EE Q1 2013 Results
EE Q1 2013 Results 23rd APRIL 2013 Olaf Swantee CEO Neal Milsom CFO
Q1 2013 Summary: strong 4G take-up as company makes good progress focusing on high value segments Strong demand for 4G services: 4G base reaches 318k or 2.3% of postpaid base after five months of trading; on track for 1m 4G customers by year end Secured UK’s best spectrum portfolio for superfast 4G data services: acquired 2x5MHz of 800MHz and 2x35MHz of 2.6GHz spectrum for £589m; hold industry-leading 36% share of UK mobile spectrum
Steady underlying service revenue performance: underlying Q1 service revenue -0.4% (Q4/12 +1.5%) yoy, including regulatory cuts –5.4% yoy (Q4/12 -3.9%) Attracting high value customers: postpaid net adds of 166k (Q1/12: 151k) (exc MVNO and M2M); improving customer value mix with postpaid base +5.9% yoy; 53% of mobile customers now postpaid (Q1/12 49%), underlying ARPU +2.2% (Q4/12 +3.9%) Strong customer retention: sustained low postpaid churn of 1.2%; 8th consecutive quarter at 1.2% or below Rapid postpaid smartphone adoption driving data revenue growth: postpaid smartphone penetration +11 ppts yoy to 82% (Q1 2012: 71%); non-voice revenue at 51% of ARPU (Q1 2012: 45%) 2
Customer loyalty: delivering on high value acquisition and retention strategy Mobile service revenue -0.4% ex regulation, £m -5.4%
Strong postpaid net adds*
-0.4%
313k
+32
-75
-38
Q1/12
1,422
1,428
1,503
regulation
Q1/12 ex regulation
postpaid
prepaid
160k
Q1/13
Sustained low postpaid churn# 1.4% 1.3% 1.3%
250k
236k
1.1% 1.1% 1.1% 1.2% 1.2% 1.2%1.2% 1.2%
*
201k
185k
Q1/11 Q2/11 Q3/11 Q4/11 excluding MVNOs and M2M
151k 150k
Q1/12
Q2/12
Q3/12
Q4/12
166k
Q1/13
Insights –Service revenue affected by macroeconomic/competitive pressures –93% of new and upgrading postpaid handset connections are smartphones, of which 42% are 4G or 4G-ready –Sustained low churn; continued average access fee growth
Initiatives Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 # monthly average (3 month rolling)
–Introduced postpaid RPI price adjustments –Launched competitive prepaid offers in April that more effectively monetise data (T-Mobile Smart Packs and enhanced Orange Dolphin) –Further extended 4G smartphone range
3
Operational excellence: driving successful integration Retail Integration
• On track to streamline retail footprint to approximately 600 stores by end of H1 • Maintained direct sales performance
Network Leadership
• On track to deliver 4G to 55% UK pop. by June • Secured 2x5 800 MHz and 2x35 MHz 2.6 GHz spectrum • Landmark plans to introduce double-speed 4G • Network Optimisation programme on track with 548 sites decommissioned in Q1
Organisational Excellence
• Ranked in the Sunday Times Top 25 Best Big Companies to Work For in the UK
4
Platforms for growth: leveraging the data opportunity Increasing postpaid smartphone base
Mobile blended monthly ARPU growth
% of postpaid base with smartphones
57% 61% 51% 45%
-2.7% +2.2%
82% 72% 74% 78% 65% 69% 71%
Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13
£17.8
£18.2
Q1/12
Q1/12 ex regulation
Q1/13
Insights
Exploiting data opportunity Non voice % ARPU data messaging
£18.7
47%
48%
39%
45%
51%
43%
50%
42%
18%
23%
24%
27%
29%
31%
34%
36%
21%
19%
19%
18%
18%
17%
16%
15%
Q2/11
Q3/11
Q4/11
Q1/12
Q2/12
Q3/12
Q4/12
Q1/13
– Blended ARPU ex regulation +2.2% yoy, as postpaid base mix increases to 53% (Q1/12 49%) – Increasing smartphone data usage drove non-voice revenues, with data revenues +9ppts yoy to 36% of ARPU – Fixed Broadband revenues +11% yoy
Initiatives – Continued programme to migrate Orange/T-Mobile customers to EE – Educating market about 4G benefits with mobile broadband promotion – Strong business interest in 4G; c. 1,600 business customers using 4G including RAC, Reed and PA News
