O2 sees Irish revenues boost

MOBILE phone operator O2 says its expects to see its Irish revenues grow in the first half of its financial year.

In a trading update yesterday, MMO2, owner of O2 Ireland, said that revenue growth and profits would be ahead in Ireland for the six months to end of September.

The Irish operation of the group is said by management to be the “jewel in the crown” of the entire group given its strong and consistent profit record and its clear second position in the Irish market.

“The strong customer and (average revenue per user) growth that we reported across the group in the first quarter was sustained into the second quarter, and our first-half results will reflect this,” chief executive Peter Erskine said in a statement.

It is forecasting a 10% service revenue growth and 30% margins on earnings before interest, tax, depreciation and amortisation (EBITDA).

But the mobile operator says revenue expansion will slow in its core British market in the second half of the year. It is expecting that price cuts for mobile calls by the industry regulator will hit second-half turnover and margins.

“We expect the market to become more competitive in the second half,” Mr Erskine added.

Europe's fifth-largest listed mobile operator also expected full-year capital expenditure to be between five and 10% below a previous forecast of £1.3 billion.

The company shed 1,900 jobs in the last financial year, and Mr Erskine said he would seek further “operational efficiencies” across the group. An MMO2 spokesman said this statement was not a precursor for any large-scale job cuts.

In Germany, the company is expecting a first-half EBITDA margin in the mid-teens and expected this rate to continue for the full year to March 2004, beating a previous target of double-digit growth.

In the second half, capital expenditure would be trimmed despite an acceleration in spending before MMO2’s launch of third-generation mobile services “when the conditions in our markets are right for this”.