13th Nov 2006 13:34
Telefonica SA13 November 2006 Press Release PR0627 O2 ANNOUNCES THIRD QUARTER RESULTS Released: 13 November 2006 Key performance indicators at 30 September 2006: Mobile service revenue in the third quarter (at constant currency): • O2 UK net service revenue grew by 14.9% year-on-year; • O2 Germany service revenue grew by 6.1% year-on-year; • O2 Ireland service revenue fell 1.7% year-on-year; • O2 Czech Republic service revenue grew by 6.5% year-on-year. Mobile average revenue per user (12 month rolling ARPU): • O2 UK blended ARPU £272 (Q2 2006: £271; Q3 2005: £265) • O2 Germany blended ARPU €299 (Q2 2006: €308; Q3 2005: €343) • O2 Ireland blended ARPU €545 (Q2 2006: €551; Q3 2005: €551) • O2 Czech Republic ARPU CZK6,089 (Q2 2006: CZK6,083; Q3 2005: CZK6,143) Mobile data in the third quarter • Group SMS volumes grew by 26% year on year to 6.49 billion messages Outlook • 11 months to 31 December 2006 • UK service revenue growth guidance increased, margin reduced • Germany service revenue growth reduced, margin unchanged from previous guidance • 12 months to 31 December 2006 • Czech Republic OIBDA guidance increased, revenue unchanged from previous guidance Peter Erskine, Chairman & Chief Executive of O2, commented: "O2 has continued to thrive as part of the Telefonica group and in the thirdquarter we have maintained our momentum in highly competitive markets, adding812,000 mobile customers, taking the total mobile customer base to 34.4 million,14% higher than last year. In the UK we added 524,000 net new customers, driven by our customer focusedpropositions and ongoing strategy of treating both new and existing customersequally. Contract churn was again reduced, for the fifth quarter in a row, whilegross connections grew 15% year on year, helping to extend our strongperformance from the first half into the third quarter. This faster thanexpected growth has allowed us to again raise service revenue guidance, and wenow expect 14% to 15% growth year on year for the 11 months to 31 December 2006. In Germany we added 294,000 net new customers in the quarter taking the totalbase to 10.629 million, representing 19% year on year growth. The marketcontinues to be highly competitive and this, coupled with termination rate cuts,contributed to the decline in 12-month rolling ARPU, although monthly ARPUincreased quarter on quarter. We continue to watch the future direction of thistrend. Our Tchibo joint-venture continued to perform well adding 50,000customers. We have adjusted full year guidance for Germany to reflect theslightly lower than expected service revenue growth we have seen in the firsteight months of the year and the planned increase in our commercial activity inthe fourth quarter. In the Czech Republic O2 added 55,000 net new mobile customers on contract,raising the percentage of contract customers in the base to 37.4%, compared toonly 30.9% at the end of September 2005, demonstrating the ongoing success ofthe pre-pay to contract migration strategy. In our fixed line business, thetotal number of ADSL lines stood at 427,000 at the end of September, compared to221,000 at the same time last year. In a competitive market O2 Ireland traded well, adding 16,000 net new contractcustomers and ending the quarter with a total customer base of 1.603 million, 2%higher than at the same time last year. Airwave continues to make good progress in winning new contracts and rolling outthe service to new customers. During the quarter the Scottish Ambulance Servicesigned a 10 year contract worth almost £50 million, while the rollout of Airwaveto Ambulance Trusts in England is progressing well with 3 Ambulance Trusts nowat "Ready for Service", the first key milestone in the Ambulance Programme." FINANCIAL DATA The results of O2 Group comprise the results of O2 UK, O2 Germany, O2 Irelandand O2 Airwave for the 8 month period ended 30 September 2006. It also includesthe results of be* from 1 July 2006 and Decision Focus from 1 August 2006. O2 Group Consolidated Income Statement Unaudited figures 3 months ended Period ended 30 September 2006 30 September 2006 •m •m Revenues 3,003.5 7,635.0 Internal expenditure capitalized in fixed assets (1) 49.2 132.7 Operating expenses (2,238.2) (5,666.6) Other net operating income (expense) (22.5) (46.3) Gain (loss) on sale of fixed assets (5.5) (10.2) Impairment of goodwill and other assets 0.0 0.0 Operating income before D&A (OIBDA) 786.4 2,044.6 (1) Including work in process O2 Group capital expenditure for the 8 month period ended 30 September 2006totalled €1,483.1 million. The results of O2 Europe for the period ended 30 September 2006 comprise theresults of the O2 Group for the 8 month period ended 30 September 2006 and theresults of Telefonica O2 Czech Republic and Telefonica Deutschland for the 9month period ended September 2006. It also includes the results of be* from 1July 2006 and Decision Focus from 1 August 2006. Telefonica O2 Europe Consolidated Income Statement Unaudited figures 3 months ended Period ended 30 September 2006 30 September 2006 •m •m Revenues 3,606.71 9,434.3 Internal expenditure capitalized in fixed assets (1) 64.2 161.9 Operating expenses (2,603.0) (6,733.9) Other net operating income (expense) (23.16) (53.8) Gain (loss) on sale of fixed assets (3.9) (8.8) Impairment of goodwill and other assets (0.1) (1.5) Operating income before D&A (OIBDA) 1,040.7 2,798.2 (1) Including work in process Telefonica O2 Europe capital expenditure for the period ended 30 September 2006amounted to €1,675.2 million. STRATEGIC AND OPERATIONAL HIGHLIGHTS O2 brand launched in the Czech Republic On 1 September the Czech Republic business changed its brand to O2, endorsed bythe logo of parent company Telefonica, for all of its fixed and mobile services,replacing the existing Cesky Telecom and Eurotel brands. This ongoingre-branding programme is the largest of its kind in the Czech Republic. At thesame time, a range of new products was launched under the O2 brand, including O2TV, an IPTV service based on the Imagenio platform developed by Telefonica. Withthe unified brand of O2 the Czech business is well positioned to offer customerssolutions for all of their telecommunications needs. Mobile licence won in Slovakia On 7 August Telefonica O2 Slovakia, a wholly owned subsidiary of Telefonica O2Czech Republic, was awarded a 20 year licence to operate GSM and UMTS networksin Slovakia. This new operation is an organic expansion of the existing businessin the Czech Republic and will take advantage of synergies in areas such asnetwork and back office functions. Juraj Sedivy, former CFO of the CzechRepublic business, has been appointed as CEO. The Slovak business will use theO2 brand and commercial launch is expected in the first quarter of 2007. DSL launched in Germany After the end of the quarter, on 27 October, O2 Germany launched its DSL offer,backed by a wide-ranging advertising campaign. O2 is the only provider ofintegrated communication services in Germany to offer mobile, fixed voice andfixed internet services. O2 DSL customers get one monthly bill, backed by asingle customer service number and competitive monthly charges. Customers canchoose from three different DSL packages and will receive a discount if they arealso a mobile contract customer of O2. "High roamer" tariff launched as part of My Europe After the end of the quarter O2 UK, in conjunction with movistar in Spain,launched a new 'high roamer' service aimed at frequent travellers, which removescharges when receiving calls abroad. This is the second initiative to belaunched under 'My Europe', a set of low cost roaming tariffs from O2 andmovistar for European customers. The tariff will initially be available to O2 UKcustomers travelling to Spain and in the first half of next year the servicewill be expanded to more than 35 destinations across Europe. For movistarcustomers, the tariff is available in 33 destinations across Europe. The 'highroamer' service has also been introduced by O2 Telefonica Czech Republic andcomplements the first offering under My Europe, which was launched in the Summerand offers holidaymakers reduced flat-rate voice roaming rates throughout the EUacross all networks. THIRD QUARTER OPERATING REVIEW O2 UK Third quarter net service revenue grew by 14.9% year on year and for the eightmonths to September reached a total of £2,785 million, an increase of 15.0%compared to the same period last year, driven by continued strong customer andARPU growth. OIBDA margin for the eight months to September 2006 was 27.6%, reflecting