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back to article EE's revenues dip, but smartphones lure in 200k new contracts

UK telecoms giant EE's first annual results are in, showing cost savings and revenue growth wiped out by regulatory changes, but customer numbers are up - even if it's not 4G that's attracting them. The UK's biggest network operator posted full-year earnings of £1.41bn for 2012 before the numbers for tax and depreciation (EBITDA …

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Maybe...

...and this is just a shot in the dark here, if they weren't charging ball-bustingly high tarriffs with fuck all data allowance, I might have gone with them. Most normal folks balk at paying above 30-35 a month for their phone bills and if it's a choice between a larger allowance and slightly slower speed or fast and gone in the blink of an eye, most folks will go with 3G. The other thing to bear in mind is that even in London you can't get a 3G signal all the time, so what are chances of 4G?

Apologies for the generalisations there.

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Anonymous Coward

Re: Maybe...

erm... The article says that they've increased the number of customers they have and that the drop in revenue is down to regulation. How does your comment have any bearing on the article?

Forum posting isn't a game whereby if you can think of any personal anecdote that in any way uses the same words as the headline you must post it immediately or lose points.

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Anonymous Coward

Re: Maybe...

I second that - I recently took out 4 new contracts for my family with Orange / Lumia 920s and stuck to 3G.

4G should be cheaper for data, not more expensive as they are much bigger pipes. When you get a faster broadband connection, you dont expect to pay more per GB! You expect a quantity discount!

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Anonymous Coward

Re: Maybe...

You're neglecting to consider how markets work. The 'prize' for being first to market is that you can sell your product or service at a premium until the competition arrives. You've got to recoup all the money you spent developing the thing to be first to market else you go bust when the competition do appear.

Would you expect a brand new iPhone with 64GB of storage to be cheaper than an old one with 16GB based on your quantity discount argument?

Final pedantic thing - small 'b' for data transmission. It's measured in bits not bytes.

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Anonymous Coward

Re: Maybe...

I don't think people are expected to download more, just access what they want much faster with lower latency.

Also, 4G is more efficient than 3G so it actually saves them money to implement it. Just a shame that doesn't get passed on in better contracts.

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Re: Maybe...

Yes you can use a monopoly to increase prices but my opinion hasn't changed they would have been much smarter to use that monopoly to increase their customers. Going by other articles they had 49,000 more customers signing up in the previous quarter and 112,000 more in the previous year. Does this sound like their approach is working well?

Personally I was prepared to sign up but they increased the handset prices again and pretty much drove me straight to Three, their loss and my gain.

Would I expect to pay less for a new Apple product? Of course not, it's an Apple product and you're going to pay the Apple tax to protect their profit margins but you don't have to try very hard to find many examples of other companies reducing the price of their new product due to reductions in material costs or improvements in the manufacturing process.

Are you sure about your final point? I was under the impression while we use it for convenience to signify the difference but it's not technically correct.

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Facepalm

Re: Maybe...

"erm... The article says that they've increased the number of customers they have and that the drop in revenue is down to regulation. How does your comment have any bearing on the article?"

Really?

Even if the customer numbers are up the extra customers have not generated enough extra cash to offset the lost revenue from call termination charges being limited.

No one knows how many customers are on 4G. But as EE are not boasting about the 4G uptake it is a safe bet that the uptake is not all of the new customers.

So it could follow the reason might be the massive cost of the contract and the low data allowance on a system that is designed to maximise data flow.

So yeah there was some relevance there.

I know I won't be paying EE prices for 4G. But that is just my opinion (Anecdote).

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WTF?

Re: Maybe...

Eh? I read his comment and the article and got the distinct impression that 4G wasn't being taken up, that is wasn't the saving grace people thought it would be and isn't turhing into a cash cow. That is from the article,

So me thinks you might be reading the wrong post completely if you missed all the stuff about 4G.

I was going to post the same thing by saying I am not going to 4G because they are too expensive, the tariffs are a joke and why would you if 3g is cheaper.

I am on t-mobile, I like t-mobile, I have a sim only contract with a samsung galaxy note 2 which is awesome and would chew up 4G, but at that price, no thanks. It is a 400% rise on my tariff and I have unlimited data at the moment.

People won't take it up at the price...

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Anonymous Coward

Re: Maybe...

No it isn't. Mobile phone data transfer is sold per GigaBYTE.

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FAIL

Ripoff

I recently took a contract with Three UK for £34 a month. Unlimited data, great coverage and the H+ isn't exactly slow. Add to that a free upgrade to 4G with a compatible handset and there's nothing to make you want the EE tariff.

They must think people are stupid!

