Revenues at O2 lack fizz

01-03-2007

by Charlie Taylor

O2 Ireland may have gained 29,000 new subscribers during the fourth quarter of 2006, but its average revenue per user (APRU) remained flat.

According to new figures released by the firm on Thursday, O2's customer base reached 1.63 million at the end of December 2006, up from 1.603 million in the third quarter of last year and an increase of 2 percent on the same three-month period a year ago.

During the fourth quarter, O2 gained 17,000 new post-pay subscribers and 12,000 pre-paid customers.

However, while Ireland's second largest mobile operator saw a rise in subscribers, the revenues it gained from users of its network remained static compared to the previous quarter. This was despite the fact that the amount of time users spent on the phone rose by 9.8 percent compared to the corresponding final quarter of 2005. Average time spent on calls was up from 241 monthly minutes in the third quarter of 2006, to 246 minutes in the final quarter of last year.

Overall, monthly blended ARPU (post- and pre-paid combined) totalled EUR45, down slightly on the EUR46 for the same period last year.

ARPU from post-pay customers was down by EUR2 to EUR83 compared to the third quarter, and down EUR8 year-on-year, while revenues from pre-pay customers remained flat at EUR30 versus the preceding three-month period, and down EUR1 compared to the same period last year.

The mobile operator also saw service revenue decline by 1.5 percent year-on-year, which the company attributed to termination rate regulation, increased competition and promotional offers for customers.

However data revenue as a percentage of overall service revenue grew slightly from 20.8 percent in the fourth quarter of 2005, to 22.1 percent for the final quarter of 2006.

The company said 424 million text messages were sent during the three-month period representing a 10.4 percent increase in text usage on the same period last year.

During the quarter, O2 launched Napster Mobile in Ireland -- a new service that allows subscribers to search, browse, preview and purchase music from Napster's catalogue of over two million songs.

O2 also announced it was to begin a consumer trial of broadcast mobile TV in Ireland, and would team up with Tesco to launch the country's first mobile virtual network operator (MVNO), called Tesco Mobile, in summer 2007.

"The marketplace in Ireland continues to be extremely competitive. Against this backdrop, ARPU has levelled out, though significantly our customer base continues to grow, reaching its highest ever level of 1.632 million customers. In particular, growth in our post-pay base was impressive, with 17,000 net new customers being added," said Paul Whelan, O2 Ireland's chief financial officer.

"In such a competitive market our emphasis continues to be on investing in our customers and in their loyalty by ensuring that we provide them with the services that best meet their needs. We achieve this by continuing to invest over EUR4 million each week in maintaining and upgrading our network," Whelan added.

O2 Ireland's parent company Telefonica -- one of the largest telecommunications firms in the world -- reported a hefty 40.2 percent increase in net profit for 2006 on Thursday.

Profits totalled EUR6.23 billion, while total revenue surged 41.5 percent to EUR52.9 billion.