The UK's largest mobile network continues to grow

Telefónica UK Limited (O2), the UK’s largest network with 34.1 million customer connections, today announces Q3 results for the three month period ended 30 September 2019.

 Financial highlights

  • Total revenue growth up 4.1 per cent year-on-year
  • Ongoing OIBDA growth to £489 million, up 5.7 per cent year-on-year
  • Continued customer growth, with sector-leading loyalty:
    • Total customer base grew to 34.1 million, an increase of 5.6 per cent year-on-year
    • Customer growth across all segments
    • Lowest contract churn in the sector at 1.0 per cent

 Operational highlights

  • O2 5G technology to power driverless cars in London
  • Limitless data launched across O2 Custom Plans and SIM-only contracts
  • Launch of O2’s 5G network and pivotal role in industry agreement on shared rural network

Mark Evans, CEO, Telefónica UK said:  “As the UK’s largest network, we’re proud of our ability to keep attracting and retaining customers, which ensures a healthy business and drives both top and bottom line growth.

“Our Q3 performance continues the strong momentum we saw in the first half of the year, powered by a relentless focus on our customers through award-winning coverage and great offerings such as flexible Custom Plans and limitless data.

“We’re moving at pace with our 5G rollout, already live in six UK cities rising to twenty by the end of the year. 5G offers critical support to the UK’s digital economy, supporting jobs and growth. That’s why we welcome Ofcom’s recent statement updating the rules for the planned auction of more 5G airwaves. This will help operators to deliver greater value and better connectivity to the public.”

O2 5G technology to power driverless cars in London

O2 has signed an agreement to power the testing of driverless vehicles in London through 5G technology. O2’s 3.4GHz 5G-ready spectrum will allow driverless vehicles and smart transport systems to be trialled on London’s roads, starting at a test bed in Greenwich and at the Queen Elizabeth Olympic Park in Stratford.

The speed of 5G means that data is sent between devices almost instantaneously, making it the perfect medium for driverless vehicles. O2 research predicts that a 5G powered road network will cut traffic and make road journeys safer and easier, saving the economy £880 million a year and reduce CO2 emissions by 370,000 metric tonnes a year.

Q3 2019 developments

Faster 5G Rollout: O2 extended its existing network sharing agreement with Vodafone in the quarter to facilitate a faster roll-out of 5G for customers, helping to build a competitive digital economy in the UK and supporting innovative new services that take advantage of 5G’s unique speed and reliability. Network sharing accelerates the benefits of 5G, fewer masts reduce the impact on the environment, and lower costs enable greater investment in customers and services.

O2 Business: O2 officially launched O2 Business in the quarter which consolidated its B2B activity across Enterprise and Wholesale partners bringing together all product development (including Internet of Things, data and 5G) alongside its Enterprise and Wholesale sales and commercial teams. The new division focuses on supporting and helping business customers to use technology to solve their business problems. Further, in a boost to the new division, O2 has been named as a supplier on the new Network Services 2 Framework enabling the company to offer its entire product range of ICT services to public sector and non-profit organisations.

O2 Limitless: In the consumer segment, O2 introduced its new O2 Limitless proposition across its revolutionary Custom Plans and SIM-only contracts, providing the ultimate option for customers who are looking for peace of mind with their mobile data consumption.

Smart Ambulance: O2 announced a ‘Smart Ambulance’ trial at Millbrook Proving Ground which has the potential to revolutionise patient diagnosis, transport and treatment. O2 is partnering with Samsung for the devices, Visionable for the video collaboration software and Launchcloud for the asset tracking and compliance check elements. The combined expertise will equip the vehicle with a range of cutting-edge technology providing yet another example of where the healthcare sector could benefit significantly from 5G technology to further help patients.

NSPCC and Net Aware: Through its partnership with the NSPCC and the joint commitment from both organisations to keep kids safe online, O2 and the NSPCC completed a major re-launch of the Net Aware website which encourages parents to have regular conversations with their children about their online lives. The site helps to keep parents informed of the latest apps, sites and games their children are using along with the latest technical and safeguarding tips.

Q3 2019 Financial Information

All financials reported using the new IFRS 16 reporting standards with year-on-year movements on a like for like basis

Relevance: Total connections, including customers who use the O2 network through giffgaff, Tesco Mobile, Sky Mobile and Lycamobile, reached 34.1 million at 30 September (+5.6 per cent year-on-year), with Telefónica UK remaining the largest UK mobile network carrier. Telefónica UK’s mobile base stands at 26.0 million. The company maintained its market-leading position for customer loyalty with contract churn excluding M2M at 1.0 per cent in the quarter.

Contract net additions in the quarter were 43,000 (496,000 including M2M) with the contract customer base now accounting for 66.9 per cent of the total mobile base. Active Prepay net additions for the period were 100,000.

Revenues: Total Revenue in the quarter reached £1,598 million (+4.1 per cent year-on-year). The revenue increase was mainly driven by the continued success of innovative tariffs such as Custom Plans, higher handset revenues, progress in the Smart Metering Implementation Programme (SMIP) and increased MVNO revenues

Returns: OIBDA in the quarter reached £489 million (+5.7 per cent year-on-year). OIBDA margin in the quarter grew 0.4 percentage points year-on-year. CapEx in the quarter was £218 million reflecting continued investment in network capacity, customer experience and starting to lay the foundations for 5G.

About Telefónica UK / O2

O2 is a mobile network operator and the principal commercial brand of Telefónica UK Limited, which is part of the global telecommunications group Telefónica S.A, headquartered in Spain and operating in Europe, and North, Central and South America.

O2 was awarded Best Network Coverage in 2019 by uSwitch, for a second year in a row, and with over 34 million connections to the network, it runs 2G, 3G, 4G and 5G services across the UK, as well as operating its nationwide O2 Wifi service.

The company is the network of choice for mobile virtual network operators such as giffgaff, Sky Mobile and Lycamobile as well as managing a 50:50 joint venture with Tesco for Tesco Mobile.

O2 has around 6,700 employees and over 450 retail stores and sponsors England Rugby, The O2 and 20 O2 Academy music venues across the UK. Through a comprehensive sustainability strategy O2 is also creating work experience opportunities for 16-24 year olds via its GoThinkBig platform, enabling customers to reduce their impact on the environment by recycling their old devices through O2 Recycle and, in partnership with the NSPCC, helping parents to keep their children safe online.

O2 is the only mobile operator in the 2019 Social Mobility Employer Index and was named as one of the best places to work in the 2019 Glassdoor Employee’s Choice Award.

Telefónica UK Limited is registered in England and Wales. Registration number: 1743099.  Its registered office is at: 260 Bath Road, Slough, Berkshire, SL1 4DX, United Kingdom.