O2 UK has hit a three year high for net contract adds, boosting second quarter profits by 9.2%.
For the three months to the end of June, it added 292,000 new contract customers. O2 said this was the sixth quarter in row where it added more than 200,000 new contract customers. Prepay customers declined by 2.5% to 10.7 million. Contract customers are up 9% year on year, with O2's overall customer base sitting at 23.1 million, up 3% on 2012.
Service revenue was down 4.8% to £1.17bn, an improvement of three percentage points on its first quarter. If the effects of mobile termination rate cuts and roaming were stipped out, revenues would have fallen by 0.9%. Overall sales were boosted by O2's Refresh proposition, which is being taken up by eight out of 10 customers in its direct channel. O2 is now reporting the effects of handset sales upfront and this led sales to be boosted by 5.5 percentage points. Revenues declined 0.5% on 2012 to £1.38bn and were up 4.3 percentage points quarter on quarter.
O2 has been seen by rivals as the most price competitive operator in recent quarters, as it bids to reverse the effects of a difficult 2011. However, its aggressive push has not damaged margins with its OIBDA margin standing at 25.8%, up 10.2% on 2012. Operating income before depreciation and amortisation was £357m, up 9.2% on last year.
Ronan Dunne, CEO of O2, said: 'This has been another solid quarter for us. Our market leading propositions are helping us attract and retain more and more customers every day.'
Author: Graeme Neill