O2 revenues hit despite picking rivals’ pockets

BRITAIN’S second-largest mobile network, O2, has seen revenues decline despite signing up more customers than either of its two main rivals in the final quarter of last year.

O2, owned by Spain’s Telefonica, said mobile revenues fell 8.5 per cent year-on-year in the final quarter of 2012. All mobile operators have been impacted by price wars, enforced cuts to charges, and consumers spending less on voice calls and texts, but O2’s decline was more severe than both EE – the owner of Orange and T-Mobile – and Vodafone.

This came despite O2 signing up 282,000 new customers to contracts in the fourth quarter, compared to EE’s 201,000 – during the period it launched the UK’s first 4G network – and Vodafone’s 230,000. At the end of last year, O2 had 23.8m customers to EE’s 26.8m and Vodafone’s 19.5m.

O2 said it managed to sign up more customers than its rivals “despite the absence of 4G”, a thinly-veiled dig at EE – which some analysts have suggested has failed to capitalise on launching the UK’s first 4G network.

“I think anyone who was going to go first was going to have some challenges creating the market and educating the market,” O2’s chief executive Ronan Dunne said. He said he saw an opportunity for growth by offering new services when the company switches on 4G in early summer.

O2 has recently launched a service that allows people to make and receive calls on tablets and computers, as well as over Wi-Fi, and the company is investing in developing other services in order to give it an edge. “We are in a better position to create new streams of revenue than our competitors,” Dunne said.

Telefonica, which has operations in other European countries as well as in Latin America, saw profits fall by 27 per cent after it wrote down the value of its Irish operations and a stake in Telecom Italia. Revenues were flat as improving sales in Latin America made up for a 6.5 per cent decline across Europe.