EE has signed almost 700,000 customers to its 4G service, with a surge in contract customers leading to its highest ever half year margins.
The operator reported its half year results to the end of June this morning. It said it had signed up 687,000 4G customers by the end of its second quarter, more than doubling its base. It had postpay net adds of 216,000 during its second quarter, with its contract base up 6.3% on the same period in 2012. Contract customers now account for 55% of EE's base, spending six times average revenue per user than prepay customers. EE's drive to move customers onto contracts led to a sharp fall of 671,000 in its prepay base.
Churn has also improved, moving from 1.2% to 1.1% across the past 12 months, which the operator attributed to a 'differentiated network experience'.
Service revenue shrank 4.4% to £1.42bn during its second quarter, although sales would have been flat if the effects of changes to mobile termination rates and roaming charges were stripped out. While sales were down, the move of customers to more lucrative contracts has affected its bottom line. Ebitda was £595m during the first half of the year, up 8.0% on 2012. If restructuring charges and management and brand fees were stripped out, half year Ebitda was £734m, up 9.1% on 2012. Its adjusted Ebitda margin was 22.9%, an all-time high for the operator since it was formed out of a merger of Orange and T-Mobile. However, its Ebitda does not include capital expenditure, with the network spending 20% more than in 2012 at £295m.
EE said more customers were choosing 4G when joining the network or upgrading with 56% of contract customers opting for a next generation service. This is up 12 percentage points on 2012. 4G customers are spending an extra 10% on their mobile bill. Blended ARPU was £18.40, which is down 1.6% excluding regulation but up 2.8% on an underlying basis.
Olaf Swantee, CEO of EE, said: 'Today’s results demonstrate our success in building our new brand and differentiating our network to drive commercial momentum while continuing to deliver cost savings to increase our margin performance. We’ve doubled the rate at which we’re adding 4G customers and doubled our 4G speeds across 15 cities to deliver the world’s fastest network for our customers – indoors, outdoors and on key commuter routes.'
Author: Graeme Neill