Another quarter - another set of results (Jan-Mar 2014):
Extract
O2 UK results for the quarter ending March 2014 (2014 Jan-Mar). Comparatives are with the previous quarter (2013 Oct-Dec) and the same quarter a year ago (2013 Jan-Mar).
Mobile service revenue: £1082m (2013 Oct-Dec: £1124m, 2013 Jan-Mar: £1174m)
Mobile Customers (Total): 23.576m (2013 Dec: 23.649m, 2013 Mar: 22.910m)
Mobile Customers (Prepay): 10.557m (2013 Dec: 10.765m, 2013 Mar: 10.758m)
Mobile Customers (Contract): 13.019m (2013 Dec: 12.884m, 2013 Mar: 12.152m)
So churn up quarter on quarter, total revenue down, service revenue down 7.9%, ARPU down 10% and a net customer loss against last quarter of nearly 100,000 customers.
This time, O2 also gave the machine-to-machine numbers included in their totals which stood at just over 2 million (1.7m for EE). This means the total gap between O2 and EE is 2.735m if you include M2M in both (23.576m v 26.311m) or 3.038m if you exclude M2M (21.538m v 24.576m). Useful to know as historically the main headline mobile numbers for O2 always included M2M whereas EE excluded them.
Interesting... Despite being the first company to implement compulsory contract price rises they're still gaining contract customers and losing prepay ones.
Interesting... Despite being the first company to implement compulsory contract price rises they're still gaining contract customers and losing prepay ones.
Additions based on previous quarters are down significantly, with a net loss of customers this time around and significant revenue and APRU decline.
Not adding customers like previous quarters is a change, you can't say what that might be attributed to though, although it is possible the stance on price rises might have stifled the previous quarterly Q on Q growth.
Personnel expenses declined 20.2% year-on-year due to the benefits of outsourcing of customer service.
You also have to wonder if this is the right decision in the long term for what is thought of as a premium brand. Customer service is one big part of what made O2 special.
What results can we expect over the next week or two? I don't think Three do quarterly, so unlikely to hear anything this quarter, but presumably Voda and EE will report in the next week or two?
What results can we expect over the next week or two? I don't think Three do quarterly, so unlikely to hear anything this quarter, but presumably Voda and EE will report in the next week or two?
Three do sometimes do some limited quarterly updates now outside the more formal biannual reporting otherwise we will have to wait until July. Vodafone's are on 20 May. EE will be, er, last week
Unfortunately O2 has many business customers that do not think too much about data as long as it mostly works and they get a large discount. EE just isn't as proactive as O2 on the business front well not until very recently. They didn't have to be with the 4G lead..
O2 refresh & O2 priority has helped many a customer sign up, O2 are a great company PR & Marketing wise. However profit is down.. Not sure who is buying dumb phones on contract though. I wonder what they class as smart phones, as for a good while Blackberrys were not counted in Oranges figures as Smartphones..
Three do sometimes do some limited quarterly updates now outside the more formal biannual reporting otherwise we will have to wait until July. Vodafone's are on 20 May. EE will be, er, last week
So, so far EE and O2 both down on total customer numbers then? lets see how Vodafone have done.
O2 UK had a bad set of figures with revenue down, churn up and APRU down, but it' is even worse for parent Telefonica - a further 13.5 percent drop in sales for Telefonica, profits down over 23 percent this time around.
Unfortunately O2 has many business customers that do not think too much about data as long as it mostly works and they get a large discount. EE just isn't as proactive as O2 on the business front well not until very recently. They didn't have to be with the 4G lead..
O2 refresh & O2 priority has helped many a customer sign up, O2 are a great company PR & Marketing wise. However profit is down.. Not sure who is buying dumb phones on contract though. I wonder what they class as smart phones, as for a good while Blackberrys were not counted in Oranges figures as Smartphones..
As does Vodafone. As for EE they've taken after the T-Mobile side. Orange used to be well favoured among business customers, T-Mobile not so much.
Interesting in the latest results that O2 are reporting a drop in operating costs of 5.1%
This is the same network who claimed a 2.7% price rise was necessary due to an increase in costs
They outsourced customer support which saved them 20% though In fairness. However it is questionable whether outsourcing and the controversial mid-contract price rises are a good idea seeing as revenues are down, average spend per customer is down, net customer numbers are down.
O2 UK results for the quarter ending June 2014 (2014 Apr-Jun). Comparatives are with the previous quarter (2014 Jan-Mar) and the same quarter a year ago (2013 Apr-Jun).
