LONDON -(Dow Jones)- O2 PLC, the UK mobile telecommunications company, Monday said it added 1.75 million new users in the third quarter which proved its best ever quarter for customer growth in its core U.K. and German markets.
In a trading update for the three months ended Dec. 31, its last set of data before it is subsumed by Spanish operator Telefonica, O2 said its customer base increased 18% on year to 27.4 million.
Peter Erskine, chief executive of O2, told a conference call of journalists: "The U.K. and Germany smashed all previous records for customer growth...O2's momentum continues and we look forward to taking our strong performance into Telefonica."
Telefonica said in October that it will acquire O2 for GBP18 billion.
Sean Johnstone at WestLB Equity Markets said: "Good news for Telefonica - O2 is continuing to deliver." Johnstone said the data may provide some short-term relief for European telecoms investors prior to Vodafone Group's third-quarter results Tuesday. However, he added O2 "has set a hard act for other operators to follow."
At 0817 GMT, O2 shares were 0.1%, or 0.5 pence, higher at 199.5 pence in a declining market.
O2 continued to perform in the tough U.K. market, maintaining its place at the top of the tree in terms of subscriber numbers. It added 895,000 net new customers in the region, 274,000 of which were contract customers. It grew revenue 12% on year in the U.K.
O2 said user growth, which pushed its customer base 12% higher to 16 million despite flat subscriber acquisition costs, combined with a reduction in churn to drive momentum. Contract churn - the rate at which customers defect to other networks - fell to 27% compared to 30% a year earlier, while prepay customer churn fell to 29% from 37% as the company invested in improving its customer service.
O2's blended average revenue per user, or ARPU, fell GBP3 on year to GBP272 but increased GBP1 on the second quarter result, reflecting the washing out of the impact of regulator-enforced termination rate cuts. Termination rates are the charge levied to connect a call between rival networks.
O2's Erskine said it was "certainly one of the winners" in the U.K. market and that the company intends to remain one of the two largest players in the region.
In Germany, where Vodafone is expected to report tough trading over the Christmas period due to low-cost operators stealing market share, O2 continued to grow faster than its rivals. It added 823,000 users in the region, to bring its customer base there just shy of 10 million users, an increase of 32% on year.
Revenue in Germany increased 17% although termination rate cuts reduced that growth by over 4%. Blended ARPU fell to EUR338 from EUR349 in the previous quarter and EUR370 a year earlier. O2 said termination rate cuts sliced around EUR15 from its ARPU.
O2's Erskine said O2 remains the fastest growing German operator and its ARPU is the best in the German market.
Company Web site: http://www.o2.com
- By Nic Fildes, Dow Jones Newswires; 44-20-7842-9264; nicolas.fildes@dowjones.com
(END) Dow Jones Newswires "
Posted to the site on 23rd January 2006
Posted to: www.cellular-news.com/story/15719.php