,546m (£1,326m), up on the previous quarter’s figure of €1,507m (£1,324m). However, revenue was down 5% from €1,714m (£1,470m) in Q3 2010.
Pre-tax profit (OIBDA) for the quarter was €457m (£392.1m), which was down on both Q2 2011’s figure of €464m (£407m) and down slightly in local currency on Q3 2010’s earnings of €481m (£412.6m). OIBDA margin was 26.7%, up 1.4 percentage points on 2010’s 25.3%.
Ronan Dunne, CEO Telefónica (O2) UK (pictured), said: 'We’ve had a solid quarter against the backdrop of an extremely tough economy. We have delivered market leading profit while still achieving market leading customer satisfaction and industry low churn.'
The decline in OIBDA was partly due to an 11% drop in voice traffic and also the impact of cuts in mobile termination rates (MTRs) introduced in April. Mobile data traffic continued to grow at 7.9% year-on-year for the quarter (up 22% for the first nine months of 2011) thanks to increasing numbers of smartphones and a revamp of smartphone tariffs introduced at the end of August.
Smartphones accounted for nearly 90% of sales and upgrades in Q3, increasing overall smartphone penetration to 36% of the base.
The blended (contract and prepay) average revenue per user (ARPU) was €23.1 (£19.8) for the quarter with prepay ARPU standing at €10.1 (£8.6) and contract ARPU at €37 (£31.7). Data ARPU for the quarter was €10.6 (£9.0), up 7.9% for the quarter. Overall, ARPU was up slightly on Q2 2011, but down 6.7% on the same quarter of 2010.
O2’s customer base stood at 22.2 million at the end of September, up from 22.1 million in Q2 and up 1% from 21.9 million for the same period in 2010. Total mobile net additions in the third quarter reached 71,000, a considerable improvement on net losses of 140,000 in Q2. Contract customers were up 4.5% to 10,765,400, but the prepay segment continued to show net losses of 1.8%, dropping to 11,448,200.
Customer churn for the first nine months of the year stood at 3.0% (up 0.4% percentage points year on year). Contract churn for the same period was 1.2% (1.1% for Q3 2011), which was the same for the same quarter a year ago.
Mobile service revenue for the first nine months of the year reached €4,671m (£4,005m) with a pre-tax profit (OIBDA) of €1,410m (£1,208m) – up 5.1% year-on-year. Total ARPU declined 5.7% year-on-year in the first nine months (-6.7% in Q3). If the impact of MTR cuts is excluded, ARPU to September would have declined 2.8% (-2.4% in Q3).
The Tesco Mobile MVNO, which runs on O2’s network, saw its customer base continue to increase to 2.8 million – a 17% year on year growth. The figures are not included in O2’s customer base.