Mobile service revenue: £1091m (2014 Jan-Mar: £1082m, 2013 Apr-Jun: £1170m)
Mobile Customers (Total): 23.767m (2014 Mar: 23.576m, 2013 Jun: 23.124m)
Mobile Customers (Prepay): 10.549m (2014 Mar: 10.557m, 2013 Jun: 10.680m)
Mobile Customers (Contract): 13.218m (2014 Mar: 13.019m, 2013 Jun: 12.444m)
I'm surprised. Wasn't expecting O2 to gain as many customers as they did.
So for H1 that puts them at +118k
Not too bad after the poor Q1 they had. Prepay seems to be recovering for all networks somewhat.
Revenue seems to be picking up as well (but still down YOY)
O2 are now quoting 43% outdoor population coverage which isn't bad at all. Just need to focus on getting it above 90% now. 4G users on O2 are on average using twice as much data as 3G users.
Some amazing comments..... Revenues still dropping? Period on period they increased unless 1091 has become a smaller number than 1082! Faced with some very impressive results after the company making some very tough decisions like inflation based price rises the best some can come up with is saracam relating to coverage, which as we all know differs greatly from area to area and in recent tests O2 have been reported as having made some improvements. The company has continued to confound its critics and has great potential to upgrade its huge feature phone base to increase its future revenues.
When O2 and Vodafone are bottom of the table in terms of data speed, and you're rolling out a 4G network and numerous upgrades, the only way is up... but there's still a LONG way to go.
And O2 is still the network presumably for people with ancient feature phones, no doubt including very low users who don't make use of much data at all.
On the other hand one could say that with the lowest penetration of smatphone users they have the most potential for revenue growth. If you have 90% of your customers already using smart phones there is far less opportunity to increase revenues from exiatingh customers and the costly business is acquiring customers from competitors. The real strength of O2 appears to be in the brand as it continues to increase its customer base despite cutthroat competition.
O2 don't count Tesco Mobile numbers in their figures nor does EE count Virgin Mobile. I expect most other MVNOs are counted separately also.
On the other hand one could say that with the lowest penetration of smatphone users they have the most potential for revenue growth. If you have 90% of your customers already using smart phones there is far less opportunity to increase revenues from exiatingh customers and the costly business is acquiring customers from competitors. The real strength of O2 appears to be in the brand as it continues to increase its customer base despite cutthroat competition.
O2 don't count Tesco Mobile numbers in their figures nor does EE count Virgin Mobile. I expect most other MVNOs are counted separately also.
They have struggled to get to 50% and have pretty much stalled at this level
They have struggled to get to 50% and have pretty much stalled at this level
And perhaps that may be no bad strategy in the longer term. Remember the hare and the tortoise! Holding back on investment in 3G has had little consequence for O2's overall subscriber numbers, focussing on brand and concentrating investment where most people live seems to have paid off for them. Add to that the savings made by doing one upgrade on many sites for 3G/4G simultaneously. From a business perspective, which is what it's all about there is little question that O2 have read the market well in recent years and have been very good at holding on to their customers as well as gaining new ones.
Thinking about coverage it follows that most mobile customers use their service in their home area and there is a key difference in strategy between networks in this regard. If you live in a city like Glasgow that has great O2 2/3/4G coverage and spend most of your time there it's very likely you will remain loyal to O2. You might get a better signal on a bus or a train heading out for a visit to Stirling or Dundee on an alternative network that has invested in more 3G coverage but if that network has lots of smartphone users and unlimited tethering your user experience in your home city might not be as good. Most folks value their home area mobile experience most important as that is where they need to use the service most often. Price controlled data distribution ensures that the growing demand for mobile data can be regulated without the need for 'traffic management', fair use policies or enforced compression of media. You pays your money and takes your choice and the quarterly stats seem to suggest that O2 have been convincing and acquiring customers consistently for a long time. If the key factors that customers consider valuable were not delivered on O2 they would have been losing customers rather than gaining them. As a legacy network O2 has a lot of basic voice and text customers, which are still profitable and quite a few will doubtless be convinced to upgrade as the cost of smartphones continues to decrease.
Comments
So churn up quarter on quarter, total revenue down, service revenue down 7.9%, ARPU down 10% and a net customer loss against last quarter of nearly 100,000 customers.
And I wouldn't be surprised if Three's growth slows to a crawl as well.
Congrats on 50% smartphone penetration to O2 though
Additions based on previous quarters are down significantly, with a net loss of customers this time around and significant revenue and APRU decline.
Not adding customers like previous quarters is a change, you can't say what that might be attributed to though, although it is possible the stance on price rises might have stifled the previous quarterly Q on Q growth.
Its amazing it took them so long. I guess granny and grandpa are still clinging on that old Nokia ;-)
O2 have been doing well for growth in subscriber numbers until now. Lets see if it picks up at the end of the year.....
