31.07.2024
Quarterly results:Strong core brand O2 and improved profit margin drive growth of O2 Telefónica in the second quarter
- Driven by growth in the core brand O2, the telecommunications company gains 215,000 net new mobile contract customers
- Sales stable at previous year's level with 0.1% increase in mobile service sales before regulatory effects (-1.3% including regulatory effects)
- Earnings before interest, taxes, depreciation and amortization (EBITDA) increase by 3%, EBITDA margin improves to 31.8% after 30.9% in the previous year
Statement Markus Haas, CEO O2 Telefónica
Telecommunications provider O2 Telefónica continued to grow in the second quarter and increased its earnings margin. Growth was driven primarily by the strength of the core brand O2.
"We recorded further customer growth and improved our efficiency in the second quarter. This is in line with the objectives of our strategic plan, which we are consistently executing. We are well on track to achieve our targets for the full year,” says Markus Haas, CEO of O2 Telefónica. "We have recently sharpened the positioning of our core brand O2 and further expanded our partner business. Our customers trust us. In the future, we will focus even more on their needs and want to strengthen the foundation for our long-term growth. The entire O2 Telefonica team is motivated to continue shaping the telecommunications market in the interests of our customers."
Telecommunications provider O2 Telefónica continued to grow in the second quarter and increased its earnings margin
Despite negative regulatory effects, revenue remained stable from April to June 2024 and was on a par with the previous year at EUR 2.090 billion. Mobile service revenue (MSR) was impacted by the halving of mobile termination fees at the beginning of the year and fell by 1.3% to EUR 1.444 billion. Excluding these regulatory effects, MSR increased by 0.1% compared to the same period of the previous year. As in the previous quarters, revenue in the fixed-line business increased by 3.7% to EUR 214 million. Hardware revenue climbed by 2.2% to EUR 428 million following a strong comparative quarter in the previous year.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) adjusted for special effects rose by 3.0% to 665 million euros. The strong operating performance and the efficiency measures that the company is implementing as part of its Accelerated Growth & Efficiency Plan had a positive impact here. The EBITDA margin improved to 31.8% after 30.9% in the same period of the previous year.
215,000 net new mobile contract customers in the core business
Growth was again driven by the strong development of the core brand O2
The number of mobile contract lines increased by more than 215,000 net additions in the second quarter. Since the beginning of the 2024 financial year, O2 Telefónica has reported mobile lines excluding third-party network operator lines and third-party network operator lines for transfer separately. The growth was again driven by the strong development of the core brand O2 and the successful offer for the O2 Mobile Friends & Family-Tarife, which the company launched at the beginning of the year. The churn rate at O2 was 1.0% in the second quarter. This means that only one percent of O2 customers switch to another provider each month.
At the end of July, the core brand O2 further sharpened its positioning as a particularly customer-friendly telecommunications brand. In doing so, the O2 brand is continuing on its path of understanding the needs of its customers particularly well and developing suitable products. Unlike in the past, O2 will in future talk explicitly about how the brand responds to customers' wishes - and how this can be done even better in the future. The first step is a campaign on cost transparency entitled “O2 Pay Stop”.
Progress on the way to making the business even more resilient
The company is also confident about the further expansion of the telecommunications networks
"With our Accelerated Growth & Efficiency Plan strategy program, we want to make our business model even more resilient and lay the foundation for further growth in the future. We made good progress here in the second quarter of 2024. This applies to additional growth, such as in the partner business, where we have extended and expanded our service provider contract with Freenet. We have also successfully implemented further efficiency measures,” says CEO Haas. With the strategy program, the company has set itself the goal of generating further profitable growth in conjunction with a strong cash flow by 2026.
O2 Telefonica invested 233 million euros in network and services in the second quarter. This corresponds to 11.1% of revenue. The company now covers 96% of the population with its 5G network. This means that more than 80 million people in Germany can now benefit from 5G in their everyday lives. "The figures show: We are taking our self-imposed goal of enabling as many people in Germany as possible to participate in society digitally seriously,” says Haas.
The company is also confident about the further expansion of the telecommunications networks, particularly in view of the agreement reached in July 2024 between the Federal Ministry of the Interior and the network operators in Germany regarding the use of Chinese components in the German mobile networks “After years of talks and negotiations, there is now clarity, predictability and reliability in the process. The contractual decision takes into account both the changed security requirements of the German government and the security of supply for the population and the economy,” says Haas. “Our team is taking a bold approach to the further expansion of the grid in the interests of optimally connecting people and companies in Germany.”
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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 over 45 million mobile lines (incl. M2M - as at 31.12.2023). No network operator connects more people in this country. The company's high-performance, award-winning mobile network reaches over 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 revenue of EUR 8.6 billion 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. |