O2 recorded its best ever quarter for growth in small business connections and is ‘gaining commercial momentum across the business’, according to the operator’s CEO Ronan Dunne.
Service revenue, operating income and margins were all down in its latest set of results for the three months to 30 June. However, the operator slowed the rate of decline from its first quarter results. Speaking to Mobile, Dunne said: ‘We’ve stabilised the revenue trend.’
The O2 CEO acknowledged the operator is still feeling the effects of failing to grow its business in its previous financial year, as well as the impact of changes to mobile termination rates (MTRs). Both Vodafone and Everything Everywhere have spoken of how increased competition from O2 has affected their results, but Dunne claimed the business was ‘not price oriented’. He said the operator was offering ‘innovations around tariffs’ with offers such as the prepay loyalty tariff Pay & Go Go Go and its On & On unlimited minutes and texts tariff.
Dunne said: ‘We are not the leader on price and never have been. In the first quarter, innovations like [T-Mobile’s] The Full Monty took value out of the market and we had to respond. But we want to grow our attractiveness to customers through a better range of offers. We don’t want to be just price focused. If other [operators] have less in differentiation then they will have to be price oriented. I’m not looking to drive a price war. We want to offer value but it’s through people saving with Priority Moments or O2 Recycle.’
For the three months ending 30 June, service revenue fell 8.1% to €1.5bn, or 5% excluding the effects of MTR changes. Operating income before depreciation and amortisation (OIBDA) was down 20.3% to €402m. Average revenue per user (ARPU) fell 8.8% to €22.40. A drive to add contract customers saw numbers swell by 6.9%. Churn was 2.7% during the quarter, down 0.4 percentage points on 2011, while contract churn was 1%.
Meanwhile, Dunne declined to comment on whether the operator would be bidding for the 1800MHz spectrum Everything Everywhere is selling as part of the approval process of the Orange and T-Mobile merger. He said: ‘That’s highly commercially sensitive. We are generally interested in any spectrum because it’s a rare resource but it wouldn’t be appropriate to comment further.’
Dunne said it was vital to press on with the forthcoming 4G auction after Ofcom revealed its rules for the sale last month. He added: ‘We are broadly positive, although the devil is in the detail. From a high level point of view, we will take on board what the regulator has said.’