O2 has announced its financial results for the last quarter of 2016, with positive results in terms of profits and customer base.
Revenue in the fourth quarter reached £1,486 million (+2.4 per cent year-on-year) on the back of stronger mobile service revenue trends. This represents an improving growth trend (-2.1 per cent in third quarter and -4.4 per cent in second quarter. Revenue for the full year at £5,602m declined by 1.5 per cent.
However, full year profits were up 1.7 per cent to £1.425 billion in 2016, with 584,000 contract customers added over the year. Profit in the last quarter was up 4.1 per cent to £324 million, with revenue up 2.4 per cent, an improved growth compared to declines of 2.1% and 4.4% in Q2 and Q3. But full year revenue for 2016 declined by 1.5 per cent to £5.602b.
Mobile service revenue for the year grew +1.2 per cent year-on-year excluding O2 Refresh (+1.5 per cent in the fourth quarter) due to higher subscription revenues and out of bundle revenues for both contract and prepay customers.
O2 now has 25.5 million customers, up 1.8 per cent year-on-year. This does not include customers who use the O2 network through Tesco Mobile or MVNO’s such as Sky, Lycamobile and TalkTalk.
Over 10.4 million O2 customers are using 4G, which is a 36.1 per cent increase from a year ago. Data traffic was up 63 per cent on an annual basis, and contract churn remained market leading, at 0.9 per cent for the year, and 1% for Q4.
ARPU excluding O2 Refresh grew 1.3% year-on-year in the fourth quarter (-0.6% in the third quarter) on higher average subscription revenue (+9.8% year-on-year excluding O2 Refresh). Contract ARPU was down 1.4% year-on-year in the three months to December (against -3.1% in July-September), as regulatory impact on roaming and MTRs offset subscription revenue growth. Prepay ARPU grew by 10.5% year-on-year in the quarter due to higher levels of customer revenue and data usage growth.
O2 UK CEO Mark Evans (pictured) said: ‘We are committed to making every day better for our customers through experiences that count and we continue to provide them with compelling reasons to join and stay with us through attractive propositions such as O2 Refresh and O2 Priority.’
‘Coupled with the unprecedented investment we are making in our network, this is driving continued growth and high levels of loyalty which gives us confidence that our strategy is working.’
The news comes as O2 announces investment of over £2 million per day on network enhancements and 4G, and a range of new private and public sector contracts including the likes of Mercedes Benz, Admiral, Kier Group and the Home Office.
Sponsorship of The O2 venue has also been extended for a further 10 years, with double the number of tickets for O2 customers available via Priority Tickets. Partnership with the RFU and England Rugby has been extended to 2021.