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O2 UK reduces churn, while Europe grows more slowly

Telefonica does well with acquisition

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Telefonica-owned mobile operator O2 is showing steady growth in the UK market, with revenues up 10.4 per cent, as it manages to convert customers from pre-paid to contract.

However, Telefonica's results for the first half of 2007 show the rest of O2 Europe to be growing more slowly.

Telefonica bought O2 early last year, and the brand continues to operate in the UK, Germany, Ireland, and the Czech Republic.

In the Czech Republic O2 now has 2.2 million fixed-line subscribers and 4.9 million mobile. Total revenues for the first six months of 2007 were €1,095m, but a great deal of money has been spent expanding the O2 Slovakia network, which is required to have 400 sites operational by September.

O2 Ireland made revenues of €487m in the first six months of 2007, but comparisons with the same period last year aren't available. The results show a modest 2.1 per cent increase in the total customer base.

In Germany, the revenue for the three months to the end of June was down 2.9 per cent to €861m, compared to last year. Germany is a highly competitive market where O2 now has 1.6 million mobile subscribers; up 11.8 per cent on last year, and 34,000 DSL customers.

In the UK, O2 gained 76,000 contract customers, but lost 42,000 pre-paid, meaning an overall increase of 34,000 customers. With 17.8 million subscribers, it is now the largest UK operator.

O2 UK's broadband offering suffered another delay, its third postponement to date, but this time the launch only slipped a month to October 2007. Be, the broadband company acquired by O2 last year, now has 770 unbundled exchanges, reaching 50 per cent of the population.

Overall, O2 Europe brought in €7,068m to June 2007, compared to €5,828m in the previous year, demonstrating how effectively the new owner has been able to run the group. ®

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