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Dunne: O2’s customer base most valuable in the market

Michael Garwood
August 13, 2013

Operator’s latest results show churn hit ‘record low’ and contract adds rose by 16pc in Q2

O2 has said its customer base is the most valuable in the market, after its quarterly churn levels hit a record low and contract additions a three-year high.

The claim was made by O2 UK CEO Ronan Dunne following the operator’s Q2 financial results, announced late last month (July 25).

The results show O2 added 292,000 contract customers – up 16 per cent from a year earlier and 41,000 more than it added in Q1.

It is the sixth successive quarter during which O2 has added more than 200,000 contract subscribers in a three-month period and these increase its contract base to more than 12.4 million (up by nine per cent year on year).

Contract churn fell below one per cent to 0.9 per cent, continuing to improve by 0.1 per cent from the previous quarter. EE’s churn rate in Q2 was 1.2 per cent, while Three’s was 1.6 per cent in the first half of the year. Vodafone didn’t announce its churn rate when it reported its Q1 results last month.

Profits for the firm increased by 9.2 per cent annually to £357 million with revenues improving sequentially by 4.3 per cent to £1.38 billion.

Dunne told Mobile News: “We managed to drop churn yet again from its already record low, improving quarter over quarter. We’re in the position now where we have the most valuable base in the market.

“This has been another solid quarter for us. Our market-leading propositions are helping us attract and retain more and more customers every day.”

Prepay numbers, which represent 46 per cent of the operator’s 23.1 million customers, fell by 78,000. Vodafone and EE, by contrast, saw numbers fall by 102,000 and 671,000 customers respectively during Q2.

Dunne claims the firm’s persistence in offering the same value on prepay as contract has enabled it to slow the market’s downward trend.

He added that value-led loyalty schemes such as Priority Moments, free Wi-Fi and ticket offers at O2 Academy concert venues mean customers get the “overall wrap” of “value and membership” with O2.

“What we have done better than some others in prepay to postpay migration is retained more of those prepay customers who might have gone somewhere else, because we always give the same value to our prepay customers.

O2 Refresh
One of its most successful propositions is the O2 Refresh tariff plan, which Dunne claims has enabled O2 to be both “bold and disruptive” in the marketplace.

The new plan launched in O2’s 450 retail stores on April 16 and on its website on July 18. It is designed to enable customers to upgrade their devices to newer models at any time during a 24-month contract. More than 80 per cent of new and upgrading customers have chosen it.

Dunne said O2 has been able to drive its contract business as Refresh helps it stand out in the market – and he claimed the biggest compliment was that rivals are looking to mirror the offer.

“Refresh is absolutely on the money about what O2 is all about, making a bold, disruptive play in the market that other people would perhaps fear doing,” he said.

“Even if you give your customers that type of flexibility to leave and change their handset, you’re also giving them the confidence to stay and they can use Refresh to change their handset as often or as rarely as they want. Nobody else offers you that and it is a very transparent approach to value.

“It is the biggest tariff innovation in the market for a long time and the best possible reflection of that is the rumours I’m hearing that my competitors are trying to copy it. There must be something in it and customers absolutely love it.

“Refresh is causing other channels to think hard as to whether or not they have the same loyalty in their customer base and would feel as confident in doing it.”

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