Performance

Performance highlights for the quarter ended 30 June 2008

• Continued to thrive as part of the Telefónica group and maintained momentum in highly competitive markets
• Telefónica Europe now has a total customer base of 43.8 million, 9.8% higher than last year
• UK business added 137,596 net contract customers, 80.8% higher than in the second quarter of 2007
• Germany increased total mobile customer base to 13.9 million, representing 17.5% year on year growth
• Ireland continued trading strongly in a competitive market ending the quarter with a total mobile customer base of 1.7 million, 3.4% higher than at the same time last year.
• Telefónica O2 Czech Republic increased the total fixed and mobile customer base, including Slovakia to 8.5 million, 0.5% higher than the same quarter as last year. 

Access our latest set of second quarter results for the period ended 30 June 2008.  

O2 continues to thrive as part of Telefónica S.A. We have more than 43 million fixed and mobile customers across Europe and 29,000 employees across the Group. 

In 2008, in highly challenging European markets, O2 delivered a strong set of second quarter results adding 1.3 million mobile and 416,000 fixed customers taking the total customer base to 43.8 million, 9.8% higher than last year.

Non-SMS data revenue continues to grow with €420 million recorded in the first half of 2008, a growth of 39.8% year on year.

Strategic and operational highlights

Simplicity is key to O2 success
The operating environment has become more challenging in the second quarter, but we will continue to anticipate customer needs and deliver propositions that customers value.  Following the success of Simplicity in the UK, O2 in Ireland has launched O2 Clear, a SIM only 30 day rolling contract tariff which includes a text service that alerts customers when they have reached a particular amount on their bill.

Since O2 started proactively marketing the no lock-in model to the UK contract market last summer, the 'simplicity' tariff has attracted high rates of take-up.  It now accounts for over one third of all O2 online sales and customer numbers will shortly pass half a million.  It has proved particularly popular in the family segment and has been an influential factor in the increasing trend of prepay to postpay migration amongst O2 subscribers.

For customers who wish to keep their existing handset, 'simplicity' offers a range of pay monthly, bundled voice and text tariffs starting at £15 and offering O2's best ever calling rates.  Contracts can be changed or cancelled at any time with only 30 days' notice.  In order to ensure total control of spend, customers can receive a text notification of their outstanding bundle balance at any time and, from the end of this month, they will also be able to obtain it free by calling customer service.

Telefónica O2 UK launches mobile broadband
On 1 May 2008, Telefónica O2 UK established itself as a comprehensive provider of high quality broadband and Internet services in the UK by launching O2 Mobile Broadband. Designed for fast, easy and reliable Internet connectivity on the move, O2 Mobile Broadband works by simply slotting a small memory stick into the USB port of a notebook computer or PC; customers just "plug-n-play". With value for money pricing, fast speeds, as well as UK-based after sales service, O2 Mobile Broadband will allow O2 customers to access the internet on a laptop via the O2 mobile network or over 7,500 free Wi-Fi hotspots, anywhere in the UK*, from just £20 a month.

O2 and Apple launch iPhone 3G in the UK & Ireland
On 10 June 2008, Apple and O2 announced that O2, will be the exclusive carrier for Apple's highly anticipated iPhone 3G in the UK and Ireland.

iPhone 3G combines all the revolutionary features of iPhone with 3G networking that is significantly faster than the first generation iPhone. The device has built-in GPS for expanded location based mobile services, iPhone 2.0 software (which includes support for Microsoft Exchange ActiveSync) and runs the hundreds of third party applications already built with the recently released iPhone SDK. These can be accessed via iTunes.

Find out more information about the iPhone.

Telefónica O2 Germany builds foundations for further growth
As part of the 3.5 billion euros investment program for 2007-2010 announced in October 2007, O2 Germany will expand both its GSM and UMTS network coverage using a dual vendor strategy. This will provide the business with a strong platform to capture the significant growth opportunities in Germany, including the business segment, leveraging the global reach of Telefónica to offer new propositions to multinational corporations as well as in the areas of the country not currently covered by the O2 network.  In conjunction, the national roaming agreement which allowed for roaming by O2 customers in Germany on the T-Mobile 2G and 3G mobile networks was cancelled. Roaming minutes available as part of the agreement can be used until the end of 2009.  O2 Germany will also double its store network to 1,000 over the next 2 years.

O2 launches mobile broadband in the UK to give customers a complete broadband experience
Designed for fast, easy and reliable Internet connectivity on the move, O2 Mobile Broadband works by simply slotting a small memory stick into the USB port of a notebook computer or PC; customers just “plug-n-play”. With value for money pricing, fast speeds, as well as UK-based after sales service, O2 Mobile Broadband will allow O2 customers to access the internet on a laptop via the O2 mobile network or over 7,500 free Wi-Fi hotspots, anywhere in the UK, from just £20 a month.

O2 launched its home broadband offering last October with a commitment to bringing a high quality service to market. With 9 out of 10 O2 Broadband customers saying they would recommend it to friends or family, O2 has delivered on this commitment. The addition of Mobile Broadband creates a complete set of complementary services which will let customers enjoy high quality and fast access to the internet at home or on the move.

Consistent to all of these services is a commitment to the best overall customer experience in the market. That’s why O2 services – be they mobile, broadband or devices such as the iPhone from Apple – consistently rank No.1 in overall customer satisfaction.

New bundles launched in Czech Republic
The Czech Republic business launched a new TRIO bundle, including DSL, calls and O2 TV. Customers get a 2 Mbps Internet connection for free for 6 months plus 800 free calling minutes per month when they order O2 TV. There is significant customer interest in O2 Trio and O2 Duo services, with close to 100,000 customers using these products.

New data roaming tariffs announced
The O2 businesses and movistar in Spain were the first to launch a range of new data roaming tariffs before summer 2008 (movistar from February), aimed at customers travelling within Europe. The resultant savings for customers will be around 40% on connectivity rates, while the maximum price for sending an SMS will be 32 euro cents. The businesses are proactively looking to further reduce the wholesale inter-operator tariffs (IOTs) in order to pass on additional benefits to users.

The O2 celebrates its first birthday
As The O2 in London celebrates its first birthday after a highly successful year, we have now rolled out ‘The O2’ concept across our businesses in the UK, Germany, Ireland and the Czech Republic. We are already seeing the business benefits in the UK, with reduced churn from customers who have experienced The O2 in London.