O2 sales dip 9% as tight-fisted Brits cling to their old handsets

Sales at O2 UK fell by 8.9 per cent to €3.46bn (£2.91bn) for the first half of the year, as customers opted to hang on to their old handsets rather than upgrade.

Sales for the quarter fell even further by 12.3 per cent year-on-year to €1.71bn (£1.4bn).

However, Philip Carse, an analyst at Megabuyte, notes that, given the weak pound, the drop in revenue is closer to four per cent in real terms.

Sales for the entire Telefonica group for the half-year dropped by 7.1 per cent to €25.2bn (£21.2bn). Operating income fell 10 per cent over the same period to €3.1bn (£2.6bn).

Carse said: "Much of the revenue decline reflected the impact of lower handset sales from O2 Refresh (which enables early upgrades). This was reflected in ex-Refresh declines of 0.2 per cent for Mobile service revenue and 1.6 per cent for total revenue, versus the four per cent headline organic decline. 4G subscribers grew 1.489m in the quarter to 9.49m, taking penetration to 43.1 per cent."

Earlier this year the EU Commission blocked the proposed £10.3bn acquisition of O2 by Three's owner Hutchison under the EU Merger Regulation.

The commission said it had strong concerns that UK mobile customers would have had less choice and paid higher prices as a result of the takeover.

José María Álvarez-Pallete, exec chairman of Telefonica, said the second quarter results "reflect the benefits of Telefónica’s structural transformation." He noted the biz had captured "synergies and efficiencies", which bumped up operating cash flow by three per cent to €4.1bn (£3.4bn) for the first six months of the year. ®