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RNS Number:2730X
O2 PLC
23 January 2006
O2 ANNOUNCES THIRD QUARTER KEY PERFORMANCE INDICATORS
Released: 23 January 2006
Peter Erskine, Chief Executive of O2 plc, commented:
'The strong momentum in all O2's businesses was sustained through the third
quarter. Across the group we added 1.75 million customers, taking the total base
to 27.4 million, 18% higher than last year.
We were particularly pleased by our performance in the UK contract market, where
we added 274,000 net new customers, growing the base by 13% year-on-year. We
also saw a significant fall in both contract and pre-pay churn, driven by our O2
Rewards initiatives.
Our rapid customer growth continued in Germany, with 823,000 net new customers
added in the quarter, and 32% year-on-year growth taking the total base to 9.77
million. This growth was maintained in an increasingly competitive market, which
contributed to lower contract ARPU, but the strength of the brand and a range of
new propositions continued to attract high-value customers to O2. Our Tchibo
joint-venture added 153,000 customers.
As we approach completion of the acquisition of O2 by Telefonica, all our
businesses are performing well, and we look forward to maintaining momentum as
part of Telefonica.'
Key performance indicators for the three-month period ended 31 December 2005:
Service revenue:
* O2 UK net service revenue grew by 12% year-on-year;
* O2 Germany service revenue grew by 17% year-on-year (at constant currency);
* O2 Ireland service revenue grew by 9% year-on-year (at constant currency).
Customer numbers:
* O2 added 1.75 million customers, taking the total base to 27.419 million
- O2 UK added 895,000 customers;
- O2 Germany added 823,000 customers;
- O2 Ireland added 32,000 customers.
Average revenue per user (ARPU):
* O2 UK blended ARPU £272 (Q2: £271; Q3 '04/'05: £275)
* O2 Germany blended ARPU Euro338 (Q2: Euro349; Q3 '04/'05: Euro370)
* O2 Ireland blended ARPU Euro572 (Q2: Euro572; Q3 '04/'05: Euro564)
Mobile data:
* Total SMS volume grew by 32% year-on-year to 5.05 billion.
THIRD QUARTER Operating review
O2 UK
Third quarter net service revenue grew by 12% year-on-year, driven by strong
customer growth. A total of 895,000 net new customers were added in the quarter,
taking the base to 15.981 million, 12.4% higher than at the same time last year.
This excludes the Tesco Mobile customer base, which grew to a million customers
by the end of the quarter.
O2 UK's blended ARPU of £272 was £3 lower than the third quarter last year, but
£1 higher than the second quarter, with the quarter-on-quarter comparison
reflecting the continued underlying ARPU growth no longer being offset by the
impact of the September 2004 termination rate cut.
O2 UK's own channels continued to account for more than 50% of total gross
connections in the quarter. The O2 'Rewards' initiatives, introduced at the
start of the year to reduce churn, continued to show good results in both the
pre-pay and contract markets. Customer acquisition costs (SAC) were stable for
both contract and pre-pay connections.
A total of 274,000 net new contract customers were added, driven by higher gross
additions as well as lower churn. The level of contract upgrades was well ahead
of the same time last year, and 12-month rolling churn fell to 27%, compared to
30% for the same period last year. Contract ARPU of £527 was £3 lower than the
third quarter last year but £3 higher than the second quarter.
A total of 621,000 net new pre-pay customers were added in the quarter, again
due to higher gross connections, as well as lower churn. 12-month rolling
pre-pay churn fell to 29%, compared to 37% last year. Pre-pay ARPU of £139 was
the same as the third quarter last year and £2 higher than the second quarter.
O2 Germany
Service revenue grew by 17% at constant currency in the third quarter, driven by
the continued high level of net customer additions. The termination rate cuts
reduced third quarter service revenue by over 4%. A total of 823,000 net new
customers were added in the quarter, taking the base to 9.769 million, 32%
higher than at the same time last year. Contract customers comprised 51% of the
total base at the end of the quarter, compared to 56% at the same time last
year. The Tchibo Mobile customer base grew to 593,000.
