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20 February 20132 Comments by Jon M

EE slumps to massive losses

EE logoEE, formed by the merger of Orange and T-Mobile and the UK’s first 4G mobile network, has slumped to some truly appalling financial results for 2012. The latest figures show that its losses have doubled since 2011 with a pre-tax loss of £249 million ($385 million). The results are far worse than last year’s which added up to a loss of “only” £113 million ($175 million). This failure to turn a profit wasn’t unexpected but the size of the losses is a bit of a shock. Despite huge marketing campaigns, EE only had earning of £1.41 billion ($2.19 billion) which was less than in 2011 and the total revenue fell too £6.66 billion ($10.34 billion).

The big launch of 4G services and EE’s monopoly gifted by Ofcom didn’t seem help the company in the way they hoped. In fact, EE actually saw its subscriber numbers fall compared with the same time last year. In the final quarter of 2011 EE had 313,000 new contract customers. However, in the same period in 2012, EE suffered from a massive 35% year-on-year decrease. They only managed to attract 201,000 new post-pay customers in 2012’s fourth quarter.

As for 4G usage, EE have claimed that the uptake is fast although most analysts expect that it has fallen far below what they had hoped. EE probably predicted great results from their head-start over rival networks but they have admitted that only about 10% of their corporate customers are trialling or using their more-expensive 4G plans.

When EE first launched its 4G service it came under quite intense criticism for the pricing of its various tariffs. It was also lambasted strongly for not offering any unlimited data plans when superfast broadband needs to have no restrictions to be genuinely useful. While the company later u-turned and introduced a plan with a larger bandwidth allowance, uptake has been pretty poor and the customer response has been far from promising.

Although EE is reporting that it makes 10 percent more money off each 4G customer compared to a 3G customer, the fact that is is charging more for this service is probably meaning that more people stick with the cheaper option. It also seems that many would-be buyers are waiting to see what the other networks can offer before committing to a 24-month contract with EE.

Especially now 3 Mobile have announced that they will offer an unlimited 4G data plan without charging a premium, it’s hard to say that EE have made the most of their monopoly. The results really put the pressure on CEO Olaf Swantee who has held the position for only just under 18 months.

EE’s public relations department have already started desperately spinning the profits news to make it seem less dire. Despite doubling its losses, EE is claiming that it has “maintained solid commercial momentum” and successfully built its brand.

What do you make of the latest profit results from EE? And what about their attempts to excuse them? Have you tried its 4G service yet? And do you think its revenues will improve over the coming years?

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2 Responses to “EE slumps to massive losses”

  1. Samy Angel 15 November 2014 at 17:35 Permalink

    I have an all small case email address and this site will not allow my first name in small case . Ee are way too expensive, you say they have unlimited data but that’s not true the most you can buy is 1 gig which lasts less than 24 hours for a gamer. Also there 4G service is not different to the 3G and the lag when I play American games is atrocious and has made me go from being the proud owner of a game account that was in the global top 50 while I was on 3 network with an eBay value of $3,500 down to below the top 15 thousand players globally as my game constantly takes between 1 min and 3 min to do any actions , previously while on 3 network I had no lag and no crashes . Orange refused to reimburse me and only gave me a poxy 10 gig free allowance worth about $18 to make up for my losses . Also if I have bought a data bundle my texts are hugely expensive and my call charges are roughly 10 minutes of talk for £5 . When I visited the ee store they told me they only deal with contracts and I had to ring 150 which costs 25p a call and I have to repeatedly ring them until I finally get put through to an engineer that speaks English even tho they are an English company. Last time I rang ee 17 times before I managed to speak to someone who could answer my problem which they could not solve as I am often without any 3G or 4G coverage here in Plymouth , I was told they are doing work on there service and when I told them I wanted to pay to get my phone opened I was told I can’t even tho it’s payg . I am buying a new iPhone on 3 network again as I have spent over £600 in 5 weeks on ee to access the Internet and almost £1000 on talk time. Yet the woman in plymouths ee store still tried to convince me they are the cheapest and best, as I was leaving the shop a guy came in who had a contract and he was angry as his first bill was over £1000 . The assistant who made his contract told him the standard ee 1 gig a month was plenty so he had used the data the way he did on giff gaff and she was trying to convince him that his bill would be only the £25 of his phone rental if he only went on face book but he was a musician and said he uploads videos of his band and she was telling him that is excessive usage ??? Ee is a total scam and I would advise anyone on them dump your phone and get a 3 phone or giff gaff

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