Everything Everywhere sheds prepay customers

Everything Everywhere, the joint-venture between T-Mobile and Orange in the UK, has reported losses of one million pay-as-you-go customers since its formation in April last year. The company, which is jointly-owned by France Telecom and Deutsche Telekom, said that the results reflect consolidation and an increased focus on more profitable postpaid customers rather than full-on churn, citing contract adds of 752,000 over nine months.

Everything Everywhere chased-down high-spending pay-as-you-go customers, offering them attractively priced deals in order to secure network lock-in for at least 12 months.

Everything Everywhere CEO Tom Alexander reported a net increase of 33 per cent in postpaid customers, adding that: “This growth has also translated into an increasing proportion of contract customers…This remains a critical value driver going forward, impacting ARPU, revenue and long-term profitability for the company.” Alexander also pointed to increased contract tenure – 58 per cent of customers were on 24-month contracts at year end – as an indicator or reduced churn levels.

The firm’s focus on the Holy Grail of the post-paid customer contrasts with recent research from Ovum which found that operators are coming to accept prepaid as simply another payment model rather than an option reserved for the credit-unworthy. Report author Sara Kaufman said that: “Operators clinging to a migration strategy for their prepaid customer base need to re-examine their objectives.” Ovum’s study of 19 carriers around the world found that some 73 percent of respondents were keen to – or had already begun – offering a wider range of services to prepaid users, including advanced messaging, application downloads and mobile broadband.

With a global trend towards bundling prepaid tariff plans, offering smartphones and comparable volumes of minutes and messages to postpaid options, it remains to be seen whether Everything Everywhere’s strategy will pay off in the longer term.

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