O2 delivers solid fiscal 2019 and points to 5G as future of entertainment

Telefónica’s UK business arm clocks up continued growth in revenues and profits driven by expanding customer numbers and predicts 5G could boost the entertainment sector by as much as £2.3bn over the next 10 years

On the back of recording its third year of top and bottom line growth, Telefónica’s UK business arm O2 has released research showing the transformative impact 5G connectivity could have on the UK’s live entertainment industry.

For the financial year ended 31 December 2019, the telco reported total revenues of £6.2bn, a 3.8% year-on-year increase. This was said to have been driven by the continued success of the company’s custom plans tariffs, higher hardware revenues, progress in its Smart Meter Implementation Programme (SMIP) and increased mobile virtual network operator (MVNO) revenues. 

Operating income before depreciation and amortisation (Oibda) for the year reached £1.8bn, up by 2.3% compared with the 2018 financial year, with Oibda margin standing at 29.7%.

The company claims to have the UK’s largest network in terms of customers, and by 31 December 2019 the total number of connections – including customers who used the O2 network through giffgaff, Tesco Mobile, Sky Mobile and Lycamobile – reached 34.5 million, growing 5.7% year-on-year. The company added that by the end of 2019 it had maintained its market-leading position for customer loyalty with contract churn at 1% in the fourth quarter. Contract net additions for the full year were 1.73 million, or 190,000 excluding machine-to-machine (M2M) sources. In the fourth quarter, contract net additions were 623,000, or 105,000 excluding M2M.

One of the key performance statistics for the year was that O2’s capital expenditure had risen by 3.4% on an annual basis to £801m, reflecting, said the company, continued investment in network capacity, customer experience and 5G roll-out. The company introduced its 5G network to the UK in October 2019, which currently extends to 21 locations in the UK. And it is through the 5G network that the company sees a breakthrough in entertainment experiences.

“We aim to engage fans with relevant, useful and exciting experiences before, during and after a live event. The low-latency and superfast connectivity of 5G enables us to tailor these experiences to diverse audiences at our venues in real time”
Gareth Griffiths, O2

In the 5th generation entertainment research conducted by O2 and Ovum, the mobile operator predicts that 5G could boost the entertainment sector by as much as £2.3bn over the next 10 years, rejuvenating live experiences with the likes of technology such as virtual and augmented reality, both of which will benefit from faster connectivity.

O2 forecasts a revolutionised pre-event experience in connected venues, offering fans the chance to seamlessly access and enjoy activities ahead of the show. It said that immediately after shows, fans will be able to get their very own personalised highlights reel sent directly to their device as event organisers harness the connectivity of multiple camera angles and the superfast network.

By 2028, O2 predicts that 78% of live entertainment consumer spend will be driven by 5G-enabled sports experiences. It said the forthcoming Olympic Games was expected to accelerate this growth, with sponsors likely to market their 5G tech capabilities throughout the event.

“We aim to engage fans with relevant, useful and exciting experiences before, during and after a live event,” said Gareth Griffiths, head of sponsorship at O2. “The low-latency and superfast connectivity of 5G, underpinned by fan insights, bold branding and customer benefits, enables us to tailor these experiences to the diverse audiences we see at our venues in real time.”

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