UK's No1 network for customers announces third year of top and bottom line growth

Telefónica UK Limited (O2) publishes full year results to 31 December 2019 cementing its position in the market; a position based on:  

  • Three full years of growth: TEF UK today announces that 2019 becomes the third year in succession of Total Revenue and Profitability growth. In 2019, Total Revenue grew a further 3.8% and Profitability 2.3%.  
  • Customer numbers that continue to grow: Driven by its customer-focused approach, TEF UK’s customer number continues to rise. With 34.5 million connections, up 5.7% year on year[1], it is the UK’s largest network. 
  • Sustained commitment to customer fairness and customer centricityAs O2 reaches 18 years in the market, it remains one step ahead of the industry on customer fairness – including the introduction of flexible custom plans and transparent billing. As a result, customers continue to stay, and it retains the industry’s lowest overall churn rate at 1%.[2] 

O2 is leading the customer agenda:   

  • No1 for network coverage and reliability: Awarded UK’s Best Network Coverage by uSwitch for a third year running in 2020.[3] O2 also holds the top spot for the UK’s most reliable network.[4] 
  • No1 for customer experience and loyaltyO2 comes top versus all other major operators in the Institute of Customer Service Index Customer Satisfaction rankings.[5] 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 pricingO2’s Custom Plans, which separate device payments from airtime bills, offer customers the most transparent bills of any major network. Customers are also better off on O2 at the end of their device plan, receiving up to £50 a month back once their device is paid offan offer unmatched by the rest of the industry.[6] 

Today, the UK’s No1 network marks 18 years in the UK market by reinforcing its relentless focus on customer fairness. O2 joins Citizens Advice, the CMA and Ofcom in a renewed call on the industry to treat customers fairly, ending loyalty penalties where customers are still paying for devices they already own. O2 customers already benefit by up to £50 a month as a result of the network’s commitment to fair bills.   

Mark Evans, CEO, Telefónica UK said:    

“Today we’re marking 18 years of serving UK customers. Our third full year of consecutive topline growth, profitability and rising customer numbers is something our teams can be proud of.   

From the very beginning, we’ve had a relentless ambition to champion customer fairness, investing to provide the best possible experience for those using our network. But customers who aren’t with O2 are still being penalised for their loyalty to their phone networks.

 

Full Year / Q4 2019 Financial Information 

All financials reported using IFRS 16 reporting standards with year-on-year movements on a likeforlike basis 

Relevance: Total connections, including customers who use the O2 network through giffgaff, Tesco Mobile, Sky Mobile and Lycamobile, reached 34.5 million at 31 December(+5.7 per cent year-on-year), with Telefónica UK remaining the number one UK mobile network carrier. The company maintained its market-leading position for customer loyalty with contract churn at 1.0 per cent in the quarter. Contract net additions for the full year were 1.73 million (190,000 excluding M2M). In the fourth quarter, contract net additions were 623,000 (105,000 excluding M2M).   

Revenues: Total revenue for the year reached £6,235 million (+3.8 per cent year-on-year).  The revenue increase was driven by the continued success of innovative Custom Plans tariffs, higher hardware revenues, progress in the Smart Metering Implementation Programme (SMIP) and increased MVNO revenues.   

Returns: OIBDA for the year reached £1,854 million (+2.3 per cent year-on-year on an organic basis). OIBDA margin for the full year stood at 29.7 per cent.  CapEx for the full year was £801 million (+3.4 per cent year-on-year) reflecting continued investment in network capacitycustomer experience and 5G rollout.


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[1] Total connections, including customers who use the O2 network through giffgaff, Tesco Mobile, Sky Mobile and Lycamobile, reached 34.5 million at 31 December 2019

[2] The company maintained its market-leading position for customer loyalty with contract churn at 1.0 per cent in the quarter. Contract net additions for FY 1.73 million

[3] uSwitch Awards 2020 winners

[4] Global Wireless Solutions Feb 3 2020: ‘O2 retains the top spot as the UK’s most reliable network’

[5] Institute of Customer Service Index Customer Satisfaction rankings 2 Jan 2020 score 77.2. O2 no1 in 17/21 surveys completed period Jan 2010 – Jan 2020

[6] Citizens Advice – The Cost of Loyalty