EE earnings hit by rising handset costs - Mobile World Live

EE earnings hit by rising handset costs

02 FEB 2018

BT Consumer CEO Marc Allera pointed to an increase in handset acquisition costs and the launch of three different Apple products as factors affecting EE’s earnings in the last calendar quarter of 2017, though revenue and post paid customer numbers both grew.

Revenue from EE increased 4 per cent year-on-year in BT’s fiscal Q3 to £1.36 billion. Operating profit was £62 million, down 16 per cent year-on-year. The company does not reveal net profit for its operating units in quarterly earnings announcements.

Speaking on BT Group’s earnings call, Allera (pictured) said the number and price of new high-end products had led to higher investment by the operator, but noted he expected it to “bear fruit” in terms of customer acquisition and retention going forward.

“This has been an exceptional quarter, with Apple products in particular you would normally get one device launch – we actually had three,” he said: “You’ll have seen from Apple’s results yesterday their average selling price was $796 versus around $700 the prior year and obviously we’ve experienced something similar.”

EE customer numbers fell during the quarter due to continued decline in prepay, down by 299,000, which offset the addition of 235,000 contract customers. Its total base stood at 29.8 million by the end of the quarter.

Unique position
During the call, BT Group CEO Gavin Patterson tipped the company to exploit its “unique position” in the UK market as the convergence trend sweeping Europe began to make a strong impact in the UK.

“We’re extremely well-placed as a business. We’re the one operator in the UK that can really exploit the trend that is happening all over Europe by creating converged services for consumer and business customers.”

“We have a very strong fixed network, we’re now going to make an ultrafast [broadband] network. On top of that, we have – through the acquisition of EE – the best 4G network in the UK by some way. The combination of the two together allows us to provide converged services across three brands, BT, EE and [discount broadband brand] Plusnet.”

The company also signed a deal with broadcaster Sky in December 2017 to boost the content options available on its TV offering.

Patterson added its position would enable it to face the significant headwinds facing the sectors it competes in.

In fiscal Q3, BT reported a net profit of £501 million, up from £374 million in the same quarter of 2016, though Patterson noted both figures were impacted by specific and one-off costs.

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Chris Donkin

Chris joined the Mobile World Live team in November 2016 having previously worked at a number of UK media outlets including Trinity Mirror, The Press Association and UK telecoms publication Mobile News. After spending 10 years in journalism, he moved...

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