Everything Everywhere Shrinks in Q2

The U.K.'s largest mobile operator EE reported a revenue decline and subscriber losses in its second-quarter results released on Wednesday. (See Everything Everywhere Reports Q2.)

The joint venture company owned by Orange (NYSE: FTE) and Deutsche Telekom AG (NYSE: DT) posted revenue for the quarter of £1.6 billion (US$2.6 billion), down from £1.7 billion ($2.8 billion) in the same period last year.

The operator ended the quarter with 27.5 million customers, down from 27.9 million in the year-ago quarter. The net subscriber loss in the quarter was 188,000.

But despite the dips in turnover and customers, and the recent surprise resignation announcement of its CEO Tom Alexander, the young joint venture pointed to progress with the integration of T-Mobile (UK) and Orange UK . Apparently, the company is ahead of plan with its "synergy capture." [Ed note: whatever that is, but it sounds good.] (See CEO Quits Everything Everywhere.)

Some good news for Everything Everywhere in this reporting period was the addition of 236,000 contract mobile customers, which will help the operator as it works towards changing its customer mix so that it has more contract than pay-as-you-go (PAYG) customers.

The change in this customer mix is already evident, even though PAYG customers still outnumber contract subscribers. At the end of the second quarter, the operator had 14.4 million PAYG customers, down from 15.6 million in the same period last year. Meanwhile, the contract customer base increased to 12.3 million in the period, up from 11.4 million a year ago.

Also, more of the operator's subscribers are signing up to longer contracts. Everything Everywhere said 67 percent of contract customers were on 24-month contracts, which is up from 42 percent in the second quarter last year.

Key to the contract customer growth is smartphone sales: in the second quarter, 85 percent of new contract customers selected a smartphone, compared with 64 percent in the same period last year.

Indeed, Everything Everywhere also claimed that it sold more Apple Inc. (Nasdaq: AAPL) iPhones than any other U.K. operator in the last week of the second quarter, citing data from GfK AG .

— Michelle Donegan, European Editor, Light Reading Mobile