Telefónica UK Limited (O2) publishes half year results to 30 June 2020

• O2 posts slight revenue decline of 1.1% and profitability of -1.6% for the half year. It remains the UK’s No1 mobile network for customers, growing its base to 34.1 million (up 2.5%), representing YoY customer growth and churn down to just 0.9%.
• O2 uses its sustained investment to provide permanent support for the UK, improving connectivity, boosting coverage, investing in digital skills training and supporting customers when they need it most.
• Ahead of the UK’s staycation summer O2 boosts 4G in over 91,000 postcodes and 400 tourism hotspots.

Mark Evans, O2 CEO, commented on the network’s ambition to rebuild Britain following the global pandemic:

’The impact of the COVID-19 pandemic has been devastating for many families, communities and businesses right across the UK. As the UK’s No1 mobile network for customers, we have naturally provided additional support to our customers at such a critical time, while continuing to invest in and grow our network, maintaining market-leading levels of customer loyalty and satisfaction.

‘Now we’re focused on playing an even bigger role in getting the UK back on its feet. During the pandemic we have doubled our network capacity to meet demand, improved coverage across rural locations and supported our NHS with training venues and devices.

‘We’re acting as a force for good – setting a higher bar for connectivity, service and support for all our customers – and today we’re going further, announcing permanent free access to support websites including the NHS and Samaritans and new virtual 121 appointments with our Gurus. We’re also investing in digital skills training for thousands of our retail colleagues.

‘Connectivity has never been more important, and we know that O2 is at the forefront of one of the UK’s most valued services. We will power this country into recovery and work to rebuild Britain.’

**Connecting the nation with a network built for the future ** Since the start of the pandemic, O2 has doubled the capacity of its voice network to meet unprecedented demand and has boosted 4G services in over 91,000 postcodes and almost 400 tourist hotspots ahead of an anticipated record staycation summer. Its 5G rollout continues ahead of target with partners Nokia and Ericsson, with 5G now available in 60 towns and cities. O2 was also the first to launch an LTE-M network which supports Britain’s digital leadership by powering ‘Internet of Things’ (IoT) technology. To date, it has 10,000 LTE-M sites operational in the UK.

**Helping consumers by raising the bar on service and support ** O2 has focused on providing the support and service customers need at this time. It was the only UK mobile operator to reopen all its 440+ UK stores for customers in June. New layouts and virtual queuing technology meant that customers were able to get support at their local store without a wait. Today, O2 has also announced that it will permanently zero rate the 30 national support sites it made free of charge during the lockdown, including the NHS website, Citizens Advice, Samaritans, Age UK, Childline and Diabetes UK. It will also pilot a new service to offer O2 Guru digital appointments to customers unable to come into store.

**Helping businesses to grow and thrive in the UK ** O2’s success in delivering new services to businesses has helped it secure a major new contract with KPMG to provide connectivity tools to help support operational activity. O2’s environmental credentials played an important role in winning this business. In the public sector, over half of UK police forces, 50 NHS trusts and over a third of the UK’s local councils now use O2’s services. O2 was additionally awarded a contract by West Midlands 5G to help create 5G accelerators in Birmingham, Wolverhampton and Coventry supporting at least 2,000 businesses in the area.

**Helping communities and the most vulnerable ** During the pandemic, O2 partnered with environmental charity Hubbub to provide refurbished smartphones to those in need. The ‘ Community Calling ’ trial has helped users to contact family after months of isolation, and even successfully apply for new jobs. The company was also a major supporting donor of the BBC’s Big Night in fund, helping charities across the UK. With many children spending more time learning online, O2 also supported the Department for Education on their pledge to keep families connected, and the NSPCC to help parents keep children safe online.

**Helping the NHS through the pandemic ** O2 has continued its long-standing relationship with the NHS with thousands of connected devices provided to clinicians across the UK, allowing doctors to see patients remotely, and allowing relatives of those with COVID-19 to visit them virtually in hospital. O2 has offered additional mobile data, voice calls and texts to all NHS frontline staff who were existing customers at no extra cost on personal mobiles used for work purposes, and handed over the keys to the iconic venue, The O2, to use free of charge as an NHS training facility for Nightingale staff.

**Supporting and upskilling employees ** O2 has fully supported its 6,500 employees throughout the pandemic, with no use of the furlough scheme and full pay for all. As part of its efforts to rebuild Britain, the company has also enfranchised its employee base with a new £10m incentive programme to motivate and reward those working to keep Britain connected. O2 used the lockdown period to give digital skill training to thousands of retail staff and facilitated home working for over 3,000 customer support agents.

**H1 2020 Financial Information ** All financials reported using IFRS 16 reporting standards with year-on-year movements on a like-for-like basis

Relevance : Total connections, including customers who use the O2 network through giffgaff, Tesco Mobile, Sky Mobile and Lycamobile, reached 34.1 million at 30 June, (+2.5 per cent year-on-year), with Telefónica UK remaining the largest UK mobile network operator. The company maintained its market-leading position for customer loyalty with contract churn at 0.9 per cent in the period and the highest customer satisfaction based on NPS.

Revenues : Total revenue for the period reached £2,945m (-1.1 per cent year-on-year). The revenue decline can be attributed to unavoidable lockdown-related decline in SMIP installation, roaming services and other service revenues, partly mitigated by hardware revenue and non-mobile ICT business growth.

Returns : OIBDA for the period reached £884 million (-1.6 per cent year-on-year excluding 2019 one-offs) with OIBDA margin at 30.0 per cent.

CapEx for the period was £355 million reflecting continued investment in network capacity at a time when customers need it most.