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Operators - Manny Pham
February 27, 2017
Full year profits up 1.7 per cent with operator adding 584,000 contract customers in the year
O2 saw profits rise 1.7 per cent to £1.425 billion in 2016, with 584,000 contract customers added.
Revealing its latest financial results today, the operator revealed profit in the final three months of last year was up 4.1 per cent to £324 million.
Revenue in the quarter increased 2.4 per cent, representing improving growth compared to declines of 2.1 per cent in Q3 and 4.4 per cent in the prior three month period. However, revenue for 2016 declined 1.5 per cent to £5.602 billion.
Mobile service revenues in 2016 grew 1.2 per cent year-on-year, although O2 didn’t provide a breakdown of this. It said the rise was due to higher subscription revenues and out of bundle revenues for both contract and prepay customers.
O2 added 584,000 contract customers last year (421,000 excluding M2M), driving a nine per cent, which now accounts for 62 per cent of its total subscription numbers. In Q4, it added 135,000 contract customers.
This means the operator’s mobile base now stands at 25.5 million customers, up 1.8 per cent year-on-year, of which over 10.4 million are using 4G, which is a 36.1 per cent increase from a year ago. Data traffic was up 63 per cent on an annual basis. Contract churn remained market leading at 0.9 per cent for the year and one per cent for Q4.
Investment
O2 is investing over £2 million per day to enhance its network and extend 4G coverage across the UK, which has grown to cover 95 per cent of the population outdoors – up 16 per cent year-on-year. As a result, CapEx for 2016 rose 18.7 per cent to £760 million.
The operator also won a number of private and oublic sector contracts throughout 2016 with the likes of Mercedes Benz, Admiral, Kier Group and the Home Office.
In the fourth quarter, it gained new business from BAE, SSE and Avon & Wiltshire NHS Trust. O2 now has a 40 per cent share of accounts in local and central government and is a provider to over half of UK police forces.
Additionally, O2 Gurus helped customers more than eight million times last year, representing an increase of 177 per cent year-on-year.
Strategy
O2 UK CEO Mark Evans (pictured) said: “We are committed to making every day better for our customers through experiences that count and we continue to provide them with compelling reasons to join and stay with us through attractive propositions such as O2 Refresh and O2 Priority.
“Coupled with the unprecedented investment we are making in our network, this is driving continued growth and high levels of loyalty which gives us confidence that our strategy is working.”