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Anonymous Coward

Re: Ripoff

I did exactly the same thing myself not three months ago. The unlimited data really swung it. H+ has more than enough speed for me (it's not like I'm going to be streaming HD video on the go, now, is it?), I've found the coverage to be excellent and should I get an LTE device to replace/supplement the device that came with the contract (Note 2), it's there for me to use, with unlimited data as part of the contract. EE really shot themselves in the foot charging as much as they did. If they could've matched the deals 3 offer I'd have been with them in a shot, and I was already an Orange customer.

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Bronze badge

So with a blanket monopoly on the next "must-have" technology, they got 200,000 new customers (how many do they tend to get each year anyway?) but still didn't make a profit. And if they had done (adjusted for those regulatory costs), they would have made a paltry increase over what they made in 2011 (which didn't have those 200,000 customers).

From that, I take away that nobody's really buying 4G anyway, or certainly not using it as a major factor to buy on, and the business is just growing as per normal. Hope all those licensing fees were worth it.

Given what I've learned by just looking at a 4G ISP (Now, which is one of the most stupid names in the world for Google-ability), it's not surprising. They cost as much as a phone contract, still have a pitiful data allowance, you have to use their box, and they don't cover a major town inside the M25 at all (and I have a huge mast visible just down the road).

I think we just stumbled on the hurdle that is 4G rather than actually made it a viable upgrade. If we'd just let everybody bid, rolled it out to everybody, and not had this exclusivity, I think we'd have been better off as a nation (and the fact that other nations already have this kinda proves the point).

I don't know anyone with a 4G-capable phone, and judging by the figures in this article there's a reason - nobody is buying FOR 4G, they just happen to end up with it. I'd like to know the percentage of cell sessions that are actually 4G over the whole network, averaged appropriately. If it's more than 1% (given the amount of coverage, the number of supported phones, the number of customers who choose to use it, the amount of time it can actually get a signal, and the amount of time that 3G just isn't enough and the phone decides it needs to use 4G), I'll be amazed.

Another technology broken by people who can't work out how to sell it. Hell, the prices and data allowance alone were enough to make me run a mile. It'll become viable when the other providers get it, I imagine. By then, we'll have some more price competition, more handsets supporting it, and maybe some coverage.

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Bronze badge
Boffin

I'm not sure I follow your logic. If the rollout had been more widespread, there'd be more cost needing to be recouped and the price might have been even higher.

The problem with consumer data - I think both in the fixed and the mobile world - is that the market sets a price that doesn't allow the providers to actually make any money. Price it low enough for people to buy it and you lose money on every customer, price it high enough to cover your costs and you don't have any customers.

It's largely the same problem the railways had 150 years ago. Infrastructure investment pays back slowly but commercial investors want to see a return now. The solution then, and what might end up being the solution now, is to sit back and watch the original network builders go to the wall and then pick up their assets cheap from the administrators. Only by paying a fraction of what the stuff actually cost can you make a return on selling it to people.

You're right about people not actively buying 4G however. Most non-technical people I know either have never heard of it or are convinced that "it's all 4G now" since the launch of an Apple phone with the string '4G' in its name.

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Bronze badge

The primary causes of the lack of take up are, from what I see, coverage, price, lack of choice (one provider, one phone), lack of competition.

What I'm saying is that if it hadn't been such a closed-doors affair, then maybe other companies could have jumped on and they could all upgrade their systems together and sell coverage to each other, not to mention actually compete in order to lower prices (not saying it WOULD, but it might). We also all know that when the exclusivity expires, that's when more people will look at it. If there hadn't been exclusivity, I'd probably have it already.

As it is, I'm not going to buy a phone I don't want from a company that can't provide me coverage, would charge me a bomb to do so, and where if I wander off their towers, I go back to what I already have - when I have no choice about that for the next X years until the exclusivity expires. However, if they'd all got together, the licenses had been distributed a bit more evenly, all the companies were offering different deals (I don't really care about a phone, so much as a 4G dongle), coverage extended to a lot more places with costs shared among each other, and I knew that in a couple of years there wasn't going to be the expected explosion of the market onto other companies actually offering a sensible deal (or, more likely, suddenly having the same service cost me much less because EE finally have some competition), then maybe I'd have looked more closely.

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FAIL

EE coverage

I have a Lumia 920 on EE, so should get the full 4G lovliness.

When it works, its like being on a dedicated Wi-Fi but most of the time, in and around London, the 4G coverage sucks balls! EE via their twitterbot simply claim that thy're working on masts in 'that' area and have no knowledge of any completion dates, in other words tough luck buddy, you bought it now what you gonna do?

