Everythng Evrywh 50WS Everything Everywhere Q1 2012 results

  Everythng Evrywh (50WS) - Everything Everywhere Q1 2012 results

RNS Number : 5178C
Everything Everywhere Finance PLC
02 May 2012

London. 2 May 2012

     Everything Everywhere Results for the First Quarter to 31 March 2012

  Underlying service revenue growth driven by postpaid growth and smartphone

· Service revenue excluding regulated MTR cuts +2.9%* (Q4 2011: +1.2%);
including impact of MTR cuts -2.5% (Q4 2011: -4.0%)

· Continued rapid smartphone adoption and accelerating data revenue
growth; postpaid smartphone penetration up 14 ppts at 71% (Q1 2011: 57%);
non-messaging data revenue up 10 ppts at 27% (Q1 2011: 17%) of ARPU; non-voice
revenues (data and messaging) up 17% to 45.5% (Q1 2011: 37.5%) of ARPU

· Customer value mix improves further; postpaid customer base up 7.3%
year-on-year(yoy) with 886k net adds; Q1 net adds 151k (Q1 2011: 160k); 49%
of customers now on postpaid plans (Q1 2011: 45%); in line with industry trend
towards postpaid and reflecting post-Christmas seasonality, prepaid customers
decreased by 494k (Q1 2011: -394k)

· Industry-leading customer retention, with churn of 1.2% (Q1 2011:
1.3%); successfully upgrading existing customers to higher value plans, with
average access fees +1% yoy

· Further progress building the best network for the UK

§ 3G "Smart Signal" sharing doubles of the number of Orange and T-Mobile
customers using the other network's signal

§ Nationwide rollout of 3.5G (HSPA+21 Mbps), delivering up to 50% faster data
speeds than 3G

                                      Quarter ended 31 Change year-on-year %,
                                            March 2012        comparable basis
Service revenue                                £1,503m                 (2.5%)*

Service revenue change (excluding                                        2.9%*

Postpaid Net Adds                                 151k

Postpaid Churn                                    1.2%              (0.1) ppts

Olaf Swantee, Chief Executive Officer of Everything Everywhere, commented: "We
are seeing improved underlying service revenues, driven by rapid data revenue
growth, as we successfully upgrade customers to smartphones and higher value
postpaid agreements. We continue to make major strides improving our
current network experience such as better signal sharing and faster 3G data
services, and we plan to start to introduce 4G LTE for the benefit of UK
consumers and businesses by the end of the year, pending regulatory approval."

Operating Review

The first quarter was a period of steady progress, with solid postpaid
customer acquisition and retention performance. We aggressively advanced our
strategy of building the best network for the UK with further investment in
the current and future development of our network to underpin the long term
growth of our business.

Our Customers: Driving market leadership and customer loyalty

Excluding the impact of regulated Mobile Termination Rate (MTR) cuts,
underlying service revenue grew 2.9%, up from 1.2% in the previous quarter;
including the impact of MTR cuts, service revenue was down 2.5% to £1,503m.
Underlying growth was driven by a 7.3% year-on-year increase in high value
postpaid customers, including 151k net postpaid additions in Q1. We are
successfully upgrading significant numbers of existing customers to higher
value postpaid plans and continue to lead the industry in customer retention,
with churn of 1.2%.

With nearly half our customers on postpaid plans that generate five times more
ARPU (Average Revenue Per User) than prepaid customers, the value mix of our
customers continues to improve, with underlying blended (combining pre- and
postpaid) ARPU up 4.5%. 

We rapidly delivered on our strategy to build the UK's best network. In March
we rolled out "Smart Signal" sharing to provide seamless 3G handover between
the Orange and T-Mobile networks, resulting in twice as many customers using
the other network's signal than before. We have also completed the nationwide
rollout of 3.5G (HSPA +21 Mbps), providing up to 50% faster data download
speeds than 3G.

To provide high value postpaid customers with increased smartphone support, we
are reorganising our customer service functions to ensure that we put the
operating systems and devices at the heart of everything we do, resulting in
increased rates of one-call resolution and positive customer feedback.

Our Company: Operational excellence

We continue to make progress in reducing costs and simplifying the business.
In the first quarter we initiated our network optimisation programme to
streamline the number of network masts.

We completed on a series of other business integration projects including: the
head office restructuring in February; the consolidation of the Orange and
T-Mobile warehouses and handset supply chain, generating cost savings,
improved product availability to customers and stores and allowing quicker
introduction of new products and services; and plans to reduce our head office
space by 38%. We remain on track to achieve our targeted £3.5bn+ NPV in cost
savings by 2014.

