Telefónica's O2 Reports Q3Telefónica's O2 Reports Q3

European mobile carrier reports key performance indicators for Q3

November 14, 2006

3 Min Read

LONDON -- Key performance indicators at 30 September 2006:

Mobile service revenue in the third quarter (at constant currency):

  • O2 UK net service revenue grew by 14.9% year-on-year;

  • O2 Germany service revenue grew by 6.1% year-on-year;

  • O2 Ireland service revenue fell 1.7% year-on-year;

  • O2 Czech Republic service revenue grew by 6.5% year-on-year.



Mobile average revenue per user (12 month rolling ARPU):

  • O2 UK blended ARPU £272 (Q2 2006: £271; Q3 2005: £265)

  • O2 Germany blended ARPU €299 (Q2 2006: €308; Q3 2005: €343)

  • O2 Ireland blended ARPU €545 (Q2 2006: €551; Q3 2005: €551)

  • O2 Czech Republic ARPU CZK6,089 (Q2 2006: CZK6,083; Q3 2005: CZK6,143)



Mobile data in the third quarter

  • Group SMS volumes grew by 26% year on year to 6.49 billion messages



Outlook (11 months to 31 December 2006)

  • UK service revenue growth guidance increased, margin reduced

  • Germany service revenue growth reduced, margin unchanged from previous guidance



Peter Erskine, Chairman & Chief Executive of O2, commented:"O2 has continued to thrive as part of the Telefónica group and in the third quarter we have maintained our momentum in highly competitive markets, adding 812,000 mobile customers, taking the total mobile customer base to 34.4 million, 14% higher than last year.

In the UK we added 524,000 net new customers, driven by our customer focused propositions and ongoing strategy of treating both new and existing customers equally. Contract churn was again reduced, for the fifth quarter in a row, while gross connections grew 15% year on year, helping to extend our strong performance from the first half into the third quarter. This faster than expected growth has allowed us to again raise service revenue guidance, and we now expect 14% to 15% growth year on year for the 11 months to 31 December 2006.

In Germany we added 294,000 net new customers in the quarter taking the total base to 10.629 million, representing 19% year on year growth. The market continues to be highly competitive and this, coupled with termination rate cuts, contributed to the decline in 12-month rolling ARPU, although monthly ARPU increased quarter on quarter. We continue to watch the future direction of this trend. Our Tchibo joint-venture continued to perform well adding 50,000 customers. We have adjusted full year guidance for Germany to reflect the slightly lower than expected service revenue growth we have seen in the first eight months of the year and the planned increase in our commercial activity in the fourth quarter.

In the Czech Republic O2 added 55,000 net new mobile customers on contract, raising the percentage of contract customers in the base to 37.4%, compared to only 30.9% at the end of September 2005, demonstrating the ongoing success of the pre-pay to contract migration strategy. In our fixed line business, the total number of ADSL lines stood at 427,000 at the end of September, compared to 221,000 at the same time last year.

In a competitive market O2 Ireland traded well, adding 16,000 net new contract customers and ending the quarter with a total customer base of 1.603 million, 2% higher than at the same time last year.

Airwave continues to make good progress in winning new contracts and rolling out the service to new customers. During the quarter the Scottish Ambulance Service signed a 10 year contract worth almost £50 million, while the rollout of Airwave to Ambulance Trusts in England is progressing well with 3 Ambulance Trusts now at "Ready for Service", the first key milestone in the Ambulance Programme."

Telefónica Europe plc (O2)

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