O2 continues customer growth and profitability as it supports UK through pandemic

Network’s value offerings give £168m back to customers in 2020 and drive industry-leading loyalty

O2 powers NHS vaccination drive and increases free data offer as thank you to NHS workers

Telefónica UK Limited (O2) today publishes full year results to 31 December 2020. 

  • UK’s No1 network grows customer base to 36.2 million connections (+4.8% year-on year), churn 0.9%.
  • OIBDA margin at 30.8%, up +1.0 percentage point on 2019, as network delivers flexible value led plans
  • O2 announces plans to offer the latest tech at low monthly prices to customers on any network
  • Support of NHS continues as O2 connects over 1,600 vaccination centres to power jab drive and NHS workers gifted 50Gb data bolt on as nation marks a year of lockdown

Mark Evans, O2 CEO, commented:

 “We continue to drive value back to customers, saving them £168million in the past year alone through flexible plans that ensure that they always get the best deal.

“By focusing on value and flexibility, we have grown our customer base to 36.2million, achieving industry leading loyalty and customer satisfaction ratings.

“As we move forward in 2021, O2 will continue to create new and exciting propositions for consumers and businesses alike, whilst we provide connectivity to power our NHS, and the nation, through this tough period.”

O2 to offer the latest tech at low monthly prices for customers of all networks 

From next month, O2 will offer customers on any network the option to buy the latest tech at low monthly prices, without any airtime contract, with payment options to help spread the cost. Products include games consoles, headphones and smart watches with more products to follow later in the year, available at 0% APR. Terms and conditions apply.

Full year 2020 operational highlights

Connecting the nation with a network built for the future

During 2020, O2 doubled the capacity of its voice network to meet unprecedented demand and boosted 4G services in around 180,000 postcodes. Its 5G rollout continued with 5G now available in over 150 UK towns and cities. The company opened the first 5G commercial laboratory for 5G and satellite communications with the European Space Agency and built a 5G-powered COVID-19 clinic-on-wheels, in order to track COVID-19 at care homes. O2’s coverage and reliability are industry recognised, with GWS ranking O2 as the most reliable UK network, now three years in a row – 2021, 2020, 2019) and Uswitch has seen the public vote for O2 as the operator with the best network coverage four years in a row (2021, 2020, 2019, 2018).

Helping communities and the most vulnerable

Through O2’s Community Calling program in partnership with charity Hubbub, O2 has facilitated the gifting of 10,000 connected smartphones to vulnerable individuals, including those home schooling. Most recently, O2 signed up to the Department for Education’s Get Help with Technology scheme providing 40GB free data a month to support home schooling families struggling with connectivity. The company was also a major supporting donor of the BBC’s Big Night In fund and continued to help parents keep children safe online with Net Aware in partnership with the NSPCC. 

Helping the NHS through the pandemic

O2 has delivered connectivity delivered to over 1,600 vaccine centres across the country and continued its long-standing relationship with the NHS to offer thousands of connected devices provided to clinicians across the UK. O2 offered additional mobile data, voice calls and texts to all NHS frontline staff who were existing customers at no extra cost on personal mobiles used for work purposes and is now increasing that offer to 50GB as a bolt on for nearly 100,000 NHS staff who are O2 customers, for the next two months. O2 also handed over the keys to the iconic venue, The O2, to use free of charge as an NHS training facility for Nightingale staff.

Serving customers with the best offers and products

O2 launched a new brand platform with robot ‘Bubl’ taking centre stage in O2’s first ever Christmas advert, featuring O2’s Disney+ partnership. A supporting social media campaign on TikTok, featuring Bubl in a dance challenge, has been listed as one of TikTok’s most creative brand campaigns of 2020 with 2.3bn global views. Priority saved customers over £17million in 2020 with around seven million Priority offers accepted and over 12 million entries made to prize draws.

Helping businesses to grow and thrive in the UK

O2’s success in delivering new services to companies helped it secure new business with companies including KPMG, McDonalds, Sainsbury’s, Harrods and OneStop. In the public sector O2 secured contracts with a range of local councils including Scottish Borders, West Dunbartonshire, London Borough of Brent and Barnsley. Over half of UK police forces, 50 NHS trusts and over a third of the UK’s local councils now use O2’s services. O2 remains the UK’s No1 for business customer satisfaction and introduced a suite of innovative digital services for businesses to help the nation get back to work safely during the pandemic. 

Supporting employees

Building on its flexible culture, O2 has fully supported its 6,500 employees throughout the pandemic, with no use of the furlough scheme and full pay for all. Over 3,000 call centre employees were equipped to work fully from home following the first lockdown announcement. As part of its efforts to rebuild Britain, the company also enfranchised its employee base with a new £10m incentive programme to motivate and reward those working to keep Britain connected.

