UK number-one operator Everything Everywhere suffered a widening loss in the first half of 2012 but claimed its cost savings initiative, targeted at £3.5 billion pounds by 2014, is on track.

The Orange/T-Mobile joint venture reported a pre-tax loss of £104 million for the six months to end-June, not far off triple the £39 million loss in the same period a year ago. Revenue for the period fell very slightly, from £3.37 billion to £3.31 billion.

The operator pointed to other metrics as indicators that the firm is in healthy shape. Adjusted EBITDA margin for the first half of 2012 was stable at 20.3 percent, with an extra 1.9 percentage points of the margin being invested in customer retention. This paid off with a 9 percent year-on-year increase in contract renewals.

Everything Everywhere said 50 percent of its customers are now on postpaid plans. Postpaid smartphone penetration increased by 11 percentage points to 72 percent while 91 percent of new postpaid customers selected smartphones.

"With postpaid customers generating five times more ARPU than prepaid, this continues to improve the value mix of our customer base and resulted in underlying blended (combining pre- and postpaid) ARPU growth of 5.1 percent year-on-year," said the firm in a statement.

Non voice revenues (data and messaging) grew to 47 percent of ARPU revenues in the second quarter (Q2 2011: 39 percent), with non-messaging data reaching 29 percent of ARPU in Q2 2012 (Q2 2011: 18 percent).  

The company said it has exceeded its savings target of 71 percent (£316 million) of annual gross operating expenses (£445 million) and is on track to achieve "synergy savings" of £3.5 billion in net present value by 2014.

Cost savings been made through network optimisation (1,390 redundant sites have been switched off), a corporation function restructure, a 38 percent reduction of its head office property, integration of IT systems and consolidation of its warehouses and handset supply chain. The company also plans to close 30 retail stores.

“We are making strong progress integrating the legacy Orange and T-Mobile businesses to create cost efficiencies and deliver planned synergy targets, while investing in significant network upgrades to further improve our customer experience,” said Everything Everywhere CEO Olaf Swantee.

The company issued £543 million in dividends to its shareholders Deutsche Telekom and France Telecom in the first half of 2012 and says it has "the long term funding to achieve our operational goals" thanks to bond issuance progammes that saw it raise Euro 500 million in January and £450 million in March.