T- Mobile UK Second Quarter And Half Year Financial Results

In line with its strategy of building both market and revenue share, T-Mobile UK today announces a continued strong increase in customer numbers, record contract customer growth, reduced contract churn and an increasing rate of revenue growth. 

Record Contract Growth

Net new customers: 748,000. Up 127% on H1 05
Q1: 379,000.  Q2: 369,000
Net contract customers: 629,000. Up 14 times on H1 05
Q1: 266,000.  Q2: 363,000
Total customer base: 16.7 million
Total contract customers: 3.6 million. Up 25.4%
Revenues: £1.48 billion. Up 7.9%
Q2 Revenues:  £772 million. Up 12.5%
ARPU: £19 per month. Contract ARPU £44
Non-voice 18% of ARPU revenues

Success of new launches
Flext exceeds target with 771,000 new customers
Mates rates pre-pay base now 1,127,000. U-Fix base now 419,000

Note: Customer numbers include Virgin Mobile customers. The total Virgin Mobile customer base was restated at the end of the first quarter of 2006 to be on a 180 day active customer basis. This had the one-off effect of reducing total reported pre-pay customers compared to 2005.

In particular, T-Mobile’s innovative Flext contract plan has had a marked impact on the mobile market, attracting over 771,000 customers since its launch in March. The contract base has grown by over 25% year to date to over 3.6 million. At the same time, T-Mobile has deliberately swung its focus away from the low end of the pay-as-you-go sector of the market, the most susceptible to churn.

Revenue growth reflects this strategy with total revenues up 7.9% year to date and up 12.5% for the second quarter to £1.48 billion and £772 million respectively.

Jim Hyde, Managing Director of T- Mobile UK, said:

“Growth this year to date has exceeded all our expectations. More importantly, it is quality growth.

“We are putting into practice straightforward principles of meeting customer needs with simplicity, innovation and value. We are also leading in the introduction of mobile internet and mobile broadband, and we are placing a strong focus on improving customer service.

“Our aim is that customers increasingly recognise that T-Mobile represents the best in network, service and value.”

This year to date, T- Mobile UK has launched a succession of important initiatives in addition to Flext. It has simplified and refreshed its Relax tariffs and its range of Pay-as-you-go plans, led the way on reducing roaming costs and introduced market – leading mobile data and internet plans. Its Mates Rates on-net pre-pay plan and      U-Fix, which combines contract value with pre-pay bill control, were both introduced last year and have built on their success with customer bases of 1,127,000 and 419,000 respectively.

These initiatives all reflect T-Mobile’s commitment to identifying and meeting customer needs with good value, simple plans and its belief in price elasticity and the ability of mobile steadily to displace the fixed line phone.

In parallel, T-Mobile is rapidly expanding its retail store portfolio, which now has 181 shops, compared to 141 at year end, and is on track to meet its 300 plus target by end next year.

During the rest of the year, T-Mobile will continue its focus on contract customers and on reducing higher churn pre-pay customers. It expects a more stable total number of customers in the second half, but with a continued improvement in the profile of the customer base, a continued increase in revenues and an up-lift in EBITDA margin.

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