Blended ARPU remained the highest in the German market, at Euro338, down from
Euro349
in the previous quarter and Euro370 in the same quarter last year. This trend
reflected the approximately Euro15 impact of the termination rate cuts, the
higher
proportion of pre-pay customers in the total base, and the increasingly
competitive market environment.
O2 Germany added a total of 278,000 net new contract customers in the quarter.
Contract ARPU of Euro514 was Euro9 lower than the previous quarter, and Euro25
lower than
the third quarter last year. This reflected the impact of the termination rate
cuts, as well as the introduction of new customer offers. In the increasingly
competitive German market, these new propositions enabled O2 to continue to
drive contract customer acquisition and retention, and stimulate voice and data
usage. Contract SAC and churn remained stable.
A total of 545,000 net new pre-pay customers were added in the quarter. Pre-pay
ARPU of Euro135 was Euro3 lower than both the second quarter and the third
quarter
last year, mainly reflecting the impact of the termination rate cuts. Pre-pay
SAC and churn remained stable.
O2 Ireland
Service revenue grew by 9% at constant currency in the third quarter, driven by
both further customer growth and improving ARPU. A total of 32,000 net new
customers were added in the quarter, bringing the total base to 1.602 million
customers, 5.7% higher than at the same time last year. Blended ARPU of Euro572
was
flat quarter-on-quarter, but Euro8 higher than in the same quarter last year,
reflecting the continuing strength of both voice and data usage trends.
Mobile data
Data as a proportion of service revenue increased to 27.0%, from 24.3% in the
third quarter last year. The total number of text messages sent by O2 customers
grew by 32% year-on-year, to 5.05 billion. Non-SMS data accounted for 14.3% of
total data revenue and 3.8% of total service revenue. There was a significant
increase in the number of users of non-SMS data, with 40.3% of O2's customers
using these services during the quarter, compared to 30.5% in the same quarter
last year.
O2 Airwave
During the quarter Airwave won the contract to supply a National Fallback
Service, which will provide enhanced levels of operational resilience within the
Airwave network. Airwave was also successful in its bid to equip all Fire and
Rescue Services across England with a new resilient and secure voice and data
communications service, and the company is now working with the customer to
conclude the terms of the final contract. The Scottish and Welsh Ambulance
Service Trusts are scheduled to finalise their choice of communications solution
in the near future.
Cautionary statement Regarding Forward-Looking Statements
This document contains certain forward-looking statements. We may also make
written or oral forward-looking statements in:
- our annual report and accounts and half-yearly reports;
- our press releases and other written materials; and
- oral statements made by our officers, directors or employees to third
parties.
We have based these forward-looking statements on our current plans,
expectations and projections about future events. These forward-looking
statements are subject to risks, uncertainties and assumptions about us.
Forward-looking statements speak only as of the date they are made.
Statements that are not historical facts, including statements about our beliefs
and expectations are forward-looking statements. Words like
'believe,''anticipate,''expect,''intend,''seek,''will,''plan,''could,''may,''mig
t,''project,''goal,''target' and similar expressions often identify
forward-looking statements but are not the only ways we identify these
statements.
These statements may be found in this document generally. Our actual results
could differ materially from those anticipated in these forward-looking
statements as a result of various factors, including all the risks discussed in
the above-mentioned sections.
If any one or more of the foregoing assumptions are ultimately incorrect, our
actual results may differ from our expectations based on these assumptions.
Also, the sector and markets in which we operate may not grow over the next
several years as expected, or at all. The failure of these markets to grow as
expected may have a material adverse effect on our business, operating results
and financial condition and the market price of our ordinary shares.
The information on our web site, any web site mentioned in this document or any
web site directly or indirectly linked to our or any other web site mentioned in
this document is not incorporated by reference into this document and you should
not rely on it.
