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O2 claims to be ‘outrunning rivals’

Michael Garwood
September 8, 2010

Record Q2 dealer investment and sales put O2’s SME share at 40 per cent as it claims it’s ‘getting stronger’

O2 has dismissed the challenge from Vodafone and Everything Everywhere in the SME sector after achieving record growth in SME connections during the second quarter.

O2 told Mobile News it has so far seen no impact on sales or disconnections as a result of its rivals increasing their focus on SME connections, and in fact beat its own best for SME connections by more than 10 per cent last quarter.

The result has increased O2’s share of the SME market to around 40 per cent, outstripping Vodafone by five-10 per cent and Everything Everywhere by 10-15 per cent.

O2 head of SME sales David Plumb said: “The other networks have now started to put more focus on this market, but it has been a priority for us for many years because it’s a very profitable and growing market place. Vodafone has made some noise but when it comes to results, we have just had our best quarter ever.

“We have grown our market share, so we have certainly not seen the impact yet of its activity. And I think Everything Everywhere is working through a big transition and it is certainly not winning business from us.

“We would expect to outrun the market and grow share; that is our typical run rate. Every
quarter, we look to port in more than we port out and we have achieved that again. We are number one in the SME market and we are getting stronger.”

O2 pumped an additional £4 million in to the SME channel in the first half of the year to achieve its market share growth.

It has also provided additional funding for its dealer partners to offer a number of incentives, including holidays and cash bonuses to help push sales on its network.

But Plumb said such investment will not be maintained in to the second half of the year, although he said the brand will outperform rivals even so.

“In the first half of the year, we invested heavily in our channels to drive bigger numbers – and that is through a combination of things such as revenue share for customers we have passed on to partners, and volume bonuses for hitting certain connection numbers,” said Plumb.

“The third quarter is usually our best quarter for SME sales, and September is historically our best month. We wouldn’t normally expect the second quarter to be record-breaking; it
would normally be Q3. We went over and above, and invested more in the first half of the year than we would normally. We will look to outperform the market and grow our share again in the second half, but perhaps not at the same rate.”

O2 said the figures are a direct result of its early decision to partner more closely with specific dealers and distributors, and to take all or the lion’s share of their business connections. It also said it has performed well because of its early introduction of a revenue share model.

These partners include around 20 ‘centre of excellence’ partners, which are required to put
a minimum of 80 per cent of business to the operator, as well as 60 ‘approved’ distributors and resellers and 40 direct dealers. It said this choice band of connectors deliver more than a third of its total SME sales.

O2 business sales director Ben Dowd challenged O2 partners before Christmas to grow market share and to achieve their best ever connection numbers in 2010. He paid tribute to the channel this month, highlighting in particular the performances of Avenir Telecom and Azzurri Communications, which each recorded best-ever quarterly connections.

Avenir Telecom said earlier this month it had broken O2’s record for new connections in
the quarter, connecting more O2 business than its two nearest distributor rivals combined.

Also, dealer Davison Communications was mentioned for selling more O2 Joined Up connections than any other O2 partner.

Dowd said: “In December 2009, I asked our channel partners to support our strategy to outpace the competition and achieve their best ever performance in 2010. I’m delighted to have had our best ever quarter in Q2 and we thank our partners for their incredible performance.

“We took a fair amount of criticism when we launched revenue share, but I thoroughly believe these results bear out the fact that it was the right thing to do.”

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