Irish market still profitable for O2 and Vodafone

17-01-2006

by Ciara O'Brien

Vodafone Ireland saw its pre-tax profit drop slightly in 2005, in contrast with rival O2 Ireland, which boosted its pre-tax profit by 7.5 percent.

According to reports, Vodafone's consolidated pre-tax profit for the year ending March 2005 slumped slightly to EUR339.6 million, compared with EUR341 million in the previous year.

The mobile operator is blaming the write-down of its 2G network and the abandonment of a technology project for the group.

Turnover also saw a drop, slipping 14 percent to EUR1.2 billion, but according to the firm, underlying turnover was up 9 percent. This drop has been attributed to the cessation of a number of activities including the British "top-up" business, costing the Irish subsidiary in the region of EUR300 million.

The mobile network has also been hit by rising staff costs, which jumped to EUR82.6 million, compared with the previous year's EUR73.1 million.

In general, Vodafone's figures reflect the strength of the Irish market. Irish mobile phone customers generally have a higher average revenue per user (ARPU) than many other European countries. The operators key performance indicators (KPIs) for the third quarter of 2005 revealed a monthly ARPU total of EUR53.10 per user in Ireland, in comparison to EUR37.40 in Britain and EUR24.40 in Germany.

Meanwhile, O2 Ireland has also filed its figures for the same period, showing accumulated profit of EUR426 million. The number two mobile operator saw its pre-tax profits surge by 7.5 percent, reaching EUR214 million in the period ending March 2005.

Its turnover has not hit the same dizzying heights as Vodafone, but managed a more than respectable EUR858 million, growing 12.5 percent on 2004 figures. Gross profit for the year was EUR483 million, compared with EUR470 million in 2004.

All eyes have been on O2 recently as a EUR26 billion takeover bid by Spanish firm Telefonica was accepted, prompting speculation that Irish users could reap the benefits in lower prices.