O2 still ahead of chasing pack after a solid Q1

O2 still ahead of chasing pack after a solid Q1

Mobile: It looks like another solid quarter for O2 in a tough climate.
Ronan Dunne (pictured): I don’t think the telecoms industry is immune to the difficulties in the economy and it’s undoubtedly a challenging market. It will definitely get worse before it gets better.

What level of slowdown do you anticipate?
The economy is shrinking. Q2 will be worse than Q1, but our focus is on out-performing the market.

One area where you aren’t out-performing the market is mobile broadband.
We took a laptop strategy and continue to look at customer satisfaction, which we rate highly and we are winning awards for. Our learning from other networks is that there are often high levels of customer dissatisfaction.

Do you have bigger ambitions for mobile broadband in 2009?
We look at the overall data space across a range of devices. We’re taking a much bigger share of mobile internet through smartphones. Our dongles have under-indexed, but it’s growing.

Are you concerned over the decline in average customer spend?
Mobile broadband average spend is £15 per month, and Simplicity [O2’s Sim-only] is typically £10 per month less than a traditional contract. It’s all down to your mix. Clearly, those propositions don’t have the costs [of postpay with subsidised handsets]. Our decline in ARPU is much better than the decline at our competitors.

Are there cashflow or currency challenges in light of the volatility?
We certainly don’t front-load or back-load our business in the financial year like others. Obviously, UK operators are affected by handsets priced in Euros.

With regard to handsets, can you comment on the revenue share arrangements you may be pursuing with manufacturers?
We have a track record of looking at innovative models in the industry’s ecosystem. What we did with the dealer/distribution channel earlier in 2009 underlines our objective to align interests in the value chain. We have a strong belief in models that align value with cost.

MVNOs seem to be one of the few growth areas for some operators over the last year. You have one of the most successful virtual networks in Tesco Mobile. Are you looking to expand your MVNO portfolio?
Tesco Mobile has been extremely successful, it has been growing and getting good traction. I don’t think the [MVNO] market is as big as you may think, if you look more closely at active and inactive bases. We have walked away from some openings but we continue to look for opportunities.

What’s your reaction to comments made by Deutsche Telekom over the future of T-Mobile UK in recent weeks?
The debate around consolidation is more real now than ever before. It is largely driven by sub-scale operators finding it increasingly difficult [to compete] than they have in the past. For us, we are working on organic growth [instead of acquisition].

A resurgence from Orange and Vodafone appears to be a matter of time. What do you expect from them?
There is very intense competition in the market, and this will increase. We’ve been taking market share for some time, but our focus is customers not the competition.

What is the key metric for you this year?
Customer satisfaction is number one. Revenue growth and margin will improve
from there.

Written by Mobile Today
Mobile Today

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