EE's LTE subs spending 10% more, but company stays shy on user numbers

EE, the UK's first LTE operator, said that subscribers to the new service are spending on average 10 per cent more each month.

EE's CEO Olaf Swantee told the Financial Times that the uptake of LTE was on track, with a third of its existing customers using LTE handsets--hundreds of thousands according to Swantee--upgrading when possible.

He added that the premium pricing EE charges for LTE was sustainable given the "differentiation" in its network quality, even after rival 3UK announced plans to charge the same for LTE as it currently does for its 3G tariff. "When you look at the early customers migrating from (3G brands) Orange and T-Mobile to EE we are seeing a 10 percent ARPU increase," Swantee said, according to Reuters.

However, Swantee ducked questions related to how many actual LTE customers the company has, claiming he didn't want to pre-arm the company's rivals, which will launch LTE service later this year. "I can say our plan is on track, we are very pleased with the progress we are making," he said.

However, this failure to reveal LTE subscribers is prompting speculation among analysts that initial results had been below expectations.

Ovum analyst Steven Hartley said in a statement that what EE didn't say seemed the most telling. "The lack of LTE customer numbers is unsurprising. The official line is so as not to impact the on-going spectrum auction," he said. "However, experience suggests that phrases such as "solid early LTE momentum" cover all manner of sins. Or to put it another way: if customer uptake was far ahead of expectation, then we would hear about it. We therefore have to conclude that uptake has not been spectacular. That doesn't make it a disaster, just not necessarily fully optimising its monopoly position."

Hartley noted that a clue lies elsewhere in EE's comments on the premium charge it has imposed on LTE subscribers. "We have argued for years that charging a premium for LTE services may appease investors fearful of telcos losing their traditional licence to print money, but it will not generate customer uptake where 3G is well embedded," he said.

Despite this, Swantee said he remains upbeat with EE seeing good demand for faster data connections from corporate customers, a business segment where the operators has been traditionally weak. "The B2B uptake on 4G is very strong," he told Reuters. "We have already over a thousand corporate customers using 4G in various degrees."

The company also posted full-year adjusted core earnings of £1.41 billion, broadly flat from the year before, on revenue of £6.7 billion, down 1.9 per cent. Service revenue of £5.95 billion rose 2.7 per cent, excluding the impact of regulatory price changes, according to Reuters.

James Barford, at research firm Enders Analysis, told the Guardian that EE's performance was "resilient."

"They did a rebrand, changed all the shops, and yet it looks like they've performed in line with the market despite all of this disruption," he said.

For more:
- see this FT article (sub. req.)
- see this Ovum release
- see this Reuters article
- see this Guardian article
- see this EE release

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