07.11.2024
Quarterly results:Strong customer growth drives O2 Telefónica’s profitability in the third quarter
- Telecommunications company continues the focused execution of its ‘Accelerated Growth & Efficiency Plan’ and enhances operational growth, gaining 226,000 new mobile postpaid customers.
- With the new O2 Mobile portfolio and the strengthening of its partner business, the company is laying the foundation for continued future profitable growth.
- Core brand O2 once again driving growth. Efficiency measures deliver results and lead to profitability increase in the third quarter.
Statement Markus Haas, CEO O2 Telefónica
Telecommunications provider O2 Telefónica accelerated its growth in mobile postpaid customers and further increased its profitability in the third quarter of 2024. Growth was driven by the continued strong performance of the core brand O2. Revenue was slightly lower year-over-year, mainly due to negative regulatory effects. The company further expanded its business with partners.
“In a challenging economic environment in Germany, we continued our growth trajectory in the third quarter. With the simplified portfolio of our core brand O2 and the further expansion of our partner business, we are consistently implementing our strategic plan and laying the foundation for sustained future growth,” says Markus Haas, CEO of O2 Telefónica. “Ten years after the merger of E-Plus and O2 Telefónica, customers benefit from intact competition in the German telecommunications market with attractive prices and increasing value. With our outstanding value-for-money approach, we are best positioned in the German market and look forward to the final spurt in 2024.”
Efficiency measures deliver results and contribute to increasing profitability
Revenues amounted to EUR 2.098 billion in the period from July to September 2024, down 1.6% year-over-year. Mobile service revenues (MSR) declined 1.8% to EUR 1.496 billion in the reporting period. This was primarily due to effects from the 50 percent cut of mobile termination fees at the beginning of the year and the change in the business model with partner 1&1. The strong performance in particular of the core brand O2 could not fully offset these effects. Excluding regulatory effects, MSR was largely stable -0.4%. Excluding regulatory effects, revenue was year-over-year at -0.5% and MSR by -0.4%, largely stable.
Revenue in the fixed-line business continued the growth of the previous quarters
Revenues in the fixed-line business continued their growth path of previous quarters and increased by 3.8% to EUR 216 million. Handset revenues remained volatile in-line with the launch dates of new mobile devices and fell by 3.6% to EUR 380 million.
Earnings before interest, taxes, depreciation and amortization (EBITDA) adjusted for exceptional effects grew 2.7% year-over-year to 683 million euros. In addition to the strong operating performance, the efficiency measures of the company’s ‘Accelerated Growth & Efficiency Plan’ are key contributors to the profitability increase. The EBITDA margin improved to 32.6% after 31.2% in the same period of the previous year.
Foundation laid for future growth with own customers and partner business
The new O2 Mobile portfolio was launched at the beginning of November
Since the beginning of the 2024 financial year, O2 Telefónica is successfully executing its ‘Accelerated Growth & Efficiency Plan’. This plan delivers an even more resilient business model and generates further profitable growth with own customers and partners, overall enhancing strong cash flow generation by 2026.
The new O2 Mobile portfolio was launched at the beginning of November. With a simplified tariff structure and more data volume for an excellent price, O2 is underpinning its value-for-money leadership claim in the German market. At the same time, O2 Telefónica expects the new portfolio to provide additional growth impetus for the business.
O2 Telefonica has gained a new partner with Lyca Mobile
The company also substantially strengthened its partner business in the third quarter. In addition to the expansion and extension of the contract with Freenet, O2 Telefonica expanded its business relations with the international mobile provider Lebara and gained Lyca Mobile as a new partner. Lyca Mobile is active in more than 20 countries and offers its customers mobile services in around 100 international destinations.
“Before the end of the year, we were already able to perspectively fully utilize the freed-up network capacities for new, profit-enhancing business. We are growing with our own customers as well as through partnerships such as Freenet and more recently with Lyca,” says Markus Haas.
Award received for “excellent” network
O2 Telefónica was one of two networks to receive an “excellent” rating from the specialist publication “Smartphone-Magazin”
All customers use the award-winning network from O2 Telefónica. Most recently, the network was one of only two networks to be awarded an ‘excellent’ rating from the trade publication ‘Smartphone-Magazin’. The company now covers around 97% of the German population with 5G. Customers have also been able to use 5G Plus for a year now. Due to the usual investment peak in the second half of the year, CapEx increased seasonally in the third quarter. The company invested EUR 332 million, equal to 15.8% of revenues, in the additional expansion of its network and services; majority-wise in the expansion and densification of its 5G network.
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| O2 Telefónica is a leading full-service provider of telecommunications services for private and business customers. The portfolio of the core brand O2 and various secondary and partner brands includes traditional telephony and internet connections as well as innovative digital services in the area of the Internet of Things and data analysis. In mobile communications, O2 Telefónica serves more than 45 million mobile connections (incl. M2M - as at 30/09/2024) . No network operator connects more people in this country. The company's high-performance and award-winning mobile network reaches more than 99% of the population. In the fixed network, O2 Telefónica offers its customers the greatest technological diversity and geographical availability of any provider in Germany. In the 2023 financial year, the company generated a turnover of 8.6 billion euros with around 7,500 employees. The company is majority-owned by the Spanish telecommunications group Telefónica S.A., based in Madrid, one of the largest telecommunications groups in the world. |