Upgrade delay and regulation hit O2 revenue

BRITAIN’S second-largest mobile network O2 saw revenue fall more than five per cent in the third quarter as customers held off on renewing contracts ahead of the launch of the iPhone 5, it said yesterday.

Regulation on roaming charges and mobile termination rates – the amount networks can charge for calls to other operators – have affected all of the UK’s mobile operators this year.

However, O2 took a much bigger hit than its major rival EE in the third quarter.

O2’s turnover was down 5.4 per cent year-on-year in pound sterling terms to €1.8bn (£1.4bn), compared to EE’s 1.5 per cent fall. O2 was much more susceptible to lower industry charges on phone calls.

The firm – a division of European telecoms giant Telefonica – gained 110,000 mobile customers on the period last year, as a rise in new contracts offset people leaving pay-as-you-go plans. O2 now has 22.5m mobile customers.

The figures suggest that a short network blackout that hit O2 in the summer did not damage the company.

The gains came despite a nine per cent year-on-year fall in contract renewals as people held off on upgrades ahead of the launch of the iPhone 5.

Meanwhile, Telefonica – which also has operations in Germany, Spain, Ireland, the Czech Republic, Slovakia and Latin America – swung to a profit after losing money in the quarter last year. The debt-laden group has been hit hard by the recession.