Merged mobile phone giant returns to growth

Everything Everywhere - the company behind merged mobile phone brands Orange and T-Mobile - has returned to growth in the third quarter, albeit by the slimmest of margins.

Sales grew to £1.8bn (€2.06bn) - an increase of 0.1% compared to the same period the previous year - due mainly to the firm increasing its number of contract customers by 185,000 and amid strong demand for smartphones. In the second quarter sales were down by 4.8% year-on-year.

Last month the company said it was cutting 7.5% of its 16,000 strong workforce to end duplicated roles following the tie-up between Orange and T-Mobile in the UK earlier this year.

The two mobile phone giants are now offering customers a joint-roaming deal that allows users the benefits of both networks to allow them better reception at no extra cost. More than one million of its 27.9 million customers have already signed up to the deal.

It has also enticed more of its customers to sign up to more lucrative contracts by offering better deals and more smartphones. The percentage of its customers on contracts has increased to 43% from 40% last year.

Some 75% of its contract sales were for smartphones, compared to 38% in the same period the previous year.

The firm, which jointly owned by Deutsche Telekom and France Telecom, announced an 18.5% plunge in adjusted second quarter operating profits in September in its first update since the merger.

Chief executive Tom Alexander said: "The UK market remains highly competitive but once we get through our period of transition and we are able to leverage both our scale and joint networks as well as realise the proposed synergies we expect to see further progress on improving our financial position."

The company will continue to focus on increasing the number of customers on contracts rather than pay as you go customers who buy pre-pay for talk time on an ad-hoc basis.

Its total number of customers increased by 1.4% year-on-year during the third quarter, while the growth in contract customers increased by 19.6% to 185,000.

The number of contract customers that chose to leave the company after their contract expired reduced from 1.7% to 1.4% year-on-year.

When the group announced its 1,200 job cuts in September it pledged the losses would not affect its 3,600 store staff and said it aimed to expand its retail network from its current base of 720 stores.

It also employs 7,500 people in customer service operations in Darlington, North Tyneside, Plymouth, Doxford in Sunderland, Greenock near Glasgow, and Merthyr Tydfil in Wales.