Everything Everywhere's Q2 saved by surge in smartphone adoption

Everything Everywhere's (EE) success in signing up more customers for long-term smartphone contracts boosted its second-quarter services revenues and helped to deliver stable profit margins.

The operator reported that second-quarter service revenues grew 3.4 per cent compared with 2.9 per cent in the previous quarter, according to Reuters.

However, including the impact of cuts to mobile termination rates (MTR), service revenues would have fallen 1.1 per cent, reports Mobile Today. EE's half-year sales were £2.99 billion, down 1.8 per cent on 2011 but up 3.1 per cent if MTR changes are taken out.

The company said it had persuaded more subscribers to sign-up for two-year contracts, with 79 per cent of postpaid customers now on a 24 month deal, compared to 67 per cent last year. Additionally, 72 per cent of its postpaid customers now have smartphones, up from 61 percent last year.

EE's profit margin were flat at 20.3 per cent, according to Mobile Today, but was helped by the operator switching off redundant base station sites as a faster rate following the merger of T-Mobile UK and Orange UK. In total, 1,390 redundant sites were switched off in the first half of the year and a faster pace expected in the second.

Other cost reduction programmes have seen 30 stores closed, together with reducing property used for corporate offices and integrating key technology used at the companies.

Of note, EE said that smartphone uptake was having a positive impact on data revenues with non-messaging data revenue up over 60 per cent to 29 per cent of ARPU, compared to 18 per cent last year. Data and messaging revenues were up 21 per cent to 47 per cent of ARPU.

Separately, according to a Marketing Magazine report, EE is preparing to launch as a consumer-facing brand, with its first advertising campaign set to go live in October.

The report, which cited unnamed sources, said the operator will launch a wide-ranging ad campaign targeting consumers, in a move casting doubt on the future of the individual Orange and T-Mobile brands. Late last year EE CEO Olaf Swantee labelled the company's Everything Everywhere name as "silly."

For more:
- see this Reuters article
- see this Mobile Today article
- see this Marketing Magazine article

Related Articles:
Everything Everywhere's Q1 hurt by MTR cuts despite booming data usage
France Telecom's Richard dismisses Everything Everywhere bid rumours
France Telecom CFO: We could IPO Everything Everywhere
Everything Everywhere slams rivals for not helping build LTE ecosystem
Rumour Mill: Everything Everywhere, T-Mobile UK brands to be abandoned