thecurrent high level of customer growth. O2 UK will continue to prioritise growth,where higher value customers can be acquired, for the rest of this year. OIBDAfor the eight months to September 2006 was £837 million. The quarter again saw tough competition in the market, but the businesscontinued to perform well and achieved 15% growth in total gross additions yearon year. A total of 524,000 net new customers were added in the quarter, takingthe base to 17.338 million, maintaining year on year growth at 15%. This figureexcludes the Tesco Mobile customer base. A total of 208,000 net new contract customers were added in the quarter, drivenby higher gross additions as well as lower churn. At the end of the periodcontract customers made up 35.1% of the total base, compared to 34.7% in thesame period last year. 12 month rolling contract ARPU of £515 was down £2quarter on quarter, but £2 ahead of the third quarter last year. 12-monthrolling contract churn was 24%, compared to 30% for the same period last year,the fifth consecutive quarter of decline, reflecting the ongoing strategy ofrewarding customer loyalty. A total of 316,000 net new pre-pay customers were added in the quarter, againdriven by higher gross additions as well as lower churn. 12 month rollingpre-pay ARPU of £142 was £7 higher than the third quarter last year and £2higher than the previous quarter. O2 UK's blended 12 month rolling ARPU of £272 was £7 higher than the thirdquarter last year, and £1 higher than the previous quarter, reflecting thecontinued growth in data ARPU coupled with broadly flat voice ARPU. O2 UK's own channels accounted for a growing percentage of total grossconnections in the quarter, reaching 61%. O2 UK also completed the acquisitionof The Link's 293 stores during the quarter which, after disposals and there-branding of selected locations, will grow O2's retail channel to around 400stores. Customer acquisition costs (SAC) were stable at a blended level. Quarterly monthly minutes of use were up 11% year on year to 175 minutes amonth, driven by propositions such as 50% extra minutes on 18 month contacts andO2 Long Weekends. 12 month rolling data ARPU of £83 was £9 higher than the same period last yearand £2 higher than the previous quarter. Capex in the eight months to September (excluding capex related to theacquisition of be*and The Link) was £350 million, with continued expenditure onrolling out coverage of the 3G network as well as investment in the existing 2Gnetwork to ensure a high level of service. O2 UK launched a number of new products and services during the quarter, aimedat acquisition and retention of customers and revenue growth. These included: • "My Europe" roaming tariff, offering holidaymakers a reduced flat-rate voice roaming rates across the European Union. Using the free opt-in service, O2 customers are charged a flat rate of 35 pence per minute to make or receive a call within the EU, regardless of the mobile network used, at any time. • The "Long Weekends" promotion, offering free on net calls from Saturday to Monday for new and existing O2 Pay and Go customers and free calls to any network in the UK for new Pay Monthly and upgrading customers. • "Be Heard" campaign, promoting the 24/7 availability of UK based business advisors for Business customers, as well as a new Best for Business tariff "Unlimited Off-Peak", offering free calls to all UK mobiles and fixed lines during evenings or weekends . • Two new own brand devices, ICE and Jet. Jet is a tri-band, low-cost handset with a simplified user interface, offering 540 hours of standby time and 9.9 hours of talk time, beating its nearest competitor by over 67%. O2 Germany Service revenue grew by 6.1% in the third quarter, and for the eight months toSeptember reached a total of €2,033 million, an increase of 8.1% compared to thesame period last year, driven by the continued growth of the customer base,which partly offset ARPU weakness in the German market. Third quarter servicerevenue was reduced by almost 4% due to the termination rate cut in December2005. OIBDA margin for the eight months to September was 24.2%, higher than expectedmainly due to the slower rate of post-pay gross additions. OIBDA for the eightmonths to September 2006 was €531 million. In this competitive environment, O2 Germany continued to trade well. A total of294,000 net new customers were added in the quarter, taking the base to 10.629million, 19% higher than at the same time last year. Over the last 12 monthsthere has been a rapid growth in the pre-pay customer base, resulting in pre-paycustomers making up over 50% of the total base for the first time. The TchiboMobile customer base grew to 772,000 by the end of the quarter. O2 Germany added a total of 96,000 net new contract customers in the quarter. 