Helping customers and businesses to go green

O2’s Blueprint sets out O2’s continued commitment to be one of the UK’s leading responsible businesses. These commitments include O2’s Greener Network ambitions, supported by O2’s partner the Carbon Trust with the goal to become a net zero business by 2025, while working with supply chain partners aiming to reduce carbon emissions by 30% in the next five years and helping customers to make greener choices.

Full Year 2020 / Q4 2020 Financial Information

All financials reported using 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 via giffgaff, Tesco Mobile, Sky Mobile and Lycamobile, reached 36.2 million at 31 December, (+4.8% year-on-year), with Telefónica UK remaining the largest UK mobile network operator. The company maintained its market-leading position for customer loyalty with contract churn at 0.9% in the period and the highest customer satisfaction based on NPS.

Revenues: Total revenue for the year reached £5,962 million (-4.4% year-on-year) with a quarter-on-quarter improvement in the fourth quarter (-5.2% year-on-year versus -9.5% year-on-year in the third quarter). Revenue impact can be attributed to unavoidable lockdown-related decline in SMIP installation, roaming services and other service revenues, partly mitigated by hardware revenue and non-mobile ICT business growth.

Returns: OIBDA for the year reached £1,834 million (-1.1% year-on-year) with OIBDA margin at 30.8% (up +1.0 percentage point versus 2019).  OIBDA decline was driven by the COVID-19-related decline in revenues and costs associated with the merger preparation, partially mitigated by commissions savings and strong cost control. OIBDA for the fourth quarter increased +2.5% year-on-year on an underlying basis (a +7.1 percentage point quarter on quarter trend improvement).

CapEx for the year was £728 million reflecting continued investment in network capacity at a time when customers need it most, while maintaining increased levels of investment in growth areas such as 5G.

 – ENDS –

About Telefónica UK / O2

Notes to editors 

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

No.1 UK Network: O2 is the UK’s largest network with 36.2 million connections, providing 2G, 3G, 4G and 5G services while operating a nationwide O2 Wifi service[1]. 

No1 for network coverage and reliability: O2’s coverage and reliability are industry recognised, with GWS ranking O2 as the most reliable UK network, three years in a row – 2021, 2020, 2019). For four consecutive years O2 has won Best Network Coverage provider at the publicly voted Uswitch Awards (2021, 2020, 2018, 2019). It also won Best Network Performance at the Mobile News Awards in both 2020 and 2019.

No1 for customer experience and loyalty: Over the last 11 years, O2 has been the best performing Mobile Network Operator in the Institute of Customer Service Index Customer Satisfaction rankings[2]. As a result of O2’s steps to treat customers fairly, churn remains the lowest in the industry as customers choose to stay with O2. 

No1 for flexibility: Unlike major network competitors, O2 puts customers in the driving seat: it’s easy to tailor your contract term, flex your tariff each month, or upgrade as and when you want to.  

No1 for fair pricing: O2’s Custom Plans, which separate device payments from airtime bills, offer customers the most transparent bills of any major network. Customers are better off on O2 at the end of their device plan. In 2020 customers on a custom plan tariff saved £168m once their device was paid off, an average of £130 per customer[3].

No1 for net zero and recycle: with a plan to reduce carbon emissions by 30% in the next five years. The O2 Recycle scheme encourages customers to dispose of old devices responsibly and was named Best Recycle Service at the Mobile Industry Awards.  In 2019 O2 was one of only three companies globally to be recertified at the highest level by the Carbon Trust Standard for reducing supply chain emissions.

Keeping children safe online: Since 2015 O2 has worked in partnership with the NSPCC, helping parents to keep their kids safe online with advice and tools like Net Aware. In 2020 it became the only UK mobile network to sign up to The Conscious Advertising Network (CAN), a voluntary coalition of organisations set up to ensure that industry ethics catches up with the technology of modern advertising.

A great place to work: O2 has 6,500 employees across three main office sites and more than 440 retail stores, awarded the first ever People and Culture Award at the Mobile Industry Awards 2020. It is the only telco named in the Social Mobility Employer Index for three consecutive years.

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.

[1] Based on total number of connections to O2 network vs. number of connections to each of Vodafone, BT Group and Three as of 30.06.20.  Connections are defined as the number of Subscriber Identity Modules (SIMs) classed as active in the last 90 days. See www.o2.co.uk/network for more.

[2] O2 has been the top UK Mobile Network Operator in 18 out of the 23 UK CSI polls (run by the Institute of Customer Service) over the last 11 years (Jan 2010 to Jan 2021)

[3] O2 figures. Standard bundled contracts offered by some competitors continue to charge customers for a device they have already paid off.