Everythng Evrywh 50WS 3rd Quarter Results

  Everythng Evrywh (50WS) - 3rd Quarter Results

RNS Number : 3500P
Everything Everywhere Finance PLC
24 October 2012




















London. 24 October 2012.



            EE Results for the Third Quarter to 30 September 2012

                                      

Strong commercial momentum driven by growth in postpaid smartphone adoption as
            company prepares for new customer brand and 4G launch



· Service revenue excluding regulated Mobile Termination Rate (MTR) and
roaming cuts +3.1% (Q2 2012: +3.4%) year-on-year (yoy); including impact of
regulatory cuts -3.0% (Q2 2012: -1.1%)

· Further improved mobile customer value mix with postpaid net adds of
250k (Q3 2011: 185k); 51% of customers now on postpaid agreements (Q3 2011:
47%) that deliver five times higher ARPU (Average Revenue Per User) than
prepaid; in line with industry trends, prepaid customers decreased by 393k (Q3
2011: -227k)

· Smartphone penetration reaches 74% of customer base (Q3 2011: 65%),
increasing non-messaging data revenue to 31% of ARPU (Q3 2011: 23%); non-voice
revenue (data and messaging) at 48% of ARPU (Q3 2011: 42%)

· Strong mobile customer retention maintained, with churn of 1.2% (Q3
2011: 1.1%); 32% yoy increase in Q3 contract renewals, with further average
access fee growth

· Fixed broadband continues to gain momentum, delivering 12% yoy revenue
growth, driven by strong multiproduct adoption, with 97% of new broadband
customers also taking line rental

· Company introduces EE; a new business name, network name and, from 30
October, a new customer brand that will launch the UK's first 4G mobile
services, with plans to cover 16 UK cities by end of this year and 98% of the
population by end of 2014



                       Quarter ended 30 Change year-on-year

                         September 2012 %, comparable basis
Service revenue                 £1,496m              (3.0%)
Service revenue change                                 3.1%

(excluding regulation)
Postpaid Net Adds                  250k
Postpaid Churn                     1.2%            0.1 ppts



Neal Milsom, Chief Financial Officer of EE, commented: "We are delivering
solid revenue performance and successfully attracting high value contract
customers, while creating growth opportunities through our new superfast EE
brand that will soon launch the UK's first 4G mobile services. We have
achieved key business goals in the past quarter and firmly established EE as
the UK market leader."

Operating Review

EE made good progress in the third quarter by improving the value mix of our
mobile business and the revenue growth of our fixed broadband business, while
announcing plans to launch superfast 4G mobile and fibre broadband services to
create platforms for growth. Despite significant competitive, economic and
regulatory pressures, we delivered strong commercial performance, with healthy
postpaid customer acquisition and take up of smartphones. 



We announced our new brand strategy including plans to launch EE as a
superfast customer brand standing alongside Orange and T-Mobile. It is our
ambition to rollout 4G in 16 cities covering 20 million people by the end of
2012, and 98% of the population by the end of 2014, making it the fastest ever
rollout of mobile network technology in the UK, underscoring EE's relentless
focus on execution. We also announced plans to offer superfast fibre broadband
to 11 million households and businesses this year.



Our Customers: Market leadership and customer loyalty

Underlying service revenue, which excludes the impact of regulated MTR and
roaming cuts, grew 3.1%. Including the impact of regulatory cuts, service
revenue was down 3.0% yoy to £1,496m.



A net increase of 250k postpaid customers was the main driver behind the
underlying revenue growth in the quarter. 51% of our customers are now on
postpaid plans, improving the value mix of our customer base and driving
underlying blended (combining pre- and postpaid) ARPU growth of 5% yoy.
Customer retention remains very strong, with sustained low customer churn of
1.2%. We are successfully upgrading existing customers to higher value plans,
with 32% yoy increase in contract renewals and further average access fee
growth. 80% of our postpaid customers are on two year contracts, up from 70%
a year ago.