12month rolling contract ARPU of €481 was €7 lower than the previous quarter, and€35 lower than the same quarter last year. This reflected the impact of theapproximately 17% termination rate cuts in December 2004 and 2005, as well asincreasing competition in the German market and the introduction of new customeroffers. A total of 198,000 net new pre-pay customers were added in the quarter. 12 monthrolling pre-pay ARPU of €111 was €6 lower than the previous quarter and €22lower than the third quarter last year, reflecting the impact of the terminationrate cuts, increasing competition, the growth in multiple SIM ownership and theconsequent lower minutes of use. Blended 12 month rolling ARPU is expected to remain the highest in the Germanmarket at €299, down from €308 in the previous quarter and €343 in the samequarter last year. This trend reflects the ongoing impact of the terminationrate cuts, the higher proportion of pre-pay customers in the total base, and theincreasingly competitive market environment. Termination rate cuts reduced 12month rolling ARPU in the quarter by approximately €13. However, average monthlyARPU in the third quarter rose €1 quarter on quarter to €25. Customeracquisition costs (SAC) were stable at a blended level, but fell by around 20%year on year. Quarterly monthly minutes of use grew by 5% year on year, to 124 minutes, drivenby new propositions such as Genion flat rate. O2 Germany now has a total of 3.8million Genion customers (72% of the post-pay base), with 51% of all newpost-pay customers opting for Genion. 12 month rolling data ARPU was €70, €1 less than the previous quarter and €9lower than the same period last year due to the higher number of lower spendingpre-pay users in the base. Non-SMS data users grew 23% compared to the sameperiod last year. Capex in the eight months to September was €745 million, with continuedexpenditure on both the 3G and 2G networks. O2 Germany launched a number of new products and services during the quarter,including: • "My Europe" roaming tariff, offering holidaymakers a reduced flat-rate voice roaming rates across the European Union until the end of the year. Using the free opt-in service, O2 customers are charged a flat rate of 59 cents per minute to make or receive a call within the EU, regardless of the mobile network used, at any time. • O2 Loop Alltime. From 1 August until 27 November the cent per minute rate has been reduced from 39 cents to 25 cents. Customers who top up €30 a month can enjoy a rate of 15 cents instead of the previous 19 cents per minute for all calls to fixed lines, mobiles and voicemail, as well as SMS at 12 cents per message. • O2 Communication Centre. The Communication Centre enables customers to save data such as phone numbers, notes and calendar items to a secure area on the O2 Germany website. If the customer changes handset or it is lost or stolen, the data can be easily downloaded and restored. E-mail can also be accessed via WAP Push or MMS. • O2 ICE - own branded 3G handset featuring MP3 player, 1.3 megapixel camera and one button access to the O2 Music Shop. A 512 MB Micro SD card is also included, which can store around 500 songs. The O2 ICE costs €9.99 on a 24 month Genion contract with Genion flatrate. • "Bonus World", a new bonus program for O2 Genion or Active customers running from 1 September until 27 November. By participating in surveys and through using their phone customers can earn bonus points that can be traded in for free calls, free SMS and other special offers. O2 Ireland Service revenue fell by 1.7% in the third quarter due to termination rateregulation, increasing competition and the introduction of new customer offers.The termination rate cut of RPI minus 11% in January impacted third