EE hailed a return to operating revenue growth in the second quarter of 2015, although growth in the UK-based operator's fixed business lifted the overall revenue trend as mobile service revenue continued to slide.
Including regulatory effects, total operating revenue rose very slightly by 0.1 per cent to £1.5 billion (€2.1 billion/$2.3 billion). Excluding regulatory effects, growth was 2.2 per cent.
The continuing rise in EE's 4G customer base to 10.9 million users is still failing to translate into mobile service revenue growth: Jefferies International analysts noted that Q2 mobile revenue fell by 1.8 per cent year on year, while fixed revenue rose by 18 per cent.
However, EE said the fixed-line growth was driven by a "successful cross-selling strategy and EETV", reflecting the company's focus on the sale of bundles of fixed broadband, TV and 4G mobile services to help drive up customer numbers and reduce account churn. "As a result, [multiple product attach rate, or MPAR] was up +4.5 per cent yoy to 1.24 connected products per postpaid voice customer," the company said.
In the first six months of the year, operating revenue declined by 0.5 per cent to £2.957 billion, although total revenue was up slightly by 0.1 per cent at £3.12 billion. On a more positive note, Jefferies said the EBITDA margin increased by 2.2 percentage points year-on-year to reach 26.6 per cent. Adjusted EBITDA also grew by a healthy 9.2 per cent to reach £830 million in the first half.
CEO Olaf Swantee said the company will maintain its focus on cross selling fixed broadband, 4G and TV services in future.
"Our established leadership in 4G and key differentiators such as Wi-Fi calling are working well for the business. We're the clear network market leader and this, combined with our strong operational performance, has led to a return to revenue growth while delivering our best ever EBITDA margin," Swantee added.
Looking ahead, EE said it remains on track to achieve its target of 14 million 4G subscribers in 2015 as a whole. The company noted that its 4G network now covers 90 per cent of the UK population.
Meanwhile the UK's Competition and Markets Authority (CMA) is continuing its investigation into BT's plan to buy EE from Deutsche Telekom and Orange. The statutory deadline for the probe is Nov. 24, but Jefferies said a decision is more realistically expected by the end of March 2016.
"Given that the BT-EE deal would not result in any material increase in retail market shares in either mobile or fixed broadband, we think the eventual approval is highly likely," the analysts said.
Jefferies further noted that interest over the next year will focus on potential remedies to such a merger, "in particular how the CMA proposes that mobile be dealt with within Ofcom's ex-ante margin squeeze testing of BT price plans."
- see EE's results presentation
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