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July 27, 2017

O2 upgrades Telefonica H1 results as mobile base hits 25 million

Are early upgrades important to you? O2 Refresh proves attractive to customers.

By Tom Ball

The Telefonica H1 2017 results show continued forwards momentum as new contract customers come on board, with the contract churn rate also reflecting positively.

At the core of the H1 results is the 178,000 increase in contract customers; this represents solid performance during what has been a challenging period. This increase places the year on year customer base growth at 1.9 per cent.

In addition to this the company has held its ground with a 0.9 per cent churn rate, indicating strong retention of existing customers. Telefonica have referred to this figure as market leading.

Telefonica highlighted the O2 Refresh service as a driver of new customers, with the total mobile base for the company now at 25.1 million. Total revenue stands at £2.7 billion for H1 2017.

O2 Refresh involves early upgrade benefits, this can entail the customer having 25% of an existing contract applied to the new upgrade. The company has been keen to show that this service is making £216 savings per year for customers.

Mark Evans CEO for Telefónica UK said: “We remain firmly focused on providing our customers with a superior mobile experience and unique propositions. Our robust first half performance demonstrates how fiercely we continue to compete, by differentiating in the market as the only true customer led mobile player. We are investing significant sums in our network and our customers are rewarding us with market leading loyalty.”

Continued network investment was also a positive aspect of the H1 results for Telefonica, with capital expenditure up by 15.4 per cent year-on-year.

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“Mobile is the UK’s most powerful opportunity to strengthen our economy. In doing so, we will enrich our society and, ultimately, be able to outperform on the global stage. Mobile moves the UK, and the UK must continue to move mobile. Investment, adoption and prioritisation must match the opportunity for the benefit of all,” said Evans.

O2 upgrades Telefonica H1 results as mobile base hits 25 million

O2 are manoeuvring to meet the new trend of customer experience focussed initiatives, while also recognising that there are consistent increases in mobile and data use going into the future.

CFO Patricia Cobian “We continue to grow and deliver for our customers in what is an increasingly competitive market, but one in which customers are continuing to choose to join us and stay with us. We say that we are mobile first because we recognise that the future is mobile, compared to other operators we have a simpler business model. It does not come as a surprise to us when different analyst houses come up with predictions of mobile data usage growing at 25 per cent year-on-year for the next few years.”

“These 25.1 million customers do not include the customers on our network through Tesco Mobile or Sky. What we see is customers are spending more as they use their phones more, and they are adding more data, either taking bigger bundles, higher tariffs, or buying more data. This has helped drive our mobile service revenue up by 1.3 per cent year year-on-year for the first half of the year,” said Cobian.

READ MORE: Productivity and profit: Is your mobility strategy mature enough?

O2 Refresh is proving to be a popular choice coinciding with customer expectations of maximum choice. With regular releases of flagship devices from major players such as Apple and Samsung, the ability to make a fluid and inexpensive switch to access new devices is a popular capability.

CMO, Nina Bibby outlined the reasons for the success of this initiative, she said: “Refresh is a real differentiator for us; it gives direct customers complete transparency over what they are charged. The way it works is we separate the air time contract from the hardware, what it means is customers can change devices whenever they want, without penalty, it also means their bills automatically lower when they pay off the device.”

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