Smartphone demand rewards O2

O2 says the increase in smartphone demand helped drive up revenue by 5.6% to €5.3bn (£4.51bn) in the nine months to 30 September 2010.

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Spanish company Telefonica, O2’s parent group, says the uplift from its UK operation was due to the “improvement in mobile service revenue and the success of handset sales”, reflecting the increased demand for new smart handsets.

Mobile service revenues reached €4.84bn (£4.12bn) for the first nine months of 2010, increasing 4.9% year-on-year. Nearly 40% of this figure was from data revenues, driven by smartphone demand.

O2 adds that successful campaigns for its pre-pay services helped curb what had been a growing level of disconnections.

The company reported 115,000 pre-pay customer additions in the third quarter, which O2 calls a “positive evolution.”

The increase comes as all UK mobile operators upweight their pay as you go marketing activity in the run up to Christmas, when a third of pay as go phones are purchased.

Contract customers now make up 47% (10.34 million) of O2’s total customer base.

O2 UK has also seen its retail broadband service increase by 25.9% year on year to 0.7 million customers.

The company says it now has a total of 22 million customers, a 4.8% year-on-year rise, with 352,000 customers added in the third quarter.

O2 UK also reported income before deductions was €365m (£311m), a growth of 8.3% year-on-year in the same period.

O2 won the Brand Innovator award at this year’s Marketing Week Engage Awards for its financial product, O2 Money.

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