O2 logs rise in profits and customer base

O2 Ireland generated operating profits of €207 million in the year to the end of March 2004 as its customers increased their annual spend on mobile services to €559.

This 60 per cent increase in operating profit came as the company added 136,000 subscribers in 2003/4, boosting its total customer base to 1.38 million. This rate of growth slowed during the fourth quarter when it added 21,000 new users.

O2 Ireland generated €720 million service revenue during the year, up from €645 million in the previous 12 months. Full-year profit margins before interest, tax, depreciation and amortisation rose to 39.3 per cent, up from 35.5 per cent in the previous year.

Ms Danuta Gray, O2 Ireland's chief executive, said the firm's outlook was positive and confirmed that the first mass-market third-generation phones would be on the market in the autumn.

Third-generation mobile phones will enable consumers to send and receive video clips and download music at high speeds from their mobile handsets.

The introduction of the new technology, and relevant applications to run on it, has been significantly delayed in the Republic and across Europe. But Ms Gray said third-generation data cards had already been launched by its German subsidiary and an Irish launch would follow this year.

She said O2 Ireland had not ruled out the distribution of adult pornographic content on its mobile network. But the firm would only introduce this if it could be confident this content would not be accessed by people under 18.

Mr Gray said O2's profits and revenues had grown because customer usage was increasing, not because its prices were too high.

She said call charges had fallen by between 5-6 per cent in the previous financial year and O2 had already agreed with the regulator to cut tariffs in September.

O2 Ireland's results show customer spend on average €559 per year on mobile services. In comparison, customers of O2 Germany spend €366 per year while British customers spend €401.

Ms Gray said she believed competition was working in the Irish market and criticised a recent plan by the Commission for Communications Regulation (ComReg) to force O2 to open its network to other companies.

O2 Ireland said it was not concerned that its growth would plateau shortly, as evidence in other markets suggested mobile penetration rates could rise to 130 per cent of population.

This could occur when people signed up for more than one device or handset, according to O2.

Revenues could also be driven higher by people using their phones more, particularly for data services, said Ms Gray, who noted the Irish ringtones market was worth €16 million per year.