1. Customer numbers
Customers Customers Customers Customers Net Customers
at at at at additions at
31 31 March 30 June 30 during 31
December September period December
2004 2005 2005 2005 2005
000's 000's 000's 000's 000's 000's
----------- -------- -------- -------- -------- -------- --------
O2 UK
Pre-pay 9,341 9,472 9,598 9,858 621 10,479
Post-pay 4,875 4,912 5,018 5,228 274 5,502
----------- -------- -------- -------- -------- -------- --------
Total 14,216 14,384 14,616 15,086 895 15,981
----------- -------- -------- -------- -------- -------- --------
O2 Germany
Pre-pay 3,253 3,620 3,888 4,254 545 4,799
Post-pay 4,145 4,356 4,500 4,692 278 4,970
----------- -------- -------- -------- -------- -------- --------
Total 7,398 7,976 8,388 8,946 823 9,769
----------- -------- -------- -------- -------- -------- --------
O2 Ireland
Pre-pay 1,118 1,130 1,119 1,148 25 1,173
Post-pay 398 403 411 422 7 429
----------- -------- -------- -------- -------- -------- --------
Total 1,516 1,533 1,530 1,570 32 1,602
----------- -------- -------- -------- -------- -------- --------
Manx
Pre-pay 41 41 47 45 0 45
Post-pay 22 22 21 21 1 22
----------- -------- -------- -------- -------- -------- --------
Total 63 63 68 66 1 67
----------- -------- -------- -------- -------- -------- --------
O2 Group
Pre-pay 13,753 14,263 14,652 15,305 1,191 16,496
Post-pay 9,440 9,693 9,950 10,363 560 10,923
----------- -------- -------- -------- -------- -------- --------
Total 23,193 23,956 24,602 25,668 1,751 27,419
----------- -------- -------- -------- -------- -------- --------
Pre-pay
percentage 59.3% 59.5% 59.6% 59.6% 68.0% 60.2%
Post-pay
percentage 40.7% 40.5% 40.4% 40.4% 32.0% 39.8%
----------- -------- -------- -------- -------- -------- --------
2. Non-SMS data users (90 day active)
Customers Customers Customers Customers Customers
at at at at at
31 31 March 30 June 30 31
December September December
2004 2005 2005 2005 2005
000's 000's 000's 000's 000's
----------- -------- ------- -------- -------- --------
O2 UK 4,901 5,728 5,975 6,729 8,223
O2 Germany 1,753 1,906 1,891 1,993 2,327
O2 Ireland 411 516 493 482 509
----------- -------- ------- -------- -------- --------
O2 Group 7,065 8,150 8,359 9,204 11,059
----------- -------- ------- -------- -------- --------
% total base 30.5% 34.0% 34.0% 35.9% 40.3%
----------- -------- ------- -------- -------- --------
3. Average revenue per user(1) (ARPU) - £
31 31 30 30 31
December March June September December
2004 2005 2005 2005 2005
£ £ £ £ £
---------------- -------- -------- -------- -------- --------
O2 UK (2)
12 month rolling
Pre-pay 139 138 137 137 139
Post-pay 530 527 523 524 527
Blended 275 273 271 271 272
Quarterly monthly
average
Pre-pay 11 11 11 12 12
Post-pay 43 43 44 45 44
Blended 22 22 23 23 23
---------------- -------- -------- -------- -------- --------
O2 Germany
12 month rolling
Pre-pay 94 95 95 95 92
Post-pay 366 362 361 359 351
Blended 251 248 244 240 231
Quarterly monthly
average
Pre-pay 8 8 8 8 7
Post-pay 31 29 30 30 29
Blended 21 20 19 20 18
---------------- -------- -------- -------- -------- --------
O2 Ireland
12 month rolling
Pre-pay 243 244 244 247 246
Post-pay 750 762 787 794 790
Blended 382 385 391 393 391
Quarterly monthly
average
Pre-pay 21 20 20 21 21
Post-pay 66 63 68 68 64
Blended 33 31 33 34 33
---------------- -------- -------- -------- -------- --------
(1) ARPU in all businesses includes revenue from inbound roaming.
(2) Adjusted for the effect of adoption of IFRS.