Our Company: Operational excellence

During the quarter, we introduced "EE" as a shorter, snappier name for our
company and network. The introduction of the EE network indicator signifies
the completion of the network sharing programme, demonstrating that we are now
providing all customers with seamless access to the UK's largest 3G network.



We also progressed plans to open refurbished EE-branded stores. Integrating
multiple IT systems across our entire retail footprint to a single more
effective and cost efficient IT platform means our customers will soon be able
to access sales and service for Orange, T-Mobile and EE in any of our 700+
stores across the UK.



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

Smartphone penetration and data revenues continued to increase rapidly in Q3
as more customers increased data use. 74% of postpaid customers are now using
smartphones, up 9ppts yoy, with 92% of new postpaid customers opting for
smartphones, up 8ppts yoy. Non voice revenues (data and messaging) were up
6ppts yoy to 48% of ARPU, with non messaging data revenue up 8ppts yoy to 31%
of ARPU.



Our fixed broadband business continued to gain momentum, with 9k net customer
additions and 12% revenue growth, with 97% of new fixed broadband customers
also taking line rental.



The mobile payment and advertising joint venture with Vodafone and Telefonica
received EU competition clearance in the quarter.



                                    -ends-

                                      

                                      

Media Contacts:

Dan Perlet

dan.perlet(at)ee.co.uk



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 EE

EE is the UK's most advanced digital communications company, providing mobile
and fixed line services to 27 million customers, and will soon become the only
company in the UK to provide 4G mobile services alongside fibre broadband.



EE is the company that runs the Orange and T-Mobile brands in the UK, and will
be launching its new superfast 4G brand - EE - on 30 October. Its 4G service
will cover a third of the population by the end of 2012, and its fibre service
will be available to more than 11 million households and businesses by the end
of the year. EE's mobile service currently provides coverage to 99% of the
population with 2G and 98% of the population with 3G.



For more information on EE please call the Media Centre on 0870 373 1500, or
visit www.ee.co.uk.




                                                                             
                                                  Q3/11   Q3/12    Movement
Customers (end of period)                   ('000)   27,493 26,913    (2.1%)
- Postpay mobile                            ('000)   12,529 13,393      6.9%
- Prepay mobile                             ('000)   14,233 12,792   (10.1%)
- Fixed total                               ('000)      731    728    (0.4%)
- Fixed broadband                           ('000)      713    723      1.4%
- Fixed narrowband                          ('000)       18      5   (72.2%)
Net customer additions                      ('000)     (48)  (134)
- Postpay mobile                            ('000)      185    250
- Prepay mobile                             ('000)    (227)  (393)
- Fixed broadband                           ('000)      (3)      9
- Fixed narrowband                          ('000)      (3)      0
Average monthly churn mobile                   (%)     2.2%   2.3%   0.1ppts
- Postpay mobile                               (%)     1.1%   1.2%   0.1ppts
                                                      Q3/11  Q3/12  Movement
Turnover                                     (£'m)    1,697  1,671    (1.5%)
Turnover underlying growth yoy                 (%)                      4.0%
Mobile service revenue                       (£'m)    1,542  1,496    (3.0%)
Mobile service revenue underlying growth       (%)
yoy                                                                     3.1%
Mobile                                                Q3/11  Q3/12  Movement
Average Revenue Per User (ARPU) (monthly
average)                                       (£)     19.1   18.9    (1.0%)
ARPU underlying growth yoy                     (%)                      5.0%
- Postpay                                      (£)     33.6   31.8    (5.4%)
- Prepay                                       (£)      6.6    5.7   (13.6%)
Voice ARPU (monthly average)                   (£)     11.1    9.8   (11.7%)
Non-voice % of ARPU                            (%)     41.7   48.4   6.7ppts
Minutes Of Use per customer per month        (min)      198    194    (2.0%)
- Postpay                                    (min)      363    338    (6.9%)







EE Results for the Third Quarter to 30 September 2012



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                     This information is provided by RNS
           The company news service from the London Stock Exchange

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