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Tuesday, 5 February, 2002, 07:25 GMT
MMO2 plans further job cuts
O2 logo
MMO2 still needs to prove itself as a solo operation
MMO2, the mobile operator spun off from British Telecom last year, is cutting a fifth of its workforce in the UK to cut costs and try to improve its bottom line.

The company announced the cuts of 1,400 staff at BT Cellnet in the UK - on top of 400 job losses last year - taking the total to 6,100. Part of the reduction comes from closing more than a third of its retail outlets.

A further 500 jobs are to go at Viag Interkom, the firm's underperforming subsidiary in Germany. Together with 400 layoffs last year, Viag's staffing level is now down to 3,400.

That should save about 70m a year, the company said.

By 0938 GMT, MMO2 shares were up just 0.5p at 75.25p.

Crawling up

The news came as MMO2 announced its subscriber figures had grown only marginally in the final three months of last year.

The company's total subscriber base grew 453,000 - in line with analysts' low expectations - to 17.24m.

In the UK, BTCellnet added 107,000 new net subscribers to 11.1m, while in Germany Viag's subscriber base expanded by 262,000 to 3.4m.

That puts BTCellnet just in third place in the UK market, with Vodafone on 11.1m - 13.2m if one includes inactive customers who seem no longer to be using their phones - and Orange on 12.4m.

The problem is that BTCellnet's churn - the proportion of customers leaving the network each year - is high for the industry at 34%, although it has fallen from over 40% a year ago.

Peter Erskine, MMO2's chief executive, said he "would have liked to have won more good quality customers", but was cheered by the rise in contract additions.

Big spenders

But there was good news in the shape of an increasing proportion of higher-spending contract customers.

BTCellnet has been losing contract customers in the past couple of years, but this time almost half its new arrivals are on contract, rather than the less lucrative prepay.

In the UK, the average revenue per user fell slightly overall thanks to weaker spending by prepay customers to 230 from 238 in the previous three months.

But Viag saw its ARPU continue to rise.

And both companies made increasing sales of data products. The company was first in the UK with fast data GPRS services, which now make up one eight of its overall sales.

SMS traffic was up 22% on the previous quarter.

The BBC's Greg Wood
"They're also closing 133 out of their 320 shops"
Jeannie Drake, CWO union
"We are very concerned"
See also:

04 Feb 02 | Business
Wireless data market set to hot up
18 Jan 02 | Business
O2 prepares to hit the streets
07 Jan 02 | Business
Oftel squares up to mobile firms
05 Dec 01 | Business
MMO2 admits further 3G delay
25 Nov 01 | Business
MMO2 mulls German exit
19 Nov 01 | Business
Strong start for BT's MMO2
08 Nov 01 | Business
BT unveils massive loss
23 Oct 01 | Business
BT approves mobiles spin-off
23 Oct 01 | Business
MMO2: A risky investment?
03 Sep 01 | Business
BT unveils new mobile brand
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