Iphone with you: EE announces Q1 2015 earnings, closes quarter with 9.3 million 4G customers

UK mobile operator EE today announced the company's financial results for Q1 2015. EE remains Europe's largest 4G operator, but aims to increase 4G user base to 14 million by year end.

The company shared figures regarding sign-ups, revealing that nearly 2 million (1.7 million) new 4G customers were registered in Q1. 96% of new postpaid customers opted for the network's 4GEE Extra plans. It's also noted that over 7,700 medium to large companies utilize the network, including the likes of Uber and GANT UK.

EE 4G coverage in the UK is now reported to be 87%, with double-speed 4G accessible to 67% of the population. Growth figures and improvements made to the network has enabled EE to experiences an increase in operating revenue, which was up by 0.3% year-on-year to . Fixed revenue increased by 15% year-on-year, marking 2015 as the 13th year in a row for growth.

The total number of EE connections is now just shy of 31 million (30.9 million), increasing by 0.6% through Q1. A notable improvement seen by EE was the tablet base, which is currently riding on 59% growth year-on-year, while mobile Wi-Fi is holding strong on 25% growth year-on-year.

Finally, EE also notes the company is the fastest growing broadband provider for the past year and has enjoyed strong customer retention with a postpaid mobile churn rate of only 1.2%. See the press release below for more details.

EE Results for the First Quarter to 31 March 2015

Most 4G net adds in Europe, extending lead as Continent's biggest 4G operator; Best ever broadband net adds, now UK's fastest growing broadband provider for past year

Highlights:

Europe's highest 4G take-up driven by network leadership and EE's exclusive double-speed 4G:

4G net adds of 1.7m to reach base of 9.3m, up +224% year-on-year (yoy). 96% of new connections on 4G, with nearly 50% on exclusive double-speed 4GEE Extra. Firmly on track to reach target of 14m 4G customers by year end.
7,700+ medium and large companies using 4G, including Uber, GANT UK, Rotary Watches, Norfolk Constabulary and Suffolk Constabulary.
Trialled Europe's fastest 4G of 400 Mbps at Wembley Stadium. 4G population coverage now 87%, double-speed 4G to 67% of the population. Named RootMetrics® 2014 #1 UK network, Best Network at 2015 Mobile News Awards and in April, Ofcom's fastest mobile broadband network.
Announced three year £1.5bn network investment programme to reach 99% 4G population and 90% geographic voice coverage by 2017 and rollout network innovations including 4G over 800 MHz, voice over 4G, micro-network technology and the UK's first seamless WiFi Calling service.

Improving underlying operating revenue, with strong growth in data and fixed revenues:

Operating revenue up 0.3% yoy excluding regulatory impacts; including regulatory impacts -1.1% yoy.
Mobile average revenue per user (ARPU) growth of +1.1% yoy (Q4 2014: +1.1%) excluding regulatory impact, and -0.5% (Q4 2014: 0.0%) including regulatory cuts.
Further growth in mobile data (non-text) revenue, up +5 ppts yoy to 52% (Q1 2014: 47%) of ARPU.
Fixed revenue growth 15% yoy, the 13th consecutive quarter of growth.

Accelerating cross-selling drives postpaid mobile and fixed customer growth

Total connections up +0.6% to 30.9m (Q1 2014: 30.7m), including machine-to-machine(M2M), Mobile Virtual Network Operators (MVNOs) and fixed bases.
Multiple Product Attach Rate1 (MPAR), which gauges average number of connected products adopted per postpaid voice customer, up +3.6% yoy to 1.22. 721k customers now on Shared 4GEE plans.
Postpaid mobile net adds of 111k including M2M. 61.5% of mobile base on postpaid plans, delivering seven times higher ARPU than prepaid. Postpaid tablet base up +59% yoy, mobile WiFi up +25% yoy and fixed up +19% yoy. Prepaid base reduced by 195k, with revenue trend in line with industry shift towards postpaid.
Strong postpaid customer retention with churn of 1.2%, the 4th year in a row at 1.2% or below.
UK's fastest growing fixed broadband base for the 4th quarter in a row with best ever net adds of 50k, revenue up +15% yoy, driven by effective cross-selling and early success of EETV.