quarterservice revenue growth by approximately 2%. For the eight months to Septemberservice revenue reached a total of €601 million, an increase of 2.0% compared tothe same period last year, driven by a higher customer base. In a competitive market O2 Ireland traded well, with gross connections at asimilar level to the previous quarter and net contract additions at a higherlevel than in the third quarter last year. 4,000 net new customers were added intotal during the quarter, taking the total base to 1.603 million customers, 2.1%higher than at the same time last year. O2 Ireland added a total of 16,000 net new contract customers in the quarter. 12month rolling ARPU of €1,040 was €35 lower than the third quarter last year and€23 lower than the previous quarter, reflecting the impact of the terminationrate regulation. Pre-pay 12 month rolling ARPU was €356, down €3 on the same period a year agoand €4 compared to the previous quarter. Blended ARPU of €545 was reduced by approximately €10 due to the terminationrate cuts, and was €6 lower than the same quarter last year and down €6 quarteron quarter. Quarterly monthly minutes of use increased by 9% year on year, mainly due to theongoing success of usage stimulation promotions such as 1 cent weekends onpre-pay. 12 month rolling data ARPU was €116, €3 higher than the third quarter last yearand €1 lower than the previous quarter. Non-SMS data users grew by 45% year onyear. In addition O2 Ireland launched a number of pricing initiatives and servicesduring the quarter. These included: • "Free Fiver Fridays" - a 3 month promotion launched on June 1, giving pre-pay customers 25% extra free when they topped up €20 on a Friday using an AIB or Bank of Ireland ATM facility, by text, or online. • Double minutes for 6 months on all Active Life plans for new customers and upgrades. • Trial of a new device repair programme - Swap Out Service (SOS) - in six O2 stores. Customers are given an immediate replacement handset if they have a faulty device which is within its warranty period. O2 Ireland also continued to promote the following offers: • 1 cent calls and texts at weekends for Speakeasy customers was extended until 25 February 2007. • 20% extra inclusive calls & texts every month for life on all online postpay tariffs - Online Active life, Online Easy life and Online Text life. • "My Europe" roaming tariff, offering holidaymakers a reduced flat-rate voice roaming rates across the European Union. Using the free opt-in service, O2 customers are charged a flat rate of 59 cents per minute to make or receive a call within the EU, regardless of the mobile network used, at any time. Telefonica O2 Czech Republic1 Mobile service revenue grew by 6.5% in the quarter, driven by growth in thecustomer base, up 6.0% year on year to 4.760 million, partially offset bydeclines in ARPU. A total of 55,000 net new contract customers were added in the quarter, bringingthe contract customer base to 1.782 million, an increase of 28.4% year on year.Contract customers accounted for 37.4% of the total customer base at the end ofthe third quarter, compared to only 30.9% at the end of September 2005. This growth was achieved through acquisition of new customers as well asmarketing campaigns focused on pre-pay to contract migration, which alsoaccounted for the decline in the pre-pay base compared to the same period lastyear and the previous quarter. 12 month rolling contract ARPU of CZK12,130 was CZK2,630 lower than the sameperiod last year, and CZK420 lower than the previous quarter, mainly due to theeffect of the pre-pay to contract migration strategy. The pre-pay base declined by 65,000 in the quarter as a result of customersusing the analogue NMT network, who were disconnected at the end of June due toclosure of the network, not migrating to digital GSM services, as well ascustomers migrating from pre-pay to contract tariffs. 12 month rolling pre-payARPU of CZK2,854 was CZK129 lower than the third quarter last year and CZK21lower than the previous quarter. 12 month blended ARPU was CZK6,089 in the third quarter, CZK54 lower than thesame period last year but CZK6 higher than the previous quarter. 