O2 takes the lead with iPhone and Sim-only strategy.
O2 added more contract customers between July and September 2008 than its two closest competitors (Orange and Vodafone) combined. In fact, O2 added 31,000 more than the total figure of contracts amassed by the rivals.
O2 is last of the big four networks to unveil its Q3 financial numbers, and the results indicate that the operator has extended its lead at the top of the UK market.
O2 had its best ever Q3, fuelled by a twin strategy that focused on 3G iPhones and Simplicity Sim-only deals. It has seen the addition of 278,000 contract customers and a total of 402,000 customers across both prepay and contract.
In the same period, Vodafone took on 207,000 new customers, 87,000 of which were contract customers. Orange added 160,000 contract customers but did not declare how many were prepay customers. T-Mobile added 96,000 contract customers and lost 88,000 on prepay.
The network has been aggressively pursuing the top end of the market with its exclusive 3G iPhone deal, with sales believed to have varied from 50,000 a week at its height in late July, when the phone was launched, gradually dropping to around 20,000 a week – the level that sales are reckoned to be at now.
The bulk of the contract additions, however, are understood to be coming from Sim-only deals, which has enabled O2 to rack up contract customers while shifting the majority of its acquisition budget onto the iPhone. Sim-only is thought to have been promoted heavily by the networks in ads and through its stores with customers looking for cheaper deals and the opportunity to migrate from prepay to contract.
The tell-tale sign for the weighting of Sim-only is the 2.5% drop in contract Arpu, with the operator acknowledging the cheaper deals it has been offering customers.
O2’s revenue jumped by 8.7% in the quarter compared to the previous year, and the operator now leads Vodafone as the network claiming to have the strongest churn levels in the market.
Arguably the most impressive aspect of the results occurred outside the mobile arena.
O2's fixed-line broadband division added 72,870 customers in the quarter, in what has been interpreted as an even more competitive market than that of mobile phones. The operator had the second highest number of home broadband additions after Sky, beating market leader BT (69,000), Virgin Media (50,000) and Carphone’s TalkTalk and AOL (34,000).
O2 broadband base now sits at 267,000, after a total of 196,000 customers were added throughout the year.
Group CEO Matthew Key said: ‘The operating environment is more challenging today than at the start if the year, so we will continue to focus on delivering propositions that customers value and which make O2 stand out in the market.’
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