ORANGE and T-Mobile operator EE saw revenues fall at the end of last year amid signs it failed to cash in on its monopoly of the 4G mobile network.
EE rolled out the superfast service ahead of its competitors in October, but still saw revenues drop 2.8% in the three months to December 31, pushing full-year sales down 1.9% to £6.7bn.
But the group, which starred Footloose actor Kevin Bacon in its latest advertising campaign, insisted its 4G plans were still on track and customers on its new network were spending 10% more than existing users.
With the auction of the rest of the 4G spectrum ongoing, EE has not disclosed how many customers it has attracted to its faster network, but said it had added a net 201,000 new contract customers in the final three months of the year. This was less than the 250,000 net new pre-pay customers the previous quarter.
It said more than half its customers were now on contracts, with most opting for smartphones, as its 4G network reached 43% of the population in 18 towns and cities, including London, Cardiff, Edinburgh and Belfast, by the end of last year.
EE said it would continue to rapidly roll out 4G with the network expected to cover 65 towns and cities and 55% of the population by June.
The company’s rivals, Vodafone, Three and O2, hit out at the telecoms regulator decision to allow EE to be the only 4G operator in the UK until the spring. But the competitors decided against legal action and will be able to launch their own 4G services in the coming months.
EE’s 4G contracts, which are available on smartphones from makers Apple, Nokia and Samsung, range in price from £36 and £56 a month.
Steven Hartley, principal analyst at Ovum, said EE’s latest results showed that the company still faced huge challenges and there were signs the 4G, also known as LTE, performance had not been spectacular.
He said: “EE has everything in its favour for LTE to be a success: a market starved of high-speed mobile broadband, but high smartphone adoption and data usage; an LTE monopoly; rapid LTE coverage deployment; and a wider range of compatible handsets at launch than any other LTE operator. Therefore, unspectacular LTE uptake will be due to brand and pricing.”
When including one-off costs such as restructuring, EE’s pre-tax losses increased by 55% to £249m. The group has refurbished its entire retail estate and announced plans to close 78 redundant stores in 2013.
Chief executive Olaf Swantee said that 4G customers were taking advantage of applications such as video calling, streaming, online shopping and banking on the network.
He added: “We have started to see EE become known for having a great network which will give us long-term benefits and advantages.”
EE, which has more than 26 million customers, kept its churn rate – or the number of customers leaving the business – at 1.2%, but lost 239,000 pay-as-you-go customers in the final three months of the year.