The Peoples Operator Regulatory News (TPOP)

The People's Operator plc

("TPO" or the "Company")

AGM Statement and Heads of Terms signed with T-Mobile

The People's Operator (AIM: TPOP), the cause-based commercial mobile virtual network operator, provides the following update at its Annual General Meeting.

The UK business continues to perform in line with expectations. The Company announced that subscriber numbers had reached 50,360 at 29 September 2015 and the Board is confident of exceeding its year-end target of 69,000 subscribers in the UK.

In the US, the Board is delighted to announce that it has signed Heads of Terms for TPO to launch on the T-Mobile network by the end of March 2016. These will be in addition to our existing contract with Sprint. This significant development will allow TPO to run on T-Mobile's GSM network, giving the Company immediate access on launch to the 50 per cent. of mobile users in the US who use GSM. The other 50 per cent. uses CDMA, which is covered by TPO's existing contract with Sprint, and consequently the new deal expands the Company's potential customer base to the full range of 355.4 million mobile users in the US (data: CTIA.org, Dec 2014). The Board expects this agreement to have a materially positive effect on the Company's ability to attract new customers to the TPO brand during the course of 2016 and beyond.

As previously announced, the US operation launched fully on 21st July and received excellent media coverage both on- and off-line. In its statement of 16 September, the Company stated its intention to bring subscribers on to the network on a phased basis in order to ensure the best possible user experience while the business remained at a nascent stage. At the interim results, published on 29 September, the Company reported that early indications remained encouraging but that it was too early to implement any in-depth analysis of the operation. Over the period since the interim results the level of customer enquiry has remained good and consistent with the Company's expectations of the level required to grow the business quickly.

In the course of processing its commitments to subscribe on the phased basis and its new enquiries, the Company has been encountering difficulties in satisfying some customers' demands for registrations. In most cases this is due to our host network having to carry out a number of software improvements relating to customers wishing to switch from their existing networks to TPO, while others relate to the credit evaluation process. The Company is confident that the main issues have now been identified and the process of software updates to fix them is well underway. Early indications from updates already implemented have been encouraging and conversion rates have been increasing. The Company also believes that the conversion of new customers currently using the GSM network, which is covered by the T-Mobile agreement, is unlikely to present challenges.

Given the issues with completing registrations, the Company has been more cautious with commencing some of its marketing efforts to ensure that any issues with the registration process are limited and therefore do not create brand or other reputational issues. As a consequence current subscriber numbers in the US are lower than the Directors had expected at this early stage, although the Directors note that subscriptions at this stage are not indicative of the potential of the business in 2016 and beyond.

The Company is launching a US-wide marketing campaign in early December and believes that it has effected solutions to allow it to deal with a meaningful number of new subscribers as a result of this campaign. The Company will report on the results of this around mid-December and at the same time the Directors expect to give guidance on their subscriber expectations for 2016. The Board remains confident of significant near term growth in the US, especially in the light of the expected new offering via the T-Mobile network.

Investors should note that the Company's revenue for FY 2015 will be below current market forecasts as a result of the challenges highlighted above, although the actual shortfall remains dependent on activity levels between now and the year end.

The Directors remain confident of the long-term prospects for the Company and reiterate their commitment to the achievement of a 2% market share across the UK and the US by 2021.

Finally, the company is sorry to announce that Gary Hughes is stepping down as a Non-Executive Director by mutual agreement. Gary is stepping down due to other work and personal commitments. The Board thanks Gary for his contribution to the Company and he leaves the Board with its best wishes for his new endeavours. The Board is actively engaged in seeking a replacement and expects to make an announcement in the near future.

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About The People's Operator

The Company was founded in 2012 and currently offers customers pay monthly ("PAYM") and pay-as-you-go ("PAYG") mobile contracts. These contracts are competitively priced and allow users to direct 10% of their monthly bill to a cause of their choosing at no additional cost to themselves. In addition, The TPO Foundation, a UK registered charity, will receive 25% of the UK trading profits generated by The People's Operator LLP. A similar structure is proposed to be adopted in other countries.

The strategy of the Group is to maintain a low fixed-cost base, small staff numbers and lower levels of advertising and marketing expenditure than its competitors. In addition, as TPO operates as an MVNO, the Group is not expected to be exposed to the high infrastructure costs and large capital investment charges that traditional mobile operators can incur. This strategy is expected to enable the Group to offer customers a highly competitive pricing model with a high quality of service, whilst generating an attractive return to shareholders after donations to causes.

TPO has developed partnerships with community organisations and causes who promote TPO's products to their supporters. Under the direction of Jimmy Wales, the founder of the online encyclopaedia Wikipedia, the Company is also developing an online viral community to expand the global network of mobile phone customers who share in the common belief of supporting causes.

The Directors believe that this strategy is scalable into new markets around the world which offer competitive wholesale mobile network bandwidth prices and where subscriber acquisition and revenue growth can be driven quickly at a low incremental cost once network agreements have been concluded with local network operators. 

For more information, visit: https://www.thepeoplesoperator.com.