At the end of September, the total number of fixed and mobile accesses for Telefonica O2 Czech Republic, including Slovakia, stood at 8.4 million, a slight decrease of 0.3% year-on-year.
Fixed telephony accesses amounted to 1.9 million at the end of September, an 11.3% decline year on-year. However, net losses of fixed telephony accesses improved by 34.0% year-on-year in the January to September period, consolidating the positive quarter-on-quarter trend recorded since the beginning of the year. This is a result of the improvement in gross adds and lower number of disconnections driven by enhancements to fixed line propositions with broadband and bundled offers. At the end of September, 10.0% of fixed accesses had a bundled product.
Retail Internet broadband accesses reached 552,180 (+14.2% year-on-year), with 11,808 net customers added in the third quarter. The ADSL offer was significantly improved in the quarter, with speed increasing by four times with no change in price, with 8 Mbps now the basic reference product. The total number of O2 TV customers increased by 10,143 to reach 108,061 at the end of September.
The total number of mobile customers in the Czech Republic increased by 4.4% year-on-year to reach 5.2 million at the end of September, mainly driven by the increase in the contract customer base, reaching 2.4 million at the end of September, with net additions of 60,360 in the third quarter.
The prepay customer base decreased by 59,253 customers in the third quarter to reach 2.8 million at the end of September, following the active prepaid to contract migration strategy. Telefonica O2 Slovakia registered 412,677 customers at the end of September, with the contract customer base increasing sequentially, reflecting a positive response to the recent launch of the “O2 Fér” customer proposition, which is SIM only based and offers one simple tariff for both contract and prepay.
In the Czech Republic, the churn rate reached 1.6% in the third quarter, 0.3 percentage points higher than in the same period of last year, but stable on a nine month basis and similar to the churn rate of the first half of the year.
MoU in the Czech Republic in the third quarter increased by 3.2% year-on-year to reach 120 minutes in the first nine months of 2008 (+4.1% year-on-year) due to the higher contract base and the good performance of “Neon” flat rate tariffs, introduced in May, with close to 140 thousand customers opting for one of these tariffs at the end of September.
Total mobile ARPU in the Czech Republic in the third quarter declined by 3.0% year-on-year in local currency to reach 20.9 euros in the first nine months of 2008 (-0.7% year-on-year in local currency). Contract ARPU declined 7.7% year-on-year in local currency in the third quarter (-6.7% up to September 2008) mainly due to the dilution caused by customer migration from the prepay segment. Prepay ARPU in the third quarter decreased by 3.8% year-on-year in local currency (-1.9% up to September 2008). Data ARPU in the nine months increased by 2.6% year-on-year in local currency to 4.5 euros as a result of the growth in mobile data customers.
Revenues for the Telefonica O2 Czech Republic Group in the third quarter were 5.1% higher year on- year in constant currency, leading to a 2.5% year-on-year increase in constant currency for the January-September period to reach 1,930 million euros, with approx. 39 million euros registered in the quarter from the regulatory accrual of Universal Service Obligations. The Czech mobile business continued to be the key driver of the underlying growth of the Company, with service revenue growing by 2.2% year-on-year in local currency in the third quarter and 4.3% in the January-September period. Traditional fixed revenues fell by 7.6% year-on-year in local currency in the third quarter, an improved performance compared to the January-September period (-9.5% year-on-year), with fixed internet, broadband and TV revenues growing by 4.0% year-on-year in local currency in the third quarter and 6.8% in the January-September period.
Operating income before depreciation and amortization (OIBDA) in the third quarter increased by 1.6% year-on-year in constant currency, while for the January-September period, growth was 2.5% year-on-year in constant currency to reach 886 million euros. Operating costs in the third quarter increased by approx. 27 million euros as a result of the Universal Service Obligation already mentioned. On a like for like basis5, OIBDA would have decreased by 0.5% year-on-year in constant currency in the first nine months. OIBDA margin was 44.0% in the third quarter compared to 45.4% in the same period of last year, with margin for the January-September period of 45.9% diluted less than 3 percentage points by the Slovak operation.
CapEx for the year to date totalled 167 million euros and operating cash flow (OIBDA-CapEx) amounted to 719 million euros.
