Everything Everywhere has signed a total of 687,000 customers to its 4Gmobile network nine months after launch, as smartphone owners chase faster mobile internet connections.
With Vodafone, 3 and O2 yet to bring their own flavours of 4G to market, EE is racing to make the most of its monopoly. Reporting half year financial results on Wednesday, the company said the rate of adoption for its new service had doubled in the June quarter compared with the previous five months, and that it is on track to more than reach its target of 1 million users by Christmas.
The group is now signing more than 120,000 contracts a month for 4G connections , compared with an average of 60,000 a month earlier in the year. The growth has come despite a higher price tag – EE's 4G service costs between £5 and £10 more a month than a typical 3G contract.
"EE's figures indicate considerable willingness among UK users to pay extra for high-performance mobile broadband," said IDC analyst John Delaney. "This bodes well for the prospects of the other UK operators when they bring 4G services to market."
Launched last autumn, the 4G network now reaches 95 UK towns and cities and nearly 60% of the population. It will reach 98% by the end of 2014. This summer, EE doubled average speeds to between 24 and 30 Megabits per second in 15 of the largest cities.
Finance director Neal Milsom dismissed suggestions that the arrival of competing 4G services this autumn will lead to a price war and lower costs for consumers. "All of us are spending a lot of money to upgrade our networks and on buying spectrum," he said. "It's quite a bizarre business decision if you trash the price on launching it."
Profitability has increased to a record high for EE, which was formed in 2010 through the merger of Orange and T-Mobile. Underlying earnings of £734m are now nearly 23% of revenue, thanks to cost savings achieved by combining the Orange and T-Mobile mast networks and a reduction in the number of shops. The company's retail estate has shrunk by 130 stores to around 600.
EE, which is owned by Deutsche Telekom and Orange, the German and French national phone companies, will pay its parents a £159m dividend for the half year.
Total customer numbers fell year on year from 28.2 million to 27.5 million, with the number of pre-pay customers declining across the mobile industry in the UK. The customer count now includes not just mobile phone connections, but 1.5 million machines with connections to EE's mobile networks such as utility smart meters, black boxes installed in cars by insurers, and even clothing to monitor individuals with dementia.
Chief executive Olaf Swantee said EE would "exceed" its 1 million 4G customer target by the end of the year. With 4G customers on average five years younger than the typical mobile phone owner, Swantee said take up rates would rise in September as students head back to university for the new term.
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