Underlying service revenues at Everything Everywhere (EE) grew 2.9 per cent during its first quarter, but enforced cuts to Mobile Termination Rates (MTR) dragged actual revenues down 2.5 per cent to £1.5 billion.
Despite the impact of MTRs, EE CEO Olaf Swantee told Reuters that the operator's improved underlying service revenues was driven by rapid data revenue growth and smartphone users on postpaid contracts.
The company revealed that the attraction of smartphones has continued to rise with 71 per cent of postpaid customers choosing these devices, compared to 57 per cent last year. The operator said 90 per cent of new customers choose smartphones, compared to 82 per cent last year, according to Mobile Today.
This level of smartphone uptake has pushed EE's non-messaging data revenue up from 17 per cent to 27 per cent of ARPU, while data and messaging combined was up 17 per cent to over 45 per cent of ARPU.
Adding to this, Swantee said this uptake of smartphones, which typically have 18-month or two-year contracts, has helped reduce churn. "In the fourth quarter we had the best churn in the market [at 1.2 per cent]," Swantee told Reuters. "It's too early to tell this quarter but I expect again we will have the best churn in the industry."
While not releasing first-quarter earnings, Swantee said cost savings, targeted at £3.5 billion pounds by 2014, were firmly on track. The company confirmed it had completed a number of restructuring activities during the quarter, including a mast reduction programme, a head office reshuffle and a 38 per cent reduction in head office space. Its handset supply chain and warehousing for both Orange and T-Mobile also underwent consolidation.
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