O2 throws down gauntlet to rivals on customer numbers

O2 throws down gauntlet to rivals on customer numbers

Competition between mobile operators intensified this week,withO2 claiming victory over rivals EE and Vodafone in the battle to win customers as it revealed its strongest quarterly growth in six years in Q4 2014.

In the week before its annual results, O2 revealed comparative figures that appear to put it well ahead of rivals EE and Vodafone on customer numbers.

The operator attributes the customer surge to its O2 Refresh and O2 Priority offerings and high levels of customer service.

However, rivals dismissed O2’s claims, insisting the figures were not a true representation of customer numbers, since they exclude M2M connections and do not take into account ARPU and pay monthly churn.

Figures released by O2 show it achieved its strongest quarterly growth in customer numbers in six years in the final quarter of 2014, with 318,000 net customer additions and 215,000 net customer contract additions in the period. These figures exclude M2M connections.

In comparison, Vodafone saw 185,000 total net customer additions and 98,000 contract customer additions in the same period, while EE’s net customer additions fell by 13,000 in the fourth quarter, reflecting a continuing fall in EE pre-paid customers. However, the operator added 144,000 contract customers in Q4 (see graph).

(The figures for Vodafone refer to its 3rd quarter results for the three months to 31 December 2014)

O2’s Q4 figures ended a year of strong growth for O2. The operator added a total of 616,000 contract customers in 2014, beating both Vodafone and EE, which added 362,000 and 551,000 new contract customers respectively in the same year.

An O2 spokesman told Mobile that O2 Refresh and O2 Priority were key factors in allowing the operator to stand out ‘in a mature market’ and win new customers as well as retain existing customers. He also noted O2 churn levels are at an all time low of 1%

Rival operators said the figures ignored metrics such as M2M customers, and disregarded factors such as pay monthly churn and ARPU.

An EE spokesman said: ‘EE saw good customer growth in 2014, with total connections on our network up 183,000 over the year. We continued our focus on pay monthly customers, adding 824,000 year-on-year, with strong growth in our mobile and machine-to-machine bases.’

A Vodafone spokesman said: ‘We are now one year into a well-developed, two-year strategy to transform the UK business, change the perception of Vodafone in the market and drive the company back to growth – as our recent results show, we are delivering well against that plan and returned to growth in the quarter.’

Phil Kendall, global wireless director at Strategy Analytics, said O2 customer numbers had been boosted by its low-cost 4G deals.

He said: ‘O2 did pretty well last year by repositioning itself lower down the market and becoming far more price competitive and less premium brand heavy. O2 Refresh and O2 Priority also allow O2 to differentiate itself in the market and that has helped maintain pretty low churn levels for O2.’

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