Telefónica Germany

Strong first quarter in 2011

-Data business is the engine of growth
-Turnover with mobile data, not including SMS, grew by more than 30 percent
-Net customer growth primarily in the attractive post-paid segment
MUNICH/Germany. Telefónica Germany continues to experience strong growth. The overall number of customers for mobile communication and DSL was nearly 20 million in the first quarter of 2011, which represents an increase of 9.2 percent compared to the same quarter of the previous year. Turnover and the operating result (OIBDA) also had strong growth. The mobile Internet business in particular developed rapidly. Data revenue, not including SMS, grew by more than 30 percent.
Telefónica Germany now has 20 million customers for mobile communication and DSL, which is attributed also to the strong development in the first three months of the year. At the end of the recently completed quarter, the number of customers was 19.95 million, 9.2 percent more customers compared to the same quarter of the previous year. In consideration of the fixed network wholesales business, fixed network telephony and pay TV, the company has 23.5 million customer connections in total. "Our strategy is paying off: With one of the most modern mobile data networks in Europe, the broadest possible selection of smartphones and our attractive rates, we are the first choice for smartphone customers," says CEO René Schuster. "By now, we're selling almost exclusively such high-quality Internet mobile phones with the right rates, and we're benefitting from the explosive growth in the market for mobile data." The number of new customers in the mobile communication sector grew to 308,000. The thing that is especially encouraging about that is that two-thirds of the new customers are in the high-turnover post-paid segment. During the first quarter of 2011 the number of post-paid customers in mobile communication grew by 206,000, which represents net customer growth of 33.7 percent compared to the same quarter of the previous year. The O2 core brand contributed significantly to that development.
Such growth was achieved in particular thanks to straightforward and transparent smartphone rates, such as O2 Blue and the business customers offer O2 on, which bundle attractive packages for voice and data. By now, the overwhelming majority of new post-paid customers are signing up for an O2 Blue contract. Smartphones once again made up nearly 90 percent of mobile phone sales during the first quarter of the year.

Telefónica Germany business development

Results Q1/2011
This trend has a very positive impact on the data business. Two-thirds of new post-paid customers for the O2 core brand also signed up for a data package in the first quarter. As a result, the percentage of data package users in terms of the post-paid customer base has more than tripled since the same quarter last year. Growing mobile data use as a result of increased smartphone sales provided a clear increase in data turnover without SMS. Mobile data use grew by 31.8 percent during the first quarter as compared to the previous year. Mobile communication turnover grew by 6.2 percent compared to the previous year. If not for the drastic reduction of mobile communication termination rates in December, this growth would have even been around 12.3 percent. Total turnover increased by 14.4 percent to 1.23 million Euros. Organically, it grew by 1.9 percent. (The results of HanseNet for the entire first quarter of 2010 are projected in the organic figures, because the company transition was only completed by mid quarter.) Also the average revenue per user (ARPU) in the data business (without SMS) segment showed very significant growth of 20.4 percent. On the whole, the ARPU for the mobile communication business was around 13.10 Euros, a decrease of 11.7 percent compared to the previous year. That is attributed to the fact that hardware turnover is no longer assigned to ARPU since the introduction of O2 My Handy. Another reason is the drastic reduction in the mobile communication termination rate. DSL business also experienced a very strong development. The Alice brand, which following its turnaround last year continued to grow in 2011, played a significant part in that. Net customer growth nearly quadrupled during the first quarter, rising to almost 62,000. On the whole, Telefónica Germany now has 2.6 million DSL customers.
"The completed integration of HanseNet is now really paying off," explains CFO André Krause. "In the past couple of years we invested a great deal in broadband and mobile data, and now we're seeing the results. The positive trend in DSL business, our excellent smartphone sales and strong data use demonstrate that we're pursuing the right strategy. That's also reflected in the growth in profits." The consolidated operating result (OIBDA) for the quarter rose by 8.1 percent compared to the previous year and is around 260.65 million Euros. Organically, the OIBDA grew by 1.4 percent. That was made possible by lowered operating costs and the strong growth in the customer base.
The next development stage for Telefónica Germany is already emerging. "The growth of our data business will be accelerated even further by the new LTE wireless technology," explains René Schuster. "We're one of only three providers in the German market that have 800-megahertz frequencies for LTE, which are particularly far-reaching. As a result, in future we will be able to benefit from data growth in a better than average way." The rollout of the LTE networks is already underway, and O2 LTE products for end customers will be launched soon. During his presentation of the quarterly figures, CEO René Schuster also refered to the start of Think Big 2011. This year, Telefónica Germany invests more than ever before in this social action programme. Nearly one quarter of Germany's population today is a customer of the telecommunications company. "Telefónica Germany has experienced rapid development. Therefore it is important to us to exercise corporate responsibility as a commitment," says René Schuster. "This year, we will financially support more than 5,000 children and youths in more than 300 youth projects through Think Big." The programme in cooperation with the German Children and Youth Foundation is also in 2011 under the patronage of Kristina Schröder, Federal Minister for Families, and is being supported by rap musician Kool Savas.
Telefónica Germany GmbH & Co. OHG and its brands O2 and Alice belong to Telefónica Europe and are part of the Spanish telecommunication group Telefónica S.A. The Company offers its German private and business customers postpaid and prepaid mobile telecom products as well as innovative mobile data services based on the GPRS and UMTS technologies. In addition, the integrated communications provider also offers DSL fixed network telephony and high-speed internet. According to a network test by "connect" magazine (edition 12/10), the O2 network is top of the list when it comes to reliable file downloads and champion in the telephony category. In the overall result the company is on second position. Telefónica Europe has more than 56 million mobile and fixed network customers in Great Britain, Ireland, the Czech Republic, Slovakia and Germany.