O2 sees customer numbers rise, ARPU dip

14-05-2008

by Bryan Collins

O2 Ireland's latest figures reveal it has built its biggest customer base to date; the problem is these customers are spending less and less money with the mobile operator.

Figures released by the mobile operator for the quarter ending 31 March 2008 show its customer numbers were up 1.8 percent to 1.67 million, with 16,805 new net customers added during the period. This is a new all-time high for O2 Ireland.

However, the monthly blended average revenue per user (ARPU) for the quarter was down from EUR45.70 in the previous quarter to EUR43.40, and down from EUR44.20 in the same period last year. Service revenue at the mobile operator was down 0.7 percent to EUR222 million compared with the same period in the previous year.

ARPU for post-pay customers was EUR75.50, down from EUR78.80 in the previous quarter and from EUR82 in the corresponding quarter last year. Monthly ARPU for prepay customers was EUR26.7, down from EUR29 in the last quarter of 2007, and down from EUR28 in the same period last year.

"O2 customers continue to benefit from a number of unprecedented value-led propositions. For prepay mobile users, O2 Experience, launched in Q1, has proven to be extremely popular, both with existing O2 customers and with customers from other networks. Its success, which has exceeded our expectations and boosted competitiveness in the prepay market, is reflected in the significant uplift in text messages sent in the quarter," said Paul Whelan, chief financial officer at O2 Ireland.

The O2 Experience free text promotion contributed to 439 million text messages being sent during the three-month period, representing a 10 percent increase on the previous quarter. O2 claims that its ARPU declined because customers are getting better value from promotions like this.

"There is the O2 Experience promotion for the price plan that we launched for our prepay customers in Q1. That would have had quite a big impact on ARPU because it had free texts as part of the proposition. There is greater value out in the marketplace for consumers," an O2 spokesperson told ENN.

O2 also lauched the iPhone in March. However, the much-hyped device was released too late into the quarter to have an impact on the figures, so all eyes will be on O2's next report to see if the expensive device is making money for the network.

The next few months will be significant as the 3G successor to the iPhone should be launched. It will face fierce competition from a number of other new smartphones such as the Blackberry Bold and the Nokia N96. These devices are all geared towards offering data services -- something O2 and other mobile phone networks regard as crucial to generating future revenues.

"Data revenue also continues to grow year on year, and is indicative of the take-up of new data services such as O2 Broadband, now with over 50,000 subscribers," said Wheelan.

O2 also took the occasion to launch its new SME plan, known as O2 Release. It allows customers to avail of unlimited calls and texts to any Irish mobile network or landline at any time for EUR99 excluding, VAT per month per mobile.