O2 Telefónica Germany experiences surge in sales with expensive mobile phones

Expensive mobile phones boost sales at O2 Telefónica Germany

Telefónica Deutschland, a German telecommunications provider, has reported a significant increase in hardware revenue during the first quarter of 2023. The company’s other revenue, known as O2, rose by almost four percent to EUR 1.6 billion, while hardware revenue surged by more than 23 percent to EUR 485 million – a rise of EUR 97 million from the previous year.

The company has reported that 97 percent of the smartphones sold in the first quarter support 5G mobile communications. Revenue from mobile communication services rose 8.6 percent to EUR 1.4 billion, while the company added 56,000 net customers in the first three months, leaving them with a total of 44.4 million customers by the end of the quarter.

There has been a loss of approximately 1.6 million customers on a year-on-year basis, largely due to the migration of prepaid customers. The company lost 353,000 customers in the first quarter of 2023, representing a fall of around 3 million over the year, leaving them with 15.9 million prepaid customers. Prepaid customers provide an average sales value of only EUR 7.50 per month, which has increased by EUR 1.20 year-on-year. However, it is clear that low-volume users are the ones opting out.

Telefónica Deutschland has been able to expand its mobile phone customer base with billing (postpaid and M2M) by 410,000 in the first three months, increasing to 1.4 million over the previous year, resulting in a total of 26.7 million postpaid customers. Postpaid customers generate an average monthly turnover of EUR 12.80 and are more likely to stick around for a longer period.

In terms of the fixed network, Telefónica Deutschland gained 26,000 more customers by the end of March, totaling 2.4 million customers. Fixed network revenue increased by 2.9 percent year-on-year to EUR 203 million. This contributed to a total increase in sales of eight percent, reaching EUR 2.1 billion during the first quarter.

Operating expenses reportedly increased by 10.6 percent to EUR 1.5 billion during the first quarter, with personnel expenses showing the smallest increase of 5.6 percent to EUR 162 million. The value of the operating income before interest, depreciation, and appreciation (OIBDA) rose by 1.7 percent to EUR 611 million, while the operating result surged by 17.4 percent to EUR 49 million. Financial losses increased over the year, causing a pre-tax profit loss of 1.7 percent to EUR 35 million. However, net profit increased by 13.7 percent to EUR 30 million due to a lower tax burden.

Telefónica Deutschland expects further growth in the low single-digit percentage range compared to the previous year for sales and OIBDA adjusted for special effects. As a result, shares in Telefónica Deutschland Holding have been traded 3.2 percent higher on Thursday.

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