I chuffin hate mobile phone companies, they're all as bad as each other but they are a necessary evil these days

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Gold badge

4G must be going badly

If you remember their first price was £55 for half a gig of data many calls and texts, and then last month it was £75 for all the data you could eat (no honest really we won't have a 'fair-use' clause hidden in the small print much...). That's obviously gone piss-poorly, because they've slashed the prices without talking about it much. We've just moved the 7 company phones on with them. I wouldn't have gone for it, but we've got:

£36 per month 2 year contract (I haven't seen it yet, I'm assuming that'll be ex VAT). First 2 months free - so it's really £33 p.m. (£40 gross).

iPhone 5's, all 16GB models + 1 64GB one (there's always room to give extra shiny to the guy signing the contract...

Unlimited calls and texts.

1GB data per month.

7 handsets. This worked out cheaper than the 'sharer' contracts we've been on for years (which seem to keep getting worse), where you have one pool of minutes and data. If you went for the shinier handsets anyway. I'd have been happy to go for cheaper, but we've got some serious iPhone fanbois here, and I got outvoted.

So it's goodbye to Win Phone 7 (your fonts were lovely and huge), with mixed feelings but mostly regret. And a big Hello to iOS 6, and no I'm not updating you to 6.1 just yet thanks. Phone feels a bit weird in the hand, but it's nice enough.

So that's a 50% price cut on the 4G tarriff they announced just 3 months ago. Oops! Ha ha ha!

Oh, just to add, I get 7Gb/sec in the office (which is marginally faster than the broadband). We're too close to the exchange to be allowed fibre to our cabinet. And we get tethering without paying extra (fuck you Vodafone!).

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Anonymous Coward

Re: 4G must be going badly

I assume you mean 7Mb/sec

that is a bad tarif really...

I pay £37 including VAT, and that is unlimited data, oh and I get between 10-14Mb/sec on my 3G phone, and around 2-3Mb/sec up

Really EE's tariffs are terrible...

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Gold badge

Re: 4G must be going badly

Ooops! I'd be really really pleased with 7Gb/sec...

It's not a great tarrif, but the unlimited calls is more important than the data (our previous contract had 500MB). It's about par for the course to get the iPhone 5 though, at least from a quick look (I've not been dealing with this or we'd have bought the phones and gone SIM free).

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Re: 4G must be going badly

I really am hacked off with being charged to "tether" - When I took out the contract almost two years ago, I was told that i wouldn't be charged to tether. Then the bills came in.; Funny how only my iPhone attracts tether charges, yet my old phone doesn't. I probably spent the best part of a couple of days arguing with Vodafone over charging to "tether"

I too may well be leaving Vodafone soon. Shame as the service used to be very good.

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Silver badge
Stop

Re: 4G must be going badly - @I ain't Spartacus

Not sure where you got those numbers from, EE have NEVER charged that much for the basic plan, nor have they offered an unlimited 4G plan. The initial offer was £36 for 500mb and pretty much unlimited talk/texts. Extra data allowance could be bought in £5 blocks (1GB, 3GB, 5GB & 8GB). They added in a top tier 20GB plan for an extra £20 (total £76, with a temporary £15 discount). T-Mobile offered an "unlimited" 3G plan that was similar for £36, but that is throttled.

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Anonymous Coward

"The analysts also noted that EE's premium pricing of 4G is unique in developed markets. Neither Japan, South Korea nor the USA charge significantly extra for LTE services - but then none of those countries gave a single operator quite such a monopoly as EE achieved in the UK."

This - 4G wont take off till the monopoly is gone.

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Gold badge

I'm sure that on the day 3 announced that they'd simply shift everyone on their One tarriff to 4G, loud swearing broke out at EE's head office. As you can see from my post above, EE have realised this, and finally got it into their noggins that they need to sign all the 4G hopefuls up at normal prices if they want to take advantage of their monopoly. Well done Ofcom! I wonder why they haven't loudly announced that they're cutting the prices? I can't believe it's not wanting to upset the early-adopters. Can't imagine one of the mobile companies caring a tuppeny-damn about hurting their customers' feelings...

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Anonymous Coward

Wouldn't surprise me if they're trying to wait out the period where a consumer can cancel the contract/return the phone with no repercussions. It's what, 30 days? I know if my provider sold me a product with the cost spread across years and then suddenly slashed the price in half mere weeks later I'd be doing everything in my power to switch to the lower cost.

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WTF?

EE still in a mess

I know 3 people who have recently entered into new contracts with Orange. Not one of them has ended up on the contract they agreed over the phone, they've all been put on contracts with different prices, lengths and data/text/minute allowances to that which they agreed to.

In most cases they've been put onto a tariff that doesn't seem to legitimately exist in the Orange range of tariffs, but that is favourable to them, so they've kept quiet about it. Seems like EE are making a bit of a mess of their systems while attempting to integrate everything into a single system.

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Re: EE still in a mess

To be fair, this isn't a new thing, particularly not with T-Mobile and Orange. Call them at the end of the contract and you can be offered all kinds of things that aren't advertised anywhere, so all sorts of non-standard things exist in their computers.

