O2 CEO: ‘We took a clear view of Q1 2010’

O2 CEO: ‘We took a clear view of Q1 2010’

O2 posted another strong set of results for the first quarter of 2010 with revenue at euros 1.63bn, up 4.6% on Q1 2009 and OIBDA of euros 414m, up 9% on the same period a year ago. Contract customer numbers were up 5.6% to 9.7 million, while its churn rate was a best in class 1.1% in contract.

Speaking to Mobile last week O2 UK CEO Ronan Dunne acknowledged that Vodafone was strongest in post pay in the quarter. ‘Year on year our profit is up and O2 is the only network to be so over the year. But we took a very clear view for Q1 2010. What we tried to do was maintain profitable growth, but we didn’t want to do was anything that would distort the market.

‘We knew it was Vodafone’s fourth quarter and it was natural that they would be the strongest in post pay. So we took our normal share, but didn’t chase it, although we still beat Orange and T-Mobile on post pay. They cancelled each other out in prepay, so we were happy with that even though we weren’t number one for the first time.’

Dunne said that O2’s growth in post pay now is just people moving up from pre pay. ‘We introduced innovations such as Sim only and Simplicity tariffs and have now done that for prepay too. Customers can now get prepay bolt-ons, but overall we gained no net new customers.’

He said that the growth of Sim only deals was the biggest single driver in expanding the post pay segment. But added that it is important to look after prepay customers, hence the new tariffs.

‘O2’s focus is on being the customer champion,’ he said. ‘We offer value to both prepay and post pay customers. That’s the basis of our Fair Deal policy where we offer existing customers the same benefits as new ones. I think we are the only ones to do this. This is partly why our retention rate is so good – everyone gets the same deal.’

Dunne said that over 70% of O2’s customers now deal with it directly, but that the network still values its relationships with Carphone Warehouse and others in the indirect channel.

He added: ‘But we have learnt from Apple. Our Guru investment programme is about customer service only, not sales. But the stores that have a guru in them achieve higher customer service levels and higher sales, so it’s a win-win. But you cannot have one at the expense of the other, you need both.’

Looking at the threat to the traditional mobile networks represented by the likes of Microsoft, Google and Apple, Dunne said the model needed to evolve. ‘We need to recognise that Apple, Microsoft and Google are both competitors and partners,’ said Dunne. ‘We have to get on and recognise that and embrace it. If they are delivering experiences to customers that they want, we have to work out how we can participate in that ecosystem and contribute to it.’

He pointed to O2’s acquisition of VoIP provider Jajah in December 2009 as an example of this policy.

‘Some say services like Skype are the devil, but customers use VoIP and we are their communications provider, so be it fixed line VoIP or mobile we are embracing the enemy. If the customer ascribes value to it we should provide the service or we may lose him. The business has to be a mix of build, partner and acquire. Our services could be in any one of those three spaces,’ said Dunne.

Written by Mobile Today
Mobile Today


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