Mobile operator EE has announced its Q2 results showing that while more customers are moving to 4G, revenue is down while customer retention costs are on the rise.
EE said it added 1.3 million 4G customers in its second quarter and now has 4.2 million 4G customers. It expects to pass its 6 million LTE target by the year end. Of the new customers, almost one in three signed up to the faster 4GEE Extra tariff. The network's 30.8 million users at the end of June included 3.67 million MVNO customers, up 4.1% on last year.
However, the operator reported Q2 revenue fell by 2.5% year-on-year to £1.56bn. For the first half of the year, operating revenue stabilised at 0.1%, down 1.3% when including regulatory impact. EE's first-half EBITDA was £657m.
Acquisition costs rose to £68 per gross addition, up by over 21%. Meanwhile, retention costs increased by 15% to £193.
The company added 240,000 net postpaid mobile customers in the second quarter. The prepaid base was reduced by 202,000. According to EE, around 72% of new postpaid customers opt for 4G, including 88% of new B2B customers.
Over 5,500 corporates are now using 4GEE. EE increased revenue in its fixed telephony, ADSL broadband and fibre business by 19.6%, adding 30,000 customers.
Commenting on the results, EE's chief executive Olaf Swantee (pictured) said: 'Today’s results demonstrate that consumers and businesses are responding to our strategy to provide the UK’s biggest, fastest and most reliable network.'
He added: 'We are delivering on our goals to rapidly transition our pay monthly customer base to 4G, generate significant merger cost savings and improve our EBITDA margin performance.'
Kester Mann of CCS Insight said that EE had reported another encouraging quarter. He told Mobile: 'It continues to reap the benefits of being first to market with LTE and saw an acceleration of customer uptake - thanks to lower tariffs and the launch of its own-brand smartphone.'
He continued, 'Crucially, EE remains on track to reach 25% EBITDA margin for the full year - a core goal for the business since the launch of the new brand.' He believes that the net additions of 1.3 million 4G users during 2Q14 are the highest so far recorded by any European operator. 'In an important trend, the number of new customers taking a 4G tariff jumped from 49% to 72% during the quarter,' he said.
'EE is clearly reaping the benefit of wider LTE coverage - an important point of differentiation versus its competitors. The number of corporate customers exceeded 5,500 with new wins during the quarter including Deloitte and Essex Police.'