The UK’s largest telco is seeing data revenues grow on increased smartphone penetration.
The joint venture between Germany’s Deutsche Telekom and France Telecom saw a slight decline in service revenue of 1.8% to £2.9 million for 1H 2012. EBITDA was down 1.3% to £673 million across the same period, with a healthy margin of 20.3%. When excluding regulatory costs related to the merger, this becomes a revenue positive of 3.1% H1 year on year.
"In the first half, we delivered a solid commercial performance, with good underlying revenue growth. We are making strong progress integrating the legacy Orange and T-Mobile businesses to create cost efficiencies and deliver planned synergy targets, while investing in significant network upgrades to further improve our customer experience," said Olaf Swantee, EE CEO.
The company has seen an increase in smartphone ownership amongst its annual subscribers of 72% compared to just 61% last year. 91% of new customers are choosing new smartphones.
50% of EE’s subscriber base are now on contracts, as opposed to pre-pay. Contracts produce five times the average revenue per user (ARPU). Data and messaging revenues grew to 47% of ARPU, with non-messaging data reaching 29%. Churn (customer turnover) remains low at 1.2%.
The company remains in the process of merging and streamlining the two networks into one. Its delivered cost savings of £316m (71%) of the £445m annual gross opex savings target; which puts it on track for savings of £3.5bn+ by 2014.
Much of this came from shutting 30 overlapping retail stores, and network optimisation which saw 1390 redundant sites switched off.
The company has applied to Ofcom for the right to launch the UK’s first 4G network on its existing 1800MHz spectrum, ahead of the 4G spectrum auction at year end. Ofcom is expected to make a decision in the coming weeks, despite a series of delays. EE is also required to divest itself of some of this 1800MHz spectrum as part of the regulatory conditions of its merger. Hutchison Whampoa’s Three Mobile is an interested buyer.
The company itself has also been the subject of takeover rumours, from former CEO Tom Alexander, although this is in the very early stages.