Our Future: Creating a platform for growth through smartphones and data 

Smartphone penetration continued to increase rapidly and data revenues growth
accelerated in Q1 as more customers increased data use. 71% (Q1 2011: 57%) of
postpaid customers are now on smartphones, with 90% (Q1 2011: 82%) of new
postpaid customers opting for smartphones. Non voice revenues (data and
messaging) were up 17% to 45% of ARPU revenues this quarter, with non
messaging data revenue up 10 ppts to 27% of ARPU.

We have achieved double digit fixed broadband revenue growth yoy with 90% of
new customers in Q1 taking fixed broadband, line rental and mobile.


Media Contacts:

Dan Perlet


Everything Everywhere Press office:

everything.everywhere(at)golinharris.com or 0870 373 1500

Investor Relations Contacts:

Deutsche Telekom Investor Relations:

investor.relations(at)telekom.de or +49 228 181 888 80

France Telecom - Orange investor relations:

didier.kohn(at)orange.com or +33 1 44 44 72 53

About Everything Everywhere

Everything Everywhere is the UK's largest communications company, providing
mobile and fixed-broadband communications services to more than 27 million
customers through the Orange and T-Mobile brands. It has invested over £15
billion since 2000 building Britain's biggest mobile networks, and plans to
invest over £1.5bn in the next three years to further improve its network and
introduce fast 4G LTE mobile broadband services. Recognised for award-winning
customer service, Everything Everywhere employs more than 15,000 people and
operates over 720 retail stores across the UK. It has revenues equivalent to a
FTSE 40 company and is backed by two of the world's leading global
communications groups, Deutsche Telekom and France Telecom, who are equal

For more information on Everything Everywhere please call the Media Centre on
0870 373 1500, or visit www.everythingeverywhere.com.

                                                       Q1/11  Q1/12   Movement
Customers (end of period)                      ('000) 27,729 27,219   (1.8%)
- Postpay mobile                               ('000) 12,107 12,993    7.3%
- Prepay mobile                                ('000) 14,871 13,498   (9.2%)
- Fixed total                                  ('000)    751  728     (3.1%)
- Fixed broadband                              ('000)    726  713     (1.8%)
- Fixed narrowband                             ('000)     25   15     (40.0%)
Net customer additions                         ('000)  (253) (344)
- Postpay mobile                               ('000)    160  151
- Prepay mobile                                ('000)  (394) (494)
- Fixed broadband                              ('000)   (15)   0
- Fixed narrowband                             ('000)    (4)  (1)
Average monthly mobile churn                      (%)    2.7  2.4    (0.3ppts)
- Postpay mobile                                  (%)    1.3  1.2    (0.1ppts)
                                                       Q1/11  Q1/12   Movement
Turnover                                        (£'m)  1,704  1,670     (2.0%)
Turnover underlying growth yoy                    (%)                     2.8%
Mobile service revenue                          (£'m) 1,541*  1,503     (2.5%)
Mobile service revenue underlying growth yoy      (%)                     2.9%
Mobile                                                 Q1/11  Q1/12   Movement
Average Revenue Per User (ARPU) (monthly
average)                                          (£)  18.9*   18.7     (1.1%)
ARPU underlying growth yoy                        (%)                     4.5%
- Postpay                                         (£)  34.1*   32.4     (5.0%)
- Prepay                                          (£)    6.8    5.8    (14.7%)
Voice ARPU (monthly average)                      (£)  11.8*   10.2    (13.6%)
Non-voice % of ARPU                               (%)   37.5   45.5    8.0ppts
Average Minutes Of Use per customer per month   (min)    193    198       2.6%
- Postpay                                       (min)    368    357     (3.0%)

 *restated, see appendix for details


Restated 2011 financials

As part of the business integration process, we have revised the accounting
treatment in two areas, starting Q1/12:

1) bundled mobile & fixed broadband revenues: previously, the whole revenue
from a bundled mobile & fixed offer was assigned to Mobile service revenue. At
the same time, for the fixed part of the bundle offer, a cost was charged to
Mobile service revenue and also booked in the Fixed business as revenue. We
now have a clear allocation of fixed broadband and mobile service revenue.

2) Service Provider revenue: previously assigned to Mobile service revenue, it
is now booked as Other operating revenue.

To give like for like comparisons, the relevant 2011 financials have been
restated as detailed below.

All other historic published numbers are unchanged.

Restated                 Q1/11   Q2/11   Q3/11   Q4/11
Mobile service revenue £1,541m £1,503m £1,542m £1,526m
Total ARPU               £18.9   £18.6   £19.1   £18.9
Postpay ARPU             £34.1   £33.2   £33.6   £32.5
Voice ARPU               £11.8   £11.3   £11.1   £10.8

As previously reported   Q1/11   Q2/11   Q3/11   Q4/11
Mobile service revenue  £1,555m £1,516m £1,556m £1,540m
Total ARPU                £19.1   £18.7   £19.3   £19.1
Postpay ARPU              £34.5   £33.6   £34.0   £32.9
Voice ARPU                £11.9   £11.4   £11.3   £10.9

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