4G demand boosts EE profit

EE’s sustained marketing activity and the launch of new service initiatives for its lucrative first-to-market 4G network helped grow the company’s profit and user base in the first half of this year.

EE Kevin Bacon iPhone 460

The mobile operator – which also owns the Orange and T-Mobile networks – says it is on track to “exceed” its target of 1 million 4G customers by the end of this year. It added 216,000 new contract customers in the three months to 30 June and its total 4G customer base has now reached 687,000.

EE launched several new service initiatives in the quarter, including the launch of “double-speed 4G” in 15 cities, “Shared 4GEE Plans” to target the family market, pay-as-you-go broadband plans and mobile payments service Cash on Tap. 

Marketing activity in the period included EE’s sponsorship of the Glastonbury Festival and a continuation of its multi-million pound advertising campaign starring Hollywood actor Kevin Bacon. 

EE’s efforts to move existing Orange and T-Mobile customers to 4G contracts has boosted its average revenue per user (ARPU) by 10 per cent, with contract customers delivering six times higher ARPU than pay-as-you-go overall. More than half (56 per cent) of new and upgrading customers are now choosing 4G contracts or 4G-ready smartphones, the company says.

First half earnings grew 9 per cent year on year, despite a 5 per cent fall in revenue in the period as regulatory cuts to roaming charges and mobile termination rates impacted the growth driven by switching customers to contracts.

Olaf Swantee, EE chief executive, says: “Today’s results demonstrate our success in building our new brand and differentiating our network to drive commercial momentum while continuing to deliver cost savings to increase our margin performance.”

Swantee says EE aims to increase its profit margins from 22.9 per cent currently to 25 per cent by 2014 as customers pay more for the faster mobile internet service and the company looks to make cost savings.

Rival operators are set to launch their own 4G services “late summer”.