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Slump in handset sales hits O2 revenues in Q2 2016

Due to a slump in handset sales, UK's O2 saw a 4.4-decrease in year-on-year revenue.

Published onJuly 28, 2016


It seems Apple isn’t the only one to see falling phone sales due to the global slowdown in the handset market. Telecom operator O2 saw its Q2 2016 revenues fall 4.4 percent year-over-year to £1.346 billion, which the company has attributed to a market-wide slowdown in handset sales. O2’s profit margin remained broadly stable at 26.6 percent.

On the bright side, the operator saw its best customer growth in the last 18 months, with 240,000 customers added in the quarter, up 20 percent year-over-year. Out of this, 134,000 (100,000 excluding M2M) were contract customers, up 10 percent year-over-year, and now account for 61 percent of O2’s overall mobile base of 25.2 million. The operator’s prepaid base increased by 106,000 subscribers and contract churn fell 0.1 percent year-over-year to a record low of 0.8 percent, due to its Refresh tariff, perks through O2 Priority and the new ‘More for you’ campaign rolled out in the quarter, according to the company.

Presently, O2’s 4G network covers 91 percent of the UK population outdoors (up 18 percentage points year-over-year), thanks to its network expanding to 23,000 hotspots and garnering more than seven million active users.

A cloud of uncertainty still hovers over O2, following its failed acquisition proposed by Three UK owner Hutchison Whampoa due to regulatory hurdles. O2 is also about to see a change in leadership with the company’s CEO, Ronan Dunne, making way for CFO Mark Evans after being at the helm for nine years.

Meanwhile, in an attempt to revive sales, O2 has launched a service called Like New. The new service offers customers pre-owned phones from O2’s stock of two million devices collected through its O2 Recycle program, as well as old handsets exchanged by its customers in return for new ones.

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