Neal Milsom, Chief Financial Officer of EE, commented: "We are delivering strong, consistent commercial performance by giving our customers the best mobile voice and data network experience in the UK. As much of the UK market now has smartphones, we are leading the charge into new growth areas by cross-selling our innovative range of connected products including 4G tablets, 4G WiFi, fixed broadband and EETV to our existing customers."

Operating Review

During the first quarter, EE continued to execute well on our strategy to maintain commercial leadership, deliver operational excellence and create long-term value through network leadership and innovation.

We are successfully attracting customers to our superfast 4G network with a net increase of 1.7m 4G connections in the quarter, more than any other operator in Europe. 9.3m users are now enjoying the UK's biggest and fastest 4G network. Strong business demand for 4G continues, with over 7,700 medium and large companies on 4G. We are firmly on track to reach our target of 14m 4G customers by year end, which will represent well over half of our mobile base.

Our 4G coverage now reaches 87% of the UK population – over 55m people. We are the only operator in the UK to offer double-speed 4G, which now covers 67% of the UK population. In March, EE was awarded Consumer Superbrand status, the youngest standalone brand to make the 2015 list.

Our Customers: Maintaining commercial leadership

Underlying operating revenue excluding the impact of regulation, improved +0.3% yoy, strengthened by continued postpaid, data and fixed growth. Operating revenue including the impact of regulatory cuts was 1.1% lower yoy at £1,469m.

We saw a net increase of 111k postpaid customers including M2M. Our customer value mix further improved in the quarter, with a net increase of 53k postpaid mobile customers. Postpaid customer growth helped drive +1.1% yoy growth in underlying mobile ARPU. Postpaid customer churn remains amongst the best in the industry at 1.2%, the fourth full year in a row at 1.2% or below.

Our fixed business continued to make excellent progress, with revenue growth of +15% yoy and a net addition of 50k broadband customers. EE is now the UK's fastest growing broadband operator for four consecutive quarters, driven by effective cross-promotions and the well-received launch of EETV.

Our Company: Operational excellence to deliver the best network and best service

In the quarter, we were again named the number one nationwide mobile network for the second half of 2014, based on comprehensive independent testing from RootMetrics®. EE also won Mobile Network of the Year at the 2015 Mobile News Awards and, in April, was named as Ofcom's fastest mobile broadband network. We continued our relentless focus on network innovation. In April, we were the first network in the UK to launch seamless WiFi Calling on several of our most popular smartphones, including the iPhone 5c, 5s, 6 and 6 Plus and Samsung Galaxy S6.

We are making good progress improving customer satisfaction by investing in our customer service centres, retail estate and customer loyalty programmes. We completed the on-shoring of 1,000 new customer service roles a year ahead of schedule, enabling us to significantly increase the volume of customer service calls handled onshore, which receive higher customer satisfaction scores. We are on track to have 1,300 apprentices through our award-winning scheme by the end of the year. We grew our Retail store catchment area by 23% yoy and introduced improved processes, training and tablet tills that increased our Retail channel Net Promoter Score2 by 12 ppts yoy. For the third year, we were selected as a Sunday Times Top 25 Big Companies to Work For, with high employee engagement supporting improved service levels.

To further increase customer loyalty, we launched relevant, innovative initiatives including EE Film Club, providing digital films to customers for £1, and in April, EE Power, giving customers a free portable charger that they can recharge themselves or take into our retail stores and swap for a charged one.

Our Future: Building value through accelerated cross-selling of connected products and services

We continue to monetise our leading mobile internet experience. Nearly all new and renewing customers are now selecting 4GEE plans, with almost 50% of new customers selecting our unique double-speed 4G plans. Data and messaging revenues continue to rise rapidly, reaching 62% of ARPU in Q1, against 58% in Q1 2014, with data (non-text) revenue up to 52% of ARPU compared to 47% in Q1 2014.

Our increased strategic focus on maximising connections on our network by introducing new connected products and services and cross-selling these into our existing customer base is delivering for the business. This is illustrated by growth in our Multiple Product Attach Rate, which increased +3.6% yoy to 1.22 connected products per postpaid voice customer. This was supported by growth in mobile and fixed, with the tablet base up +59% yoy, mobile WiFi base up +25% yoy and fixed broadband base up +19% yoy.