Quarterly results:O2 Telefónica is fully on track to achieve its 2023 targets with a strong third quarter
- Telecommunications company continues its growth trajectory in the third quarter with another strong increase of around 400,000 mobile contract customers
- Third-quarter revenue up 2.2 per cent, operating result (OIBDA) adjusted for special effects increases by 3.6 per cent
- O2 Telefónica confirms forecast for the financial year 2023
Statement from CEO Markus Haas on the results of the third quarter 2023
In the third quarter, the telecommunications provider confirmed its growth trajectory in all key operating and financial indicators. Strong customer growth translated into sales and earnings growth. At the same time, the company is pushing ahead with its network expansion and continues to make great progress, particularly with 5G coverage. "We grew in all key performance indicators in the third quarter. This shows how solid the foundation of our company is. We have a stronger network than ever before, a first-class brand positioning, award-winning service and a very good price-performance ratio. This is how we are shaping the market in Germany. Around 400,000 net adds per quarter is a highlight in our industry. With our progress in expanding the 5G network, we are laying the foundation for further growth. After a strong third quarter, we are fully on track to achieve our targets for the 2023 financial year," says O2 Telefónica CEO Markus Haas.
The telecommunications provider confirmed its growth in all key financial figures in the third quarter. Revenue climbed by 2.2 per cent to EUR 2.131 billion, driven by the continued momentum of the O2 brand and a solid contribution from the partner brands. The basis for this was an increase in mobile service revenue, which rose by 3.4 per cent to EUR 1.523 billion. Handset revenues fell by 2.1 per cent year-on-year to EUR 395 million in the third quarter. High-value smartphones continued to be in demand, while overall customer demand for "O2 my Handy" contracts was somewhat weaker in line with the German market. The company had expected this development after the previous record quarters for handset revenues. Fixed-line revenues rose by 1.8 per cent to EUR 208 million. The growth driver here was once again business with broadband revenues, which increased by around 6 per cent.
Focus on ‘value-over-volume’ pays off
In the third quarter, O2 Telefónica continued the operational growth of the first half of the year and significantly increased the number of its customers. In the fixed network, the company gained a net 31,000 net fixed-line customers, driven by a significant increase in cable and fibre optic connections. The number of mobile postpaid customers (excluding M2M) climbed by around 400,000 in the reporting period. The monthly churn rate for the core brand O2 was a low 1.0 per cent in the third quarter and thus below the previous year's of 1.2 per cent. This means that only one per cent of O2 customers switched to another provider each month. The improved service quality had a positive effect here. The connect magazine awarded the O2 shops and the O2 landline hotline "very good" in its most recent tests, while the "Mein O2" app received an "excellent" rating. The ‘value-over-volume’ strategy is reflected in the average revenue per customer (ARPU). Among O2 contract customers, this increased by by 2.0 per cent compared to the same period last year.
Stronger network than ever before
O2 Telefónica continues to make progress in the expansion of its mobile network and is still ahead of schedule in the densification and further expansion of its green 5G network. On October 10, the "5G Plus" offer was launched across the entire O2 Telefónica network. This marks the beginning of a new technological era, as "5G Plus" is now available to over 90 per cent of the German population. The company is well on track to achieve 5G coverage by the end of 2025 at the latest. With more than 43 million mobile accesses (excluding M2M), the company continues to connect the most people in Germany with mobile communications.
Operating strength reflected in earnings
The operating result (OIBDA) adjusted for special effects rose by 3.6 per cent to EUR 665 million in the reporting period. This development was driven by the strong operating performance and successful cost management in the reporting period. Profit for the period totalled EUR 41 million, compared to EUR 39 million in the same period of the previous year.
O2 Telefónica takes responsibility for its employees and society as a whole
O2 Telefónica takes responsibility for its employees and society as a whole. The company's attractiveness as an employer rose to an all-time high in the latest employee survey. This corresponds to an increase of 3.9 points compared to last year's survey. The Employee Net Promoter Score measures the willingness of employees to recommend their employer to friends and acquaintances. Employees are highly committed to society, for example by participating in the company's "Volunteering Days" or the annual "O2 Telefónica Run", in which joint sporting activities are translated into donations for charitable causes. In addition, O2 Telefónica remains committed to its climate protection goals and has been nominated as a finalist for the "16th German Sustainability Award". The company aims to reduce its Scope 1 & 2 emissions by 95% and to neutralise the remaining emissions by 2025 at the latest.
Financial Outlook FY23
|O2 Telefónica is a leading full-service provider of telecommunications services for consumers and business customers. The portfolio of the core brand O2 and various secondary and partner brands includes not only traditional telephony and Internet connections but also 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 lines (incl. M2M - as of September 30, 2023). No other network operator connects more people in this country. The company's high-performance, award-winning mobile network reaches over 99 percent of the population. In the fixed network, O2 Telefónica offers its customers the greatest technological diversity and geographical availability of any provider in Germany. Telefónica Deutschland Holding AG is listed on the TecDAX and MDax. In fiscal year 2022, the company generated revenues of EUR 8.2 billion with around 7,500 employees. The company is majority-owned by the Madrid-based Spanish telecommunications group Telefónica S.A., one of the largest telecommunications groups in the world.