O2 signals sharp downturn in growth to come

23 Mar 2005

Mobile operator O2 yesterday warned that intense competition in the UK market would lead to a significant downturn in its revenue growth rate in the fiscal year ending March 2006. The company predicts that growth could fall to less than half of the current financial year’s expected figure of between 12% and 15%. It attributed the forecasted drop to aggressive pricing strategies from relative newcomers such as Hutchison’s ‘3’ network causing its customers to migrate to rival services, in addition to a 30% cut in mobile termination rates imposed by the regulator, Ofcom. In the face of a slowdown in new subscriber take-up O2 says it aims to focus more efforts on customer service in a bid to reduce churn rates – currently at around 30% in the UK. To this end it plans to cut 500 ‘back office’ jobs and recruit 2,000 ‘customer facing’ staff over the next two years.

United Kingdom, O2 UK