T- Mobile UK Q3 2009 Financial Results
Continued marked improvement in T-Mobile UK performance
Financial Highlights:- EBITDA £159 million - Consistent improvement since Q109
- EBITDA margin 21.4% up 4.1ppts on Q209 (Q308 22%)
- Operating costs 3% lower than 1H09 run rate
- Service revenue £680 million “ Includes 4% Q309 regulatory impact
- Net additions: Prepay 59,000. Total 20,000. (Q308 8,000)
- Data devices sales up 71% year-on-year
- Total customer base 16.6 million
- Deutsche Telekom and France Telecom announce exclusive negotiations to create a 50:50 joint venture between T-Mobile UK and Orange UK
- Prepay portfolio refresh - market-leading unlimited texts for life
Richard Moat, Managing Director of T- Mobile UK, said:
In the third quarter, T-Mobile UK has continued to strengthen by attracting new customers, reinforcing its brand and marketplace position and markedly improving its financial performance. Our retail network has contributed significantly to this, with a record prepay month in September and contract sales up 12.9% over the previous quarter.
A highlight of the quarter was the announcement of exclusive negotiations between Deutsche Telekom and France Telecom on proposals to create a 50:50 joint venture between T-Mobile UK and Orange UK. This is an exciting prospect which will create a new UK mobile leader. It will reinforce competition, create the best mobile network and enable us to invest more than either we or Orange UK on our own could do in network expansion, innovative new services and new mobile devices. It will also mean we can take full advantage of the opportunities that new technology is bringing for very high-speed mobile broadband. All this is to the great benefit of our customers and to the UK as a whole."
Financial results:
While EBITDA fell 9% on a year-on-year basis, it rose 18.7% sequentially to £159 million and EBITDA margin increased 4.1ppts on Q209 to 21.4%. Service revenue was down year-on-year to £680m, impacted by the introduction on 1 August of lower regulatory caps on mobile termination rates, the charges operators levy on one another for terminating calls from other networks. This affected all operators and the impact on T-Mobile UK sequentially in the third quarter was a 4% reduction in revenue.
Contract:
Contract customer numbers were up 1.4% year-on-year at 4.1 million. T-Mobile UK maintained its focus on selective investment in the market with the aim of restoring profitability and margins. T-Mobile continued to deliver market-leading value in the contract segment with Combi offering 1,000 minutes and unlimited texts for £25 a month. The commitment to value flows through to Solo, the SIM-only plan, particularly at the highly competitive £15 price point where T-Mobile led the market in August and September with an offer of 350 minutes and unlimited texts. In the growing 24-month segment, T-Mobile launched two new Combi tariffs at £25 and £35 as part of a tariff refresh that will roll into early November with new low-end plans in recognition that customers are prioritising better handset choice and lower monthly charges in their purchase decisions.
Prepay:
T-Mobile UK added 59,000 net new prepay customers in the third quarter. Excluding Virgin Mobile, net additions were up 169,000 and the total prepay base was up 263,000 year-on-year. While maintaining a strong multi-channel strategy, T-Mobile’s prepay performance through direct channels was particularly noteworthy, with retail having a record month in September. Prepay gross additions through T-Mobile’s 293 stores rose 51% in Q309 on a sequential basis and 46% year-on-year.
The improved performance has been driven by successive enhancements to the prepay portfolio. This began in May with the launch of new weekend and monthly rewards and flexible "talk and text" boosters, and continued in Q309 with the market-leading unlimited free texts for life for £10 monthly top-ups. During the quarter, T-Mobile launched the T-Mobile Pulse, the UK’s first Android-based smartphone available on pay-as-you-go.
Non-Voice:
Sales of data devices to access mobile broadband rose 71.4% year-on-year. The non-voice element of ARPU rose 3ppts year-on-year to 25%. Quarter-on-quarter showed a 1ppt increase from 24% to 25%. Richard Moat concluded: "I'm pleased that over the quarter we have substantially improved our operating efficiency with the result that profitability and margins have bounced back to levels that are appropriate for a business of our scale. At the same time, we’ve adjusted our product portfolio in key segments with the emphasis on leading the market on value and we will continue this trend through to the end of the year."
About T-Mobile UK
T-Mobile is one of the world’s largest mobile operators with more than 150 million customers worldwide and is the service provider of choice for 16.6 million customers in the UK. T-Mobile offers a range of innovative products and services, such as Solo, the SIM-only plan, Combi, a traditional minutes and text package, and Flext, the UK’s first flexible tariff. T-Mobile continues to innovate with new devices such as the UK’s first Androidâ„¢-based smart phone, the T-Mobile G1, and its successor the T-Mobile G2, both with access to more than 1,000 applications. T-Mobile has pioneered the mobile internet, and operates an award-winning 3G network with speeds of up to 4.5Mbps. As a pioneer of deep network sharing in the UK, T-Mobile is continuously improving population coverage for 3G services and will operate the best 3G network by the end of 2010.
For more information about T-Mobile UK, please visit www.t-mobile.co.uk
Contacts:
Robin O’Kelly
T-Mobile UK
07786702526
Anthony Carlisle
Citigate Dewe Rogerson
07973611888
|
Q3/2009 |
Q3/2008 |
%Change | |
|
Customers '000¹ |
16,608 |
16,802 |
(1.2%) |
|
-contract |
4,070 |
4,013 |
1.4% |
|
-pre-pay¹ |
12,538 |
12,789 |
(0.7%) |
|
Net Additions ˜000¹ |
20 |
8 |
n/a |
|
-contract |
(40) |
8 |
71.4% |
|
-pre-pay¹ |
59 |
(88) |
n/a |
|
Total Net Revenues |
£744m |
£794m |
(6.3%) |
|
Service Revenues |
£680m |
£727m |
(6.5%) |
|
EBITDA2 |
£159m |
£175m |
9.1% |
|
EBITDA Margin |
21.4% |
22% |
0.6p.pts |
|
ARPU |
£19 |
£20 |
(5.0%) |
|
-contract |
£41 |
£43 |
(4.7%) |
|
-pre-pay |
£7 |
£9 |
22.2% |
|
Churn contract |
2.1% |
1.9% |
(0.2p.pts) |
|
Non-Voice % of ARPU |
25% |
22% |
3p.pts |
1Including Virgin
2Adjusted EBITDA
|
Q3/2009 |
Q2/2009 |
%Change | |
|
Customers '000¹ |
16,608 |
16,588 |
0.1% |
|
-contract |
4,070 |
4,109 |
(0.9%) |
|
-pre-pay¹ |
12,538 |
12,479 |
0.5% |
|
Net Additions ˜000¹ |
20 |
(87) |
n/a |
|
-contract |
(40) |
1 |
n/a |
|
-pre-pay¹ |
59 |
(87) |
n/a |
|
Total Net Revenues |
£744m |
£779m |
(4.5%) |
|
Service Revenues |
£680m |
£712m |
(4.5%) |
|
EBITDA2 |
£159m |
£134m |
18.7% |
|
EBITDA Margin |
21.4% |
17.3% |
4.1p.pts |
|
ARPU |
£19 |
£20 |
(5.0%) |
|
-contract |
£41 |
£42 |
(2.4%) |
|
-pre-pay |
£7 |
£8 |
(12.5%) |
|
Churn contract |
2.1% |
2.0% |
(0.1p.pts) |
|
Non-Voice % of ARPU |
25% |
24% |
1p.pts |
1Including Virgin
2Adjusted EBITDA