EE boosts margins with strong data take up

Thu Feb 20, 2014 2:50am EST

LONDON Feb 20 (Reuters) - Britain's largest mobile operator EE said it had exceeded its cost savings target and boosted profitability during a strong 2013, when its customers ramped up the amount they were willing to spend on data services.

EE, a joint venture between Orange and Deutsche Telekom, said its full-year adjusted core earnings margin had hit 24.3 percent, with the metric hitting 25.3 percent in the second half of the year.

The group also beat its target of taking out 445 million pounds ($743.8 million) of operating costs per year, taking the total for 2013 to 457 million pounds.

EE, created in 2010 after France Telecom combined its British Orange unit with Deutsche Telekom's T-Mobile, has been taking costs out of the business as part of its integration drive.

The group has also benefited from its strong lead in superfast networks after it rolled out its 4G service almost a year ahead of rivals 02, owned by Telefonica, and Vodafone. It now has over 2 million customers on the faster and more expensive service.

The company's owners earlier this year put on hold plans to float the business, saying they would maintain the current ownership structure for the time being while EE continues to build its 4G customer base.

Take-up of 4G is being driven by rocketing demand for mobile data. EE said data, which comes from users surfing the internet and downloading pictures, made up 44 percent of the average revenue being paid by a user in the fourth quarter.

"We successfully executed our strategy, growing our pay monthly base, delivering our targeted cost savings and achieving our best margin yet, all while cementing EE's position as the UK's best network for consumers and businesses alike," Chief Executive Olaf Swantee said.

Overall the group reported flat 2013 organic service revenue, which strips out the impact of one of costs such as handsets, when excluding cuts in pricing imposed by the regulator.

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