5
Q1 2013 Summary: strong 4G take-up as company makes good progress focusing on high value segments Strong demand for 4G services: 4G base reaches 318k or 2.3% of postpaid base after five months of trading; on track for 1m 4G customers by year end Secured UK’s best spectrum portfolio for superfast 4G data services: acquired 2x5MHz of 800MHz and 2x35MHz of 2.6GHz spectrum for £589m; hold industry-leading 36% share of UK mobile spectrum
Steady underlying service revenue performance: underlying Q1 service revenue -0.4% (Q4/12 +1.5%) yoy, including regulatory cuts –5.4% yoy (Q4/12 -3.9%) Attracting high value customers: postpaid net adds of 166k (Q1/12: 151k) (exc MVNO and M2M); improving customer value mix with postpaid base +5.9% yoy; 53% of mobile customers now postpaid (Q1/12 49%), underlying ARPU +2.2% (Q4/12 +3.9%) Strong customer retention: sustained low postpaid churn of 1.2%; 8th consecutive quarter at 1.2% or below Rapid postpaid smartphone adoption driving data revenue growth: postpaid smartphone penetration +11 ppts yoy to 82% (Q1 2012: 71%); non-voice revenue at 51% of ARPU (Q1 2012: 45%) 2
Customer loyalty: delivering on high value acquisition and retention strategy Mobile service revenue -0.4% ex regulation, £m -5.4%
Strong postpaid net adds*
-0.4%
313k
+32
-75
-38
Q1/12
1,422
1,428
1,503
regulation
Q1/12 ex regulation
postpaid
prepaid
160k
Q1/13
Sustained low postpaid churn# 1.4% 1.3% 1.3%
250k
236k
1.1% 1.1% 1.1% 1.2% 1.2% 1.2%1.2% 1.2%
*
201k
185k
Q1/11 Q2/11 Q3/11 Q4/11 excluding MVNOs and M2M
151k 150k
Q1/12
Q2/12
Q3/12
Q4/12
166k
Q1/13
Insights –Service revenue affected by macroeconomic/competitive pressures –93% of new and upgrading postpaid handset connections are smartphones, of which 42% are 4G or 4G-ready –Sustained low churn; continued average access fee growth
Initiatives Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 # monthly average (3 month rolling)
–Introduced postpaid RPI price adjustments –Launched competitive prepaid offers in April that more effectively monetise data (T-Mobile Smart Packs and enhanced Orange Dolphin) –Further extended 4G smartphone range
3
Operational excellence: driving successful integration Retail Integration
• On track to streamline retail footprint to approximately 600 stores by end of H1 • Maintained direct sales performance
Network Leadership
• On track to deliver 4G to 55% UK pop. by June • Secured 2x5 800 MHz and 2x35 MHz 2.6 GHz spectrum • Landmark plans to introduce double-speed 4G • Network Optimisation programme on track with 548 sites decommissioned in Q1
Organisational Excellence
• Ranked in the Sunday Times Top 25 Best Big Companies to Work For in the UK
4
Platforms for growth: leveraging the data opportunity Increasing postpaid smartphone base
Mobile blended monthly ARPU growth
% of postpaid base with smartphones
57% 61% 51% 45%
-2.7% +2.2%
82% 72% 74% 78% 65% 69% 71%
Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13
£17.8
£18.2
Q1/12
Q1/12 ex regulation
Q1/13
Insights
Exploiting data opportunity Non voice % ARPU data messaging
£18.7
47%
48%
39%
45%
51%
43%
50%
42%
18%
23%
24%
27%
29%
31%
34%
36%
21%
19%
19%
18%
18%
17%
16%
15%
Q2/11
Q3/11
Q4/11
Q1/12
Q2/12
Q3/12
Q4/12
Q1/13
– Blended ARPU ex regulation +2.2% yoy, as postpaid base mix increases to 53% (Q1/12 49%) – Increasing smartphone data usage drove non-voice revenues, with data revenues +9ppts yoy to 36% of ARPU – Fixed Broadband revenues +11% yoy
Initiatives – Continued programme to migrate Orange/T-Mobile customers to EE – Educating market about 4G benefits with mobile broadband promotion – Strong business interest in 4G; c. 1,600 business customers using 4G including RAC, Reed and PA News
5
