EE failing to cash in on 4G head start, says City

 

Britain’s biggest mobile phone company today disappointed the City after it reported a slowdown in revenue growth — despite being the first UK carrier to launch a super-fast 4G mobile internet service last October.

EE gave no details about how many of its 26.8 million subscribers have signed up to the new service, saying only there has been “solid early 4G momentum”.

Chief executive Olaf Swantee was upbeat, pointing out that average revenue from each 4G user is up 10%. The new service has also won more than 1000 corporate customers, including Microsoft, Addison Lee and Sony Music.

But EE’s total revenues climbed just 1.5% in the last three months of 2012 — slower than the 2.7% rise seen across the whole year.

Some analysts were unimpressed. Jefferies investment bank fears that 4G subscriber numbers are “modest”, even though EE has spent millions on a marketing campaign featuring Hollywood star Kevin Bacon.

Steven Hartley, analyst at research firm Ovum, went further: “EE’s latest results show that the company still faces huge challenges. Experience suggests that phrases such as ‘solid early 4G momentum’ cover all manner of sins. Or to put it another way: if customer uptake was far ahead of expectation, then we would hear about it.”

The lukewarm reaction from the City will raise questions about whether EE’s shareholders, France Telecom and T-Mobile, should go ahead with a possible £10 billion stock-market flotation.

Swantee insisted analysts were only disappointed because he had not released more information.

He said it was “commercially sensitive” because EE is the only 4G carrier at present and industry regulator Ofcom is conducting an auction of more spectrum.

Adjusted profits before exceptionals were flat at £1.4 billion on annual sales of £6.66 billion.

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