O2 has released its second quarter results showing buoyancy in a fiercely-competitive UK market, but not such rosy performance in other geographies.
Revenue for the UK market grew by just over 10 per cent to reach €1.8 billion (1.2 billion), for the three month period ending June 30, with the first two quarters added together showing phenomenal growth of 32 per cent, or €3.6billion (2.4 billion). Average revenue per user (APRU) per month was reported as being 23.40 for UK mobile fans. Data ARPU grew by 8.6 per cent to €11 (7.41)
In terms of broadband success, O2's internet service provider Be rolled out the service to more than 770 exchanges by the end of the quarter, extending its network reach to 31,000 customers.
Revenue for the group across Europe as a whole has increased slightly year-on-year from €3.4 billion (2.3 billion) to €3.5 billion (2.4 billion). In addition, some 7.10 billion texts were handled during the quarter by the group as a whole, showing a year-on-year increase in SMS volume of 15 per cent.
The rest of Europe is being left in the UK's shadows results-wise. German financials, including results from Telefnica Deutschland were disappointing, falling by 2.9 per cent, while O2 Ireland's revenues grew by just under four per cent.
"Against the backdrop of highly competitive European markets, O2 has built on its robust start to the year, adding 534,000 mobile customers in the second quarter, taking the total mobile customer base to 36.4 million, 8.4 per cent higher than last year," said Peter Erskine, chairman and chief executive of Telefnica O2 Europe, O2 UK's parent company.
"In the UK, the momentum of the first quarter was maintained, with double digit revenue growth and 34,000 net new customers, including 76,000 on contract, helped by migrations from prepay," he said. "Blended monthly ARPU growth of 2.8 per cent year-on-year illustrates that we are successfully focusing on higher value customers and our total customer base of 17.785 million remains the largest active base in the market. Upgrades in the quarter increased by 26 per cent compared to last year, while OIBDA [operating income before D&A] margin improved from the first quarter."
Telefnica O2 Europe is continuing to show signs of financial improvement, particularly in terms of demonstrating organic growth rather than acquisition-driven volume, but its debt remains an area of concern, according to Steven Hartley, a senior analyst at Ovum.
"Ultimately Telefnica should be congratulated on improving performances across its businesses at home and abroad," he said. "But it must build on these results if it wants the good times to continue. Chairman Cesar Alierta has ruled out further acquisitions to flatter the figures and the massive interest bill will still need to be paid. Therefore, the pressure is now on all parts of the business to deliver."
