O2 posts solid results as Telefonica looms
14-11-2005
by Deirdre McArdle

Increased competition in the Irish mobile market had little effect on O2 Ireland, which posted a 10 percent rise in customers during the first half of the year.

At the end of September the mobile operator had 1.57 million Irish customers, adding 145,000 subscribers since September 2004. During the operator's second quarter it added 40,000 customers to its books, 29,000 of those were pre-pay, while the remaining 11,000 opted to sign a contract with O2.

O2 Ireland's revenues also jumped during the six months from March to September; revenues totalled EUR475 million for the period, up 14 percent on EUR418 million from the year-ago period. EBITDA too was up at the Irish mobile operator, increasing from EUR159 million in 2004 to EUR177 million.

Service revenues grew to EUR451 million from EUR401 million in the corresponding period in 2004. Data as a percentage of service revenue climbed from 20 percent to 22 percent. Meanwhile, data ARPU (average revenue per users) on a 12-month rolling basis increased to EUR126 from EUR119 in 2004.

The levels of data usage on the O2 Ireland network are likely to increase further, forward following the launch of O2's i-mode service at the beginning of October. Subscribers to O2's i-mode service will be able to send and receive e-mail and video messages, browse the internet, make travel reservations, download video clips, shop on-line and search for jobs and accommodation. I-mode will compete with the Vodafone Live service offered by Vodafone and the 3G voice and data services launched during the summer by Three Ireland.

Looking at the all-important Average Revenue Per User (ARPU) figure for O2 Ireland's second quarter, blended rolling ARPU increased to EUR572 per year compared to EUR560 per year in the same period last year. This increase has been driven by a rise in the number of business customers joining the O2 network, the operator said.

Pre-pay rolling ARPU remained relatively stable at EUR359 per year from EUR360 per year in the same period last year, while post pay ARPU grew from EUR1,078 last year, to EUR1,155.

Following a direction from ComReg in mid-October, O2 Ireland said it will cut the mobile termination rate it charges to other operators to terminate on the O2 network by 8 percent from the beginning of January 2006. The operator said it plans to implement a further similar reduction on at the beginning of 2007.

Also on Monday, the UK-based O2 Group -- which operates in the UK, Germany and Ireland -- released its interim results for the six months to September. The group's customer base grew 17 percent to 25.7 million during the period, while turnover increased 12 percent to STG3.6 billion.

These results will be of particular interest to Telefonica shareholders; the Spanish operator made a dramatic EUR17.7 billion bid for the UK-based mobile operator at the end of October.