12 month rolling data ARPU was CZK1,281, an increase of CZK93 compared to thethird quarter of last year and CZK13 higher quarter on quarter. Quarterly monthly minutes of use remained at 102 minutes, up 9% compared to thesame period last year, mainly due to the increase in the contract customer base,driven by migrations from prepay, and traffic stimulation promotions In fixed line, total business revenues in the nine months to September fell by4.8% year on year to CZK22.5 billion, as a result of the continued decline inrevenues from traditional voice services, which was not fully offset by theincrease in broadband revenues. Revenues from broadband services amounted toCZK2.0 billion, up 48.8% year on year. A total of 41,000 net ADSL connections were added in the third quarter, drivenby marketing campaigns promoting increased broadband speeds. The total number ofADSL lines stood at 427,000 at the end of the quarter, compared to 221,000 atthe end of September 2005. -------------------------------------------------------------------------------- 1 After the merger of Cesky Telecom and Eurotel on 1 July 2006, allinter-company charges between fixed (CESKY TELECOM) and mobile (Eurotel)segments became intra-company. Therefore, the financial results of the fixed andmobile segments for the nine months to 30 September 2006 are disclosed excludinginter-segment revenues and costs. In addition, financials for the nine monthsended 30 September 2005 have been adjusted accordingly to allow for relevantcomparison. However, historic consolidated numbers for Telefonica O2 CzechRepublic/Cesky Telecom Group remain unchanged and mobile ARPU has not beenadjusted for inter-segment revenues. -------------------------------------------------------------------------------- In conjunction with the re-branding, Telefonica O2 Czech Republic also launcheda number of new products and services in the quarter including: • O2 TV, a new IPTV service currently available to more than 1 million fixed lines in Prague, Brno, and many other cities. Using the Imagenio platform developed by Telefonica, customers can access hundreds of movies, and a wide selection of TV channels and radio stations, as well as Videoteka (the Library), a virtual video rental shop and TV Archiv (TV Archive) which enables customers to watch films, serials, or sports broadcasts that they have missed, for up to seven days. There are two basic programme packages, along with six additional programme offers. Launched on 1 September, by late October O2 TV had gained 5,000 customers. • O2 Simple, two new tariffs where customers select the amount they want to spend - CZK240 or CZK 600 - and receive an additional bonus of CZK20 or CZK40 per month, which is then set against voice and SMS usage. Customers no longer have to worry about how many minutes or SMS they should select in a tariff package, and how many they use. • O2 Lollipop - all new and existing customers who combine two services provided by O2 with a third receive a bonus of CZK2000, which is deducted from mobile bills over a 12 month period. To be eligible for the discount, customers must actively use at least one mobile tariff and a fixed line in combination with a specified additional service, including Internet access (O2 Internet Expres or mobile access) or O2 TV. O2 Airwave O2 Airwave continues to perform well, making good progress on delivering theAirwave service to new customers and securing additional contracts, and remainsa valuable part of the group. Following the successful conclusion of contractnegotiations to equip all Fire and Rescue Services across Wales and Scotlandwith a resilient and secure voice and data communications service, as announcedin the second quarter, Airwave signed a 10 year contract with the ScottishAmbulance Service, worth almost £50 million, to use the Airwave service. TheWelsh Ambulance Service is expected to finalise contract negotiations in thenear future. The rollout of Airwave to Ambulance Trusts in England is progressing well with 3Ambulance Trusts now at Ready for Service (RFS) - this marks completion of thefirst key milestone in the Ambulance Programme. During the quarter Airwave acquired Decision Focus, the world's leading providerof TETRA radio management applications with a proven track record of successwith public safety customers. Its market leading capabilities in radio andmobile asset