4. Data ARPU (blended 12 month rolling) - £
31 December 31 March 30 June 30 September 31 December
2004 2005 2005 2005 2005
£ £ £ £ £
---------------- -------- -------- -------- -------- --------
O2 UK 65 68 72 75 78
O2 Germany 53 54 54 54 52
O2 Ireland 81 82 83 87 87
---------------- -------- -------- -------- -------- --------
5. Average revenue per user(1) (ARPU) - Eurouro
31 31 30 30 31
December March June September December
2004 2005 2005 2005 2005
Euro Euro Euro Euro Euro
----------------- -------- -------- -------- -------- --------
O2 Germany
12 month rolling
Pre-pay 138 140 139 138 135
Post-pay 539 531 527 523 514
Blended 370 363 356 349 338
Quarterly monthly
average
Pre-pay 12 12 11 11 11
Post-pay 45 41 44 45 42
Blended 31 28 29 29 27
----------------- -------- -------- -------- -------- --------
O2 Ireland
12 month rolling
Pre-pay 359 358 357 359 360
Post-pay 1,106 1,118 1,149 1,155 1,155
Blended 564 565 571 572 572
Quarterly monthly
average
Pre-pay 30 29 29 31 31
Post-pay 94 91 100 100 95
Blended 48 45 48 50 48
----------------- -------- -------- -------- -------- --------
Euro rates
Quarterly 1.4384 1.4427 1.4744 1.4633 1.4701
Annually 1.4747 1.4669 1.4609 1.4547 1.4626
----------------- -------- -------- -------- -------- --------
(1) ARPU in all businesses includes revenue from inbound roaming.
6. Data ARPU (blended 12 month rolling) - Eurouro
31 December 31 March 30 June 30 September 31 December
2004 2005 2005 2005 2005
Euro Euro Euro Euro Euro
----------------- -------- ------- ------- -------- --------
O2 Germany 78 79 79 79 77
O2 Ireland 120 120 121 126 128
----------------- -------- ------- ------- -------- --------
7. Data as percentage of service revenues
3 months ended: 31 December 31 March 30 June 30 September 31 December
2004 2005 2005 2005 2005
% % % % %
------------- -------- -------- -------- -------- --------
O2 UK(1) 25.7 28.6 28.2 27.8 29.6
O2 Germany 22.3 23.2 22.6 22.0 22.8
O2 Ireland 20.9 23.2 21.9 22.0 22.3
------------- -------- -------- -------- -------- --------
O2 Group(1) 24.3 26.5 26.0 25.5 27.0
------------- -------- -------- -------- -------- --------
12 months ended:
% % % %
------------- -------- -------- -------- -------- --------
O2 Group(1) 23.7 24.8 25.6 26.2
------------- -------- -------- -------- -------- --------
(1) Adjusted for the effect of adoption of IFRS.
8. SMS messages
3 months ended: 31 December 31 March 30 June 30 September 31 December
2004 2005 2005 2005 2005
million million million million million
------------- -------- -------- -------- -------- --------
O2 UK 2,834 3,097 3,234 3,436 3,908
O2 Germany 628 674 703 712 746
O2 Ireland 343 363 357 362 384
Manx 11 11 11 11 11
------------- -------- -------- -------- -------- --------
O2 Group 3,816 4,145 4,305 4,521 5,049
------------- -------- -------- -------- -------- --------
9. Non-SMS data as percentage of service revenues
3 months ended: 31 December 31 March 30 June 30 September 31 December
2004 2005 2005 2005 2005
% % % % %
------------- -------- -------- -------- -------- --------
O2 UK(1) 2.9 3.8 3.6 3.4 3.6
O2 Germany 3.8 4.4 4.7 4.6 5.0
O2 Ireland 1.6 1.9 1.8 1.8 2.0
------------- -------- -------- -------- -------- --------
O2 Group(1) 3.0 3.8 3.8 3.6 3.8
------------- -------- -------- -------- -------- --------
(1) Adjusted for the effect of adoption of IFRS.
O2 Contacts:
Richard Poston David Boyd
Director, Corporate Affairs Head of Investor Relations
O2 plc O2 plc
richard.poston@O2.com david.boyd@O2.com
t: +44 (0)1753 628039 t: +44 (0)1753 628230
David Nicholas John Crosse
Communications Director Investor Relations Manager
O2 plc O2 plc
david.nicholas@O2.com john.crosse@O2.com
t: +44 (0) 771 575 9176 t: +44 (0)1753 628198
Simon Gordon
Head of Media Relations
O2 plc
simon.gordon@O2.com
t: +44 (0)771 007 0698
O2 press office: 01753 628402
All O2 Group news releases can be accessed at our web site: www.O2.com
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