O2 customer base rises 9.6pc

21 Jul 2004

A sharp rise in the number of contract customers has helped O2 Ireland push its customer base to new levels during the first fiscal quarter of 2004 although the company’s pre-pay base suffered a slight decline.

Figures released by Ireland’s second mobile operator for the three-month period to 30 June 2004 show that it acquired 4,451 net new customers during the period. These figures comprise an increase of 7,079 post-pay (ie, contract) customers and a decrease of 2,628 pre-pay customers, bringing O2’s total customer base to 1.395 million. This represents customer numbers growth of 9.6pc from the same period last year.

The decline in its pre-pay customer base – possibly the first in O2 Ireland’s history (although this has not been confirmed by the company) – contrasts with other markets where O2 is active. O2 UK added 112,000 pre-pay customers during the period out of a total of 261,000, while O2 Germany acquired 127,000 pre-pay subscribers out of 336,000 new customers.

A spokeswoman for O2 Ireland denied that the decline in pre-pay numbers was a concern for the company. “A decrease of 2,268 customers is miniscule considering that we have over one million pre-pay customers,” she said.

“We are in a very different position to other O2 markets,” she added. “O2 Germany is still rapidly growing its market share which stands at just 10pc. Our focus has been on consolidating our pre-pay market while growing our post-pay business.”

While conceding that Meteor had been adding significant numbers of subscribers in the pre-pay market, the spokesperson said that O2 was satisfied with its performance. “We’re still maintaining our momentum in a market with a saturation of 87pc. Given the strong competition in the market with Vodafone remaining strong and Meteor starting to gain share, we are pleased with our performance,” she said.

Not only has O2 Ireland been gaining customers but it is also squeezing more revenue from out of each one. Average revenue per user (ARPU) rose to €361 for pre-pay customers, up from €342 in the same period last year. The figure for post-pay customers was €1,053, up from €1,024 in the same period last year. The blended ARPU increased from €545 to €556. This compares with €367 for O2 Germany (up from €348 in the same period last year) and £279 sterling (€419) for O2 UK (Q1 2003: £254 sterling [€381]).

The period was also marked by a continued growth in text messaging: 321 million text messages were sent by O2 Ireland customers, representing a 14.4pc increase in text usage from the same period last year. O2 Ireland also continued to increase revenues from data services. Data revenue now accounts for 21.8pc of total revenue, surpassing the O2 Group average of 21.2pc. Blended 12-month rolling ARPU from data services is now €118.

Danuta Gray, chief executive, O2 Ireland, commented: “We are very pleased with our performance this quarter. The significant increase to our post-pay base is driven by gains in the business market which were achieved through a combination of measures, most notably through compelling offers to our business customers and the products and services we offer.”

She added: “The O2 brand continued to perform well in the market and the launch of a second O2 Experience store added focus to O2’s mobile data service offerings. We continued to make good progress in selling data services driven by … new products such as the BlackBerry and through the ongoing rollout of our wireless LAN hotspots throughout the country.”

Commenting on the performance of the group as a whole, Peter Erskine, chief executive of mmO2, said: “As we expected, competition in our markets intensified in the first quarter, but we maintained our momentum, and grew our customer base, particularly in higher ARPU market segments. In the UK, we now expect to see full-year service revenue growth of 7-10pc, higher than we had previously anticipated. In Germany too we have maintained our momentum, and continued to add substantial numbers of new customers, and to generate market leading ARPU. In Germany and across the rest of the Group we remain on track to deliver our full-year targets.”

By Brian Skelly