Everything Everywhere, the company formed by the merger of Orange and T-Mobile in the UK, has posted a drop in service revenue of 2.5 per cent to fall to £1.5bn in its first quarter earnings statement.
The firm blamed the drop on the impact of regulated mobile termination rate (MTR) cuts. Last year, the UK’s Competition Commission decided to increase the speed at which mobile termination rates must fall, from 4 pence per minute to just 0.65 pence per minute by 1 April 2014. It said that, excluding the impact of these cuts, revenue would have grown by 2.9 per cent.
Nonetheless, CEO Olaf Swantee was buoyed by the performance, and described its current churn rate, which stands at 1.2 per cent as “industry-leading”.
“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,” he said.
He added that the firm expects to make “major strides” improving its network experience, such as better signal sharing and faster 3G data services, when it launches its LTE services, which it is hoping to bring to market by the end of this year by refarming its 1800MHz, pending approval from regulator Ofcom.
“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.
During the quarter, Everything Everywhere also completed on a series of other business integration projects including restructuring its head offic, the consolidation of the Orange and T-Mobile warehouses and handset supply chain and improved product availability. The firm plans to reduce its head office space by 38 per cent and Swantree said the operator remains on track to achieve its targeted £3.5bn net present value (NPV) in cost savings by 2014.