02 Q2 results: loyalty the key

02 Q2 results: loyalty the key

Network operator 02 has released its results for the second quarter of this year with the company reporting low levels of contract churn and an increase in new customers. In financial terms revenue and profit remained fairly flat. 02’s CEO Ronan Dunne told Mobile that the results reflected the level of trust customers had in the brand.

Revenue for the company returned to growth in the quarter up 0.1% year-on-year to £1,386m. Overall income totalled £326m in the quarter with profits of 23.6% in the second quarter a figure that was down 2.2% from 2013. 02 explained that this this was largely due to the one-off disposal benefit in the second quarter of last year which had be improved by the sale of its consumer home broadband service, excluding this, 02 said that the underlying OIBDA growth was broadly flat at down 0.6% year-on-year. The company announced that mobile service revenue decreased by 0.1% year-on-year excluding the impact from the O2 Refresh model. This represented a quarter-on-quarter improvement as it was down 2.6% in Q1.

O2 said that its mobile contract customer base had grown 6% year-on-year which led to a total mobile customer increase of 3% year-on-year to £23.8m at the end of June 2014. Contract churn excluding M2M declined 0.1 percentage points compared to the same period last year to O2’s lowest ever level of 1%.

CEO Ronan Dunne told Mobile that 02 believed its key differentiator was customer service and whilst some competitors sought to attract business through price, 02 looked to provide customers with value. To this end the firm also said that they had made changes to the way it was pays its in-store staff to encourage them to give them the customer an all-round experience rather than being encouraged only by sales. To this end the firm had increased salaries from the living wage rather than the minimum wage across the UK.

The network were keen to emphasise the theme of customer loyalty with Dunne claiming in a statement that 02 had the “most loyal customers in the market”. 02 also highlighted the fact that several of its reward schemes had been adopted by customers and that its 02 Refresh initiative had buoyed interest in new handsets. Speaking in broader terms 02 also expressed its excitement at the impending Dixons-Carphone Warehouse merger saying that it believed it would bring a “broader footprint and product portfolio”.

Describing the company’s outlook Dunne said: “Looking at the business overall there are three areas of particular interest to us. Firstly, the public sector and emergency services network, which we expect to see the tender go out for soon. The second area of interest with the rolling out of smart metring and the increased connectivity in the home. Finally, we are also expecting more noise the wearable’s space over the next 6, 9 or 12 months.”


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