If their systems are messed up and they are putting people on the non-standard things accidentally rather than deliberately, that's not good for them, but it doesn't greatly surprise me either.

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FAIL

As have been repeated above, maybe people just don't care about SUPER-fast mobile internet that much, and simple plain old "fast" mobile internet suffices? I consider myself quite a heavy mobile internet user, but only on my phone, so I can't think of anything I do on there which would really benefit from the faster speed (and higher cost). Maybe if I was tethering my laptop......

The other thing I don't get about EE/Orange/T-Mobile is, given they're the same company now, how I was able to get a new contract with T-Mobile with almost-unlimited everything and free Xperia Z, for £12 less per month than I could get a comparatively limited Orange contract, with a non-free Xperia Z.

Why aren't they offering comparative contracts and deals now?

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Also weird with other retailers.

Part of that answer is that Orange were owned by France Telecom and T-Mobile was owned by Deutsche Telecom. While the formation of EE was supposedly a "merger of equals" in fact the French were dominant, and there are various clauses in which the French can buy the Germans out later in the merger agreement. Plus, French management (or at least management from France Telecom - Olaf Swantee is a Dutchman) was put in place. France Telecom believed that their brand (Orange) had a better reputation for quality than T-Mobile, and so tried to position Orange as the premium brand and T-Mobile as the value brand. Thus Orange has at some points been more expensive than T-Mobile, although I don't think they are doing this so much now.

Even weirder than this is the relationship with some of the independent retailers. Last year I wanted an HTC One S, and Phones 4 U were offering them online on Orange free upfront on £15.50 a month. I rang Orange to ask if they could match that directly, and they were unable to. Given that connecting a customer directly is much cheaper to them than offering the same deal via an independent retailer that they have to pay a sizeable commission to, that they wouldn't was just weird.

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Anonymous Coward

I got a toy from them this morning

I've arrived at my desk this morning and there was that green box on my seat.

I opened the thing and it was a mifi device from EE.

My company is an O2 customer.

There was a nice letter from Olaf telling me that I can use it as much as i want until mid April and keep it after wards.

If they're desperate enough to send free mifi devices to prospective customers there is something rotten in the kingdom of 4G.

anon for obvious reasons

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Anonymous Coward

I have a Nokia 920 on EE. I get about 33Mbps at home, and about 28Mbps at work (London). Recently went to Bristol, and got similar speeds there.

I get free tethering, which I've used a lot. It has proved to be a lot quicker and more reliable than BT Broadband. And a 12 month contract.

No it wasn't cheap, but for me it has been worth every penny.

(Apologies for being reasonably happy with EE. If it helps, I think their website is crap.)

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FAIL

Missed opportunity

In the early part of this century Telewest implemented a digital network capable of delivering high speed broadband across its network. At the time the best BT could offer was ISDN. Telewest wanted to maximise the revenue they earned from this new technology and priced it high. Uptake was slow and they missed the opportunity when BT started to make ADSL available. This undercut the Telewest service and they subsequently went out of business.

EE had a similar choice: charge a premium and get the early adopters to pay, or offer prices that no one could refuse and clean up. They adopted the former and have missed the boat. I know a number of people that could have 4G capable phones that looked at EE but were put off by the costs and went with a different company instead.

The approach taken is a surprise because its not one that the old Orange would have adopted. The original Nokia Orange was offered at a price an tariff that undercut the incumbent mobile providers and allowed them to establish themselves. Likewise 3 have been using favourable pricing to establish themselves in the market. It looks as though EE have lost their mojo and become just another mobile company.

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Bronze badge

They have Been Pushing New Contracts Like Mad

I have two accounts that are long out of contract and have been pursued like mad to renew them. I have no interest in mobile internet, I mean NO interests in it at all. As a result my already low monthly price has been discounted by very pleasing amounts (>50%) and I get more minutes, more texts and some data - which is pretty unlikely to be used. No wonder the revenue per customer has reduced.

The shame is that the silly money 4G has probably done more damage than benefit.

I am not sure how many of the posters have ever had anything to do with mobile tariffs, but based on experience on real networks, price reductions can generate more traffic and revenue gains than you would imagine. I have seen, a tariff correction increase (not guessed) traffic, revenue and profits increase to an embarrassing degree as sunk costs had been recovered and the additional money was almost pure profit.

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they dont have a clue...

Orange upgrade to whatever best with ee, orange or tmobile.

Deal. £36 per month, 100 mins, unlimited texts, 1gb data and the note 2 for £220.

Went elsewhere through an independent. Got tmobile for £31 per month. 300 mins, unlimited texts and 1.5gb data. Note 2 was free...... and with cashback on quidco of £80.....

EE are useless directly.

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