Telefónica UK celebrates a solid scrum in 2016

Telefónica UK has reported its full year figures for 2016, attracting more customers to the brand, though revenues were down 1.5% to £5.6 billion.

Full year net contract mobile additions stood at 584,000, with churn rate down to 0.9%, service revenue is up 1.2% year-on-year on a like-for-like basis, excluding O2 Refresh. O2’s total mobile base now stands at 25.5 million customers, a year-on-year increase of 1.8%, though the number of 4G customers was up 36% to 10.4 million, driving traffic growth of 63% across the network.

While revenues across the UK business did fall slightly, profits were more positive. Profits were actually up 1.7% year-on-year. Neither number is going to move mountains, but any profit will be welcomed by the Telefónica group which is reportedly drowning in debt.

“We are committed to making every day better for our customers through experiences that count and we continue to provide them with compelling reasons to join and stay with us through attractive propositions such as O2 Refresh and O2 Priority,” said Mark Evans CEO for Telefónica UK.

“Coupled with the unprecedented investment we are making in our network, this is driving continued growth and high levels of loyalty which gives us confidence that our strategy is working.”

Alongside the financials announced, the team has also extended its partnership with AEG for the naming rights to The O2 for an additional 10-year period, as well as its sponsorship of the RFU and the England National Rugby team.

The partnership with AEG has formed the basis of O2’s loyalty programme, O2 Priority Moments, which sees the telco reward customers with tickets to gigs and sporting events taking place at the venue. As part of the new agreement, O2 has doubled the number of tickets which it can now relay onto customers for the venue.

“We are incredibly proud of our highly successful partnership with AEG that has made The O2 into the internationally renowned music and entertainment venue it is today,” said Evans. “Over the past ten years our work together has set an industry gold standard and it will continue to do so for the next ten years.

“The new deal reaffirms our commitment to customers, with the number of tickets available to shows via Priority Tickets doubling – giving them access to tickets to unforgettable live experiences 48 hours ahead of general release.”

On the rugby side of things, the new partnership will see O2 generate more unique content for customers, including virtual reality content. An interactive CGI virtual reality playing experience will allow fans to have a virtual training session with the England Rugby team, which will be available in various O2 stores throughout the UK (but presumably not Wales and Scotland).

Moving forward, the team may have been disappointed to lose out to EE in the Rootmetrics assessment of operators networks in the UK, though it has seemingly responded to critics. O2 claims to have continued to invest £2 million per day to enhance network experience and extend 4G coverage to 95% of the population (outdoor), though it hasn’t given any clues as to what the CAPEX budgets will be for 2017. Globally, CAPEX stood at €8.9 billion, including €345 million for spectrum acquisition.

In the wider Telefónica group, the team reported an underlying net income of €4.038 billion, a 4.8% year-on-year increase. The Spanish business accounted for 24.4% of total revenues, while the LATAM business (excluding Brazil) brought in 24.2%, Brazil 21.3%, Germany 14.4% and finally the UK 13.2%. Worldwide, mobile data revenues represented 52% of all mobile service revenues across the year.

Overall, the year would not necessarily be considered a blockbuster, but it is far from a disaster. Maintaining its strong position in the UK market is about as much as it can hope for in a sluggish mobile market, though it is holding more than its own in the wider Telefónica group.