Personnel expenses declined 20.2% year-on-year due to the benefits of outsourcing of customer service.
You also have to wonder if this is the right decision in the long term for what is thought of as a premium brand. Customer service is one big part of what made O2 special.
What results can we expect over the next week or two? I don't think Three do quarterly, so unlikely to hear anything this quarter, but presumably Voda and EE will report in the next week or two?
Three do sometimes do some limited quarterly updates now outside the more formal biannual reporting otherwise we will have to wait until July. Vodafone's are on 20 May. EE will be, er, last week
http://forums.digitalspy.co.uk/showthread.php?p=72406560&highlight=#post72406560
O2 refresh & O2 priority has helped many a customer sign up, O2 are a great company PR & Marketing wise. However profit is down.. Not sure who is buying dumb phones on contract though. I wonder what they class as smart phones, as for a good while Blackberrys were not counted in Oranges figures as Smartphones..
So, so far EE and O2 both down on total customer numbers then? lets see how Vodafone have done.
O2 UK had a bad set of figures with revenue down, churn up and APRU down, but it' is even worse for parent Telefonica - a further 13.5 percent drop in sales for Telefonica, profits down over 23 percent this time around.
As does Vodafone. As for EE they've taken after the T-Mobile side. Orange used to be well favoured among business customers, T-Mobile not so much.
This is the same network who claimed a 2.7% price rise was necessary due to an increase in costs
They outsourced customer support which saved them 20% though In fairness. However it is questionable whether outsourcing and the controversial mid-contract price rises are a good idea seeing as revenues are down, average spend per customer is down, net customer numbers are down.
O2 UK results for the quarter ending June 2014 (2014 Apr-Jun). Comparatives are with the previous quarter (2014 Jan-Mar) and the same quarter a year ago (2013 Apr-Jun).
Mobile service revenue: £1091m (2014 Jan-Mar: £1082m, 2013 Apr-Jun: £1170m)
Mobile Customers (Total): 23.767m (2014 Mar: 23.576m, 2013 Jun: 23.124m)
Mobile Customers (Prepay): 10.549m (2014 Mar: 10.557m, 2013 Jun: 10.680m)
Mobile Customers (Contract): 13.218m (2014 Mar: 13.019m, 2013 Jun: 12.444m)
Smartphone penetration: 50% (2014 Mar: 50%, 2013 Jun: 48%)
http://www.telefonica.com/en/shareholders-investors/pdf/rdos14t2-eng.pdf
So for H1 that puts them at +118k
Not too bad after the poor Q1 they had. Prepay seems to be recovering for all networks somewhat.
Revenue seems to be picking up as well (but still down YOY)
O2 are now quoting 43% outdoor population coverage which isn't bad at all. Just need to focus on getting it above 90% now. 4G users on O2 are on average using twice as much data as 3G users.
Thanks again Japaul.
A few pp higher than Vodafone's claim for the same period (40/41 I think).
And O2 is still the network presumably for people with ancient feature phones, no doubt including very low users who don't make use of much data at all.
O2 don't count Tesco Mobile numbers in their figures nor does EE count Virgin Mobile. I expect most other MVNOs are counted separately also.
They have struggled to get to 50% and have pretty much stalled at this level
And perhaps that may be no bad strategy in the longer term. Remember the hare and the tortoise! Holding back on investment in 3G has had little consequence for O2's overall subscriber numbers, focussing on brand and concentrating investment where most people live seems to have paid off for them. Add to that the savings made by doing one upgrade on many sites for 3G/4G simultaneously. From a business perspective, which is what it's all about there is little question that O2 have read the market well in recent years and have been very good at holding on to their customers as well as gaining new ones.
Thinking about coverage it follows that most mobile customers use their service in their home area and there is a key difference in strategy between networks in this regard. If you live in a city like Glasgow that has great O2 2/3/4G coverage and spend most of your time there it's very likely you will remain loyal to O2. You might get a better signal on a bus or a train heading out for a visit to Stirling or Dundee on an alternative network that has invested in more 3G coverage but if that network has lots of smartphone users and unlimited tethering your user experience in your home city might not be as good. Most folks value their home area mobile experience most important as that is where they need to use the service most often. Price controlled data distribution ensures that the growing demand for mobile data can be regulated without the need for 'traffic management', fair use policies or enforced compression of media. You pays your money and takes your choice and the quarterly stats seem to suggest that O2 have been convincing and acquiring customers consistently for a long time. If the key factors that customers consider valuable were not delivered on O2 they would have been losing customers rather than gaining them. As a legacy network O2 has a lot of basic voice and text customers, which are still profitable and quite a few will doubtless be convinced to upgrade as the cost of smartphones continues to decrease.