Everything Everywhere drops 188K subs in Q2, driven by prepaid losses

The UK's largest operator, Everything Everywhere (EE), blamed new regulations for the 3 per cent decline in its second-quarter revenues--down year-on-year from £1.72 billion to £1.66 billion.

Perhaps more worryingly, EE said in total that it lost 188,000 net customers in the quarter, and 443,000 net subscribers in total in the first half of 2011.

Despite the weak subscriber numbers, outgoing EE CEO Tom Alexander noted that the operator added 236,000 postpaid subscribers in the second quarter and achieved record smartphone sales in the quarter. The postpaid customer gains were offset by 412,000 prepaid subscriber losses in the second quarter.

"Contract customer churn is now at our best ever level at 1.1 per cent and two out of three customers are selecting 24-month contracts as they go to higher-value smartphones," Alexander said in a statement. EE said that 67 per cent of its subscribers were now signed up to two-year contracts, up from 42 per cent in the year-ago period.

Alexander, who will leave EE at the end of August, said that the first-half results indicated a "period of good prog"ess" and are proof that the synergy between Orange and T-Mobile is also performing strongly. The company claims it is ahead of its ‘synergy capture'" target having reached £57 million during the first six months of 2011, bringing the total to over £200 million.

"Leveraging our unique strengths and market leadership, we are delivering on our strategic plan, set out in September 2010 and are way ahead of plan with our synergy capture," Alexander said.

The company reported that underlying service revenues for the second quarter grew by 2 per cent year-on-year, but before accounting for the effects of regulatory impact, such as cuts in the MTR rates. However, EE said the total costs of new regulatory rules had taken £70 million, or 3.5 per cent, off top line revenue.

On the upside, EE claims that non-voice revenues now account for 39 per cent of overall revenues, up from 36 per cent in the second quarter in 2010, with increased smartphone usage driving data sales up 8 per cent year-on-year.

Of note, EE pointed to market research data from GfK that indicated that both Orange and T-Mobile sold more iPhones than any other UK operator during the final week of the second quarter.

For more:
- see this release
- see this Guardian article
- see this Computer Weekly article
- see this Mobile News article
- see this New Media Age article

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