management and TETRA fleet mapping make it a valuable addition toAirwave. Decision Focus also has a strong process consulting capability andprovides process redesign and implementation services to a wide range ofcustomers over a number of sectors, helping them reduce costs and improveoperational effectiveness. Decision Focus has approximately 80 customersthroughout the UK and worldwide, the majority of whom operate solely in publicsafety. Airwave now has over 200,000 users on the network and is supplying service toover 200 public safety and other organisations. OUTLOOK2 • O2 UK Given the continued high rate of growth in the customer base, O2 UK's servicerevenue growth is now expected to be in the range 14% - 15% for the 11 monthsended 31 December 2006. Given this higher rate of growth, and the increasinglycompetitive nature of the UK market, OIBDA margin for the 11 months ended 31December 2006 is now expected to be around one percentage point lower than forthe comparable period last year. • O2 Germany O2 Germany's service revenue growth is now expected to be in the high singledigits for the 11 months ended December 2006, from low double digits previously.OIBDA margin for the 11 months ended December 2006 is expected to be stable, aspreviously guided . • Capital expenditure for O2 Group Capital expenditure for the O2 group, excluding acquisitions, is expected to bein the middle of the range €2.0 - €2.3 bn for the 11 months ended December 2006. • Telefonica O2 Czech Republic Group revenues in the 12 months to 31 December 2006 are expected to reach thesame amount as in 2005, in local currency. OIBDA for the 12 months to 31December 2006 is now expected to grow by around 2%, in local currency, comparedto the same period in 2005, from flat as previously guided. Capital expenditureguidance is confirmed in the region of €225 million for the full year. -------------------------------------------------------------------------------- 2 2006 guidance assumes constant exchange rates as of 2005, and excludes changesin consolidation. Operating Income before D&A excludes other exceptionalrevenues/expenses not foreseeable in 2006. For comparison, the equivalent otherexceptional revenues/expenses registered in 2005 are also deducted from reportedfigures. Guidance for O2 Group does not include O2 Telefonica Czech Republic andTelefonica Deutschland, and guidance for O2 Germany does not incorporateTelefonica Deutschland. For O2, the fiscal year corresponds to theFebruary-December period. -------------------------------------------------------------------------------- 1. Customer numbers Mobile Customers at Customers at Customers at Customers at Net additions Customers at 30 September 31 December 31 March 30 June during period 30 September 2005 2005 2006 2006 2006 000's 000's 000's 000's 000's 000'sO2 UK Pre-pay 9,858 10,479 10,654 10,940 316 11,256Post-pay 5,228 5,502 5,686 5,874 208 6,082 Total 15,086 15,981 16,340 16,814 524 17,338 O2 Germany Pre-pay 4,254 4,799 4,987 5,143 198 5,341Post-pay 4,692 4,970 5,112 5,192 96 5,288 Total 8,946 9,769 10,099 10,335 294 10,629 O2 Ireland Pre-pay 1,148 1,173 1,154 1,147 (12) 1,135Post-pay 422 429 439 452 16 468 Total 1,570 1,602 1,593 1,599 4 1,603 Manx Pre-pay 45 45 45 47 1 48Post-pay 21 22 22 22 - 22 Total 66 67 67 69 1 70 O2 Czech Republic Pre-pay (1) 3,101 3,130 3,052 3,043 (65) 2,978Post-pay 1,388 1,546 1,643 1,727 55 1,782 Total 4,489 4,676 4,695 4,770 (10) 4,760 O2 Group Pre-pay 18,406 19,626 19,892 20,321 437 20,758Post-pay 11,751 12,469 12,902 13,267 375 13,642 Total 30,157 32,095 32,794 33,588 812 34,400 Pre-paypercentage 61.0% 61.1% 60.7% 60.5% 53.8% 60.3% Post-paypercentage 39.0% 38.9% 39.3% 39.5% 46.2% 39.7% (1) 13 month active customer base 1. Customer numbers (continued) Fixed Customers at Customers at Customers at Customers at Net additions Customers at 30 September 31 December 31 March 30 June during period 30 September 2005 2005 2006 2006 2006 000's 000's 000's 000's 000's 000's O2 Czech Republic(1) Fixed telephony 3,003 2,908 2,817 2,666 (129) 2,537Internet anddata 621 606 589 563 (8) 555Of which ADSL 176 226 283 326 38 364Pay TV 0 0 0 0 3 3Total Retail 3,624 3,514 3,405 3,229 (134) 3,095 Wholesale ADSL 45 48 55 60 3 63Total Wholesale 56 62 71 79 6 85 Total Accesses 3,680 3,576 3,476 3,308 (128) 3,180Manx TelecomPSTN 61 61 60 60 1 61 ADSL 7 8 8 9 1 10 1. Definition of fixed telephony accesses now excludes "incoming only" lines. 