Virtual mobile operator Lycamobile looks to build market share

The Irish subsidiary of mobile operator Lycamobile is forecasting profits in the coming years, despite recording a huge loss in 2014 and noting the difficulty that it and other companies have in establishing a presence here.

Lycamobile is one of a number of mobile virtual network operators (MVNO) that have entered the market in recent years by “piggybacking” on the infrastructure of an established player. The pan-European operator, which has an estimated 2.5 per cent market share in Ireland, offers low-cost international calls from mobiles to Asia, Africa, Europe and America.

The group’s parent has more than 14 million pay-as-you-go customers in the 20 countries in which it operates.

Newly filed accounts show Lycamobile Ireland Ltd recorded a pretax loss of €6.76 million for the 12 months to the end of February 2014, up from a loss of just €57,643 a year earlier. The firm attributed the loss to an increase in airtime costs.

The loss was recorded despite a 117 per cent rise in full-year turnover from €6.1 million to €13.3 million.

“The Ireland MVNO market remains competitive with new entrants able to join relatively easily, resulting in pricing risk,” the company said.

“It has proven difficult for any new entrants to achieve any scale, however, and the combination of any new entrant’s inability to match Lycamobile’s tariff rates for any length of time as well as a lack of national distribution mitigates this risk,” it added.

Lycamobile, which said it is well-positioned to take advantage of the continuing economic recovery in Ireland, said administration expenses increased from €2.4 million in 2013 to €3.2 million a year later, primarily due to an increase in salary costs and professional fees for marketing support services.

The company forecast a profit for fiscal years 2017 and 2018. “The directors consider that the company will continue to demonstrate a growth in sales and remain profitable,” it said.

A sister company, Lycatel (Ireland) Ltd, which sells cut-price calling cards, recorded an even bigger pretax loss in the 12 months to the end of February 2014.

Accounts show the firm posted a €16.5 million full-year loss versus as €9.46 million profit a year earlier on turnover that rose 3.4 per cent to €560 million from €541 million. Lycatel attributed the loss to currency fluctuations.