Feeds

Termination charges drop smacks Vodafone and EE in the WALLET

Europe hits saturation

Top 5 reasons to deploy VMware with Tegile

The reduction in how much mobile networks receive for handling incoming calls has hit both Vodafone and EE so hard that they have both separated out the charges in interim financial reports.

Brit multinational Vodafone announced a global drop in its revenue of 4.2 per cent for the quarter while UK mobile firm EE's financials saw a smaller drop of 0.7 per cent for the same time period.

The drop in Mobile Termination Rate (MTR) was not sole reason for the figures slide: increased competition played a big part. The Spanish and South African markets were particularly tough for global player Vodafone.

EE, meanwhile, as a UK conglomeration of Orange and T-Mobile, does not have to contend with some of the international pressures Voda faces – particularly the savage French market of Orange parent France Télécom. EE says that its revenue drop was a sign of a long term strategy to make customers more committed, offering bigger bundles.

While EE's revenues were down, margins were up to 24.4per cent, meaning the MNO made £760m (EBITDA) in the last six months.

Both companies talked lots about 4G, with EE – having had a regulatory head-start – doing particularly well with the number of its 4G customers doubling in the first half to 4.2 million and being on track to exceed 6 million by end of the year, out of its total of around 31 million customers.

This was a result of 72 per cent of new postpaid customers in Q2 opting for 4G, including 88 per cent of new B2B customers. 5,500+ corporates now use 4G, including new account wins Deloitte and Essex Police. EE is the only network to currently offer carrier aggregation, which gives 4G speeds of around twice that of its rivals.

Vodafone is keen to catch up and is rolling out infrastructure in a programme called “project spring” which is a £19bn investment programme. It will take some time for this to bear fruit and Vodafone is adding 100k UK 4G subscribers a month to EE’s 420k. Thanks to the Orange/T-Mobile merger, EE has a substantially bigger customer base in the UK than Vodafone, with EE having 31 million customers and Vodafone having 19.5 million.

One figure operators used to crow about, but have become more reticent on as figures have slid, is the Average Revenue Per User, although someone with two phones is considered to be "two users". With EE, that figure is £18.90, across both pre-paid and post-paid but not including machine to machine. EE says that figure is up 2.7 per cent quarter on quarter.

Text messaging revenue is slipping and there's a 7 per cent growth in data revenue to 48 per cent. Data hasn’t overtaken voice yet, but it’s close and will do soon.

Most impressive from EE is the low churn rate of 1.1 per cent per month (13.2 per cent per year) on post-paid subscriptions, although of course two year contracts help keep this number down. The number including pre-pay is 22.8 per cent per year – which is pretty much global industry average.

Things are less rosy for Vodafone in Europe, with revenue down 4.9 per cent in Germany, 16.1 per cent in Italy, 15.3 per cent in Spain and 4.7 per cent in the rest of Europe. Its strongest numbers come from the UK – where revenue was still down, by 3.2 per cent.

Things were better for Vodafone in India, where revenue increased by 10.3 per cent and Voda added 3.3 million customers. It says that 17 per cent of its Indian customers now have a smartphone – which makes 29 million users. Voda has recently bought the 11 per cent of Vodafone India which it didn’t own, for £900m.

Both businesses are bullish about prospects – but then companies always are in reports. What remains to be seen is if the next iPhone wakes up the market as some analysts hope. ®

Security for virtualized datacentres

More from The Register

next story
Brit telcos warn Scots that voting Yes could lead to HEFTY bills
BT and Co: Independence vote likely to mean 'increased costs'
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
New 'Cosmos' browser surfs the net by TXT alone
No data plan? No WiFi? No worries ... except sluggish download speed
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Google+ GOING, GOING ... ? Newbie Gmailers no longer forced into mandatory ID slurp
Mountain View distances itself from lame 'network thingy'
Vodafone to buy 140 Phones 4u stores from stricken retailer
887 jobs 'preserved' in the process, says administrator PwC
Bonking with Apple has POUNDED mobe operators' wallets
... into submission. Weve squeals, ditches payment plans
Drag queens: Oh, don't be so bitchy, Facebook! Let us use our stage names
Handbags at dawn over free content ad network's ID policy
Comcast exec: No, we haven't banned Tor. I use it. You're probably using it
Keep in mind if, say, your Onion browser craps out on Xfinity
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.