2. Average revenue per user (ARPU)(1) - £ 30 September 31 December 31 March 30 June 30 September 2005 2005 2006 2006 2006 £ £ £ £ £ O2 UK Quarterly monthly averagePre-pay 12 12 12 12 12Post-pay 44 43 42 43 43Blended 23 23 22 23 23 O2 Germany Quarterly monthly averagePre-pay 7 7 6 6 6Post-pay 30 28 26 27 28Blended 19 18 17 17 17 O2 Ireland Quarterly monthly averagePre-pay 21 21 20 20 20Post-pay 62 60 60 61 57Blended 32 31 31 32 31 O2 Czech Republic Quarterly monthly averagePre-pay 6 6 5 6 6Post-pay 26 25 24 24 24Blended 12 12 12 12 12 1. ARPU definition used by Telefonica has been adopted by all businesses. 3. Data ARPU(1) (quarterly monthly average) - £ 30 September 31 December 31 March 30 June 30 September 2005 2005 2006 2006 2006 £ £ £ £ £ O2 UK 6.4 6.8 6.7 6.9 7.2 % non-SMS data 12.4% 12.2% 12.5% 13.3% 13.1% O2 Germany 4.4 4.2 4.1 3.7 3.9 % non-SMS data 21.0% 21.7% 23.0% 21.5% 21.4% O2 Ireland 6.4 6.5 6.5 6.5 6.7 % non-SMS data 8.8% 11.8% 13.8% 15.6% 18.4% O2 CzechRepublic 2.4 2.6 2.5 2.5 2.6 % non-SMS data 40.6% 40.2% 39.1% 38.7% 43% (1) ARPU definition used by Telefonica has been adopted by all businesses 4. Average revenue per user(1) (ARPU) - •uro 30 September 31 December 31 March 30 June 30 September 2005 2005 2006 2006 2006 • • • • • O2 UK Quarterly monthly averagePre-pay 17 17 17 17 18Post-pay 65 64 62 63 64Blended 33 33 32 33 34 O2 Germany Quarterly monthly averagePre-pay 11 10 9 9 9Post-pay 44 41 39 39 41Blended 28 27 24 24 25 O2 Ireland Quarterly monthly averagePre-pay 31 31 29 29 30Post-pay 91 88 87 88 83Blended 47 46 45 46 45 O2 Czech Republic Quarterly monthly averagePre-pay 9 8 8 8 9Post-pay 38 37 35 35 35Blended 17 18 17 18 18Quarterly rates EUR/GBP 1.4633 1.4701 1.4576 1.4530 1.4706 CZK/EUR 29.677 29.298 28.600 28.384 28.330 1. ARPU definition used by Telefonica has been adopted by all businesses 5. Data ARPU(1) (quarterly monthly average) - •uro 30 September 31 December 31 March 30 June 30 September 2005 2005 2006 2006 2006 • • • • • O2 UK 9.4 10.0 9.8 10.0 10.6 % non-SMS data 12.4% 12.2% 12.5% 13.3% 13.1% O2 Germany 6.4 6.1 5.9 5.4 5.8 % non-SMS data 21.0% 21.7% 23.0% 21.5% 21.4% O2 Ireland 9.8 9.6 9.5 9.5 9.9 % non-SMS data 8.8% 11.8% 13.8% 15.6% 18.4% O2 CzechRepublic 3.5 3.8 3.7 3.7 3.8 % non-SMS data 40.6% 40.2% 39.1% 38.7% 43% 1. ARPU definition used by Telefonica has been adopted by all businesses 6. Average revenue per user(1) (ARPU) - CZK 30September 31December 31March 30June 30September 2005 2005 2006 2006 2006 CZK CZK CZK CZK CZK O2 Czech Republic Quarterly monthly averagePre-pay 254 243 226 239 243Post-pay 1,137 1,078 996 989 989Blended 519 514 490 507 519 (1) ARPU definition used by Telefonica has been adopted by all businesses 7. Data ARPU(1) (quarterly monthly average) - CZK 30September 31December 31March 30 June 30September 2005 2005 2006 2006 2006 CZK CZK CZK CZK CZK O2 CzechRepublic 104 110 106 104 108 % non-SMS data 40.6% 40.2% 39.1% 38.7% 43% (1) ARPU definition used by Telefonica has been adopted by all businesses 8. Minutes of Use (quarterly monthly average) 30 September 31 December 31 March 30 June 30 September 2005 2005 2006 2006 2006 O2 UK 158 165 162 169 175 O2 Germany 118 124 127 128 124 O2 Ireland 222 224 220 237 241 O2 CzechRepublic 94 97 96 102 102 9. SMS messages 3 months ended: 30 September 31 December 31 March 30 June 30 September 2005 2005 2006 2006 2006 million million million million million O2 UK 3,436 3,908 4,070 4,368 4,651 O2 Germany 712 746 742 727 727 O2 Ireland 362 384 376 392 397 O2 CzechRepublic 633 685 690 692 698 Manx 11 11 11 12 12 O2 Group 5,154 5,734 5,891 6,191 6,485 O2 Contacts: Richard Poston John Crosse Director, Corporate Affairs Investor Relations ManagerO2 plc O2 [email protected] [email protected]: +44 (0)1753 628039 t: +44 (0)1753 628198 David Nicholas Communications DirectorO2 [email protected]: +44 (0) 771 575 9176 Simon Gordon Head of Media RelationsO2 [email protected]: +44 (0)771 007 0698 O2 press office: 01753 628402 All O2 Group news releases can be accessed at our web site: www.O2.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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