EE had net adds of 250,000 contract customers during its last quarter but this did not stop it from reporting a fall in sales of 3%.
The operator said it was continuing to be hit by the effects of changes to mobile termination rates. For the quarter ending 30 September, service revenue was £1.50bn, down 3% on last year but up 3.1% if the effects of mobile termination rates were stripped out. The operator continued to move its customers towards contracts and they now account for 51% of its base. EE said contract customers deliver five times more average revenue per unit (ARPU) than its pay as you go base. It had net adds of a quarter of a million during the period. However, it continued to be affected by the move away from prepay. It had a net loss of 393,000 customers during the quarter and overall customers were down 2.1% to 26.9 million.
Three out of four EE customers (74%) now have a smartphone and 92% of new contract customers are choosing a smartphone, which is leading to an increase in data sales. Data now accounts for 31% of ARPU, compared to 23% last year. Non-voice sales, which includes data and texts, is now 48% of ARPU, compared to 41% last year. ARPU was down 1% to £18.90 but up 5% on an underlying basis.
The operator said it was focusing heavily on retention, with third quarter renewals up 32% on 2011. Churn was 2.3%, up 0.1 percentage points, and contract churn was also up 0.1 percentage points to 1.2%.
Neil Milsom, chief financial officer of EE, said: 'We are delivering solid revenue performance and successfully attracting high value contract customers, while creating growth opportunities through our new superfast EE brand that will soon launch the UK's first 4G mobile services. We have achieved key business goals on the past quarter and firmly established EE as the UK market leader.'
Editor: Graeme Neill