Underlying revenue up 2.9% year-on-year at UK mobile joint venture

May 2, 2012

3 Min Read

LONDON --

  • Service revenue excluding regulated MTR cuts +2.9%* (Q4 2011: +1.2%); including impact of MTR cuts –2.5% (Q4 2011: -4.0%)

  • Continued rapid smartphone adoption and accelerating data revenue growth; postpaid smartphone penetration up 14 ppts at 71% (Q1 2011: 57%); non-messaging data revenue up 10 ppts at 27% (Q1 2011: 17%) of ARPU; non-voice revenues (data and messaging) up 17% to 45.5% (Q1 2011: 37.5%) of ARPU

  • Customer value mix improves further; postpaid customer base up 7.3% year-on-year(yoy) with 886k net adds; Q1 net adds 151k (Q1 2011: 160k); 49% of customers now on postpaid plans (Q1 2011: 45%); in line with industry trend towards postpaid and reflecting post-Christmas seasonality, prepaid customers decreased by 494k (Q1 2011: -394k)

  • Industry-leading customer retention, with churn of 1.2% (Q1 2011: 1.3%); successfully upgrading existing customers to higher value plans, with average access fees +1% yoy

  • Further progress building the best network for the UK

  • 3G “Smart Signal” sharing doubles of the number of Orange and T-Mobile customers using the other network’s signal

  • Nationwide rollout of 3.5G (HSPA+21 Mbps), delivering up to 50% faster data speeds than 3G

    Olaf Swantee, Chief Executive Officer of Everything Everywhere, commented: “We are seeing improved underlying service revenues, driven by rapid data revenue growth, as we successfully upgrade customers to smartphones and higher value postpaid agreements. We continue to make major strides improving our current network experience such as better signal sharing and faster 3G data services, and we plan to start to introduce 4G LTE for the benefit of UK consumers and businesses by the end of the year, pending regulatory approval.”

    Operating Review

  • The first quarter was a period of steady progress, with solid postpaid customer acquisition and retention performance. We aggressively advanced our strategy of building the best network for the UK with further investment in the current and future development of our network to underpin the long term growth of our business.

  • Our Customers: Driving market leadership and customer loyalty

  • Excluding the impact of regulated Mobile Termination Rate (MTR) cuts, underlying service revenue grew 2.9%, up from 1.2% in the previous quarter; including the impact of MTR cuts, service revenue was down 2.5% to £1,503m. Underlying growth was driven by a 7.3% year-on-year increase in high value postpaid customers, including 151k net postpaid additions in Q1. We are successfully upgrading significant numbers of existing customers to higher value postpaid plans and continue to lead the industry in customer retention, with churn of 1.2%.

  • With nearly half our customers on postpaid plans that generate five times more ARPU (Average Revenue Per User) than prepaid customers, the value mix of our customers continues to improve, with underlying blended (combining pre- and postpaid) ARPU up 4.5%.

  • We rapidly delivered on our strategy to build the UK’s best network. In March we rolled out “Smart Signal” sharing to provide seamless 3G handover between the Orange and T-Mobile networks, resulting in twice as many customers using the other network’s signal than before. We have also completed the nationwide rollout of 3.5G (HSPA +21 Mbps), providing up to 50% faster data download speeds than 3G.

  • To provide high value postpaid customers with increased smartphone support, we are reorganising our customer service functions to ensure that we put the operating systems and devices at the heart of everything we do, resulting in increased rates of one-call resolution and positive customer feedback.

    EE

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