O2 Ireland will generate higher service revenue growth than it previously indicated for this year but its profit margin will fall, its parent company said yesterday.
O2 Group also said that 2004/5 full year earnings for its operations in Britain, Germany and the Republic, would be slightly below analyst's forecasts due to higher exceptional charges.
Shares in O2 Group, which recently changed its name from MmO2, fell almost 4 per cent following a conference call with analysts about its trading statement.
In its statement, O2 said its Irish mobile subsidiary should generate service revenue growth in the low teens in the year to the end of March 31st 2005, higher than previously anticipated.
In the year to the end of March 2004, O2 generated revenue worth €762 million and pretax profit worth €199.2 million. But it also indicated that this faster-than-expected growth in service revenue would result in lower EBITDA (earnings before interest, tax, depreciation and amortisation) margins in 2004/5.
In Britain, O2 said full-year net revenue growth would be in the range 12-15 per cent, with slower growth in the second half of the year reflecting a competitive in the market and cuts in termination rates. O2 also said it would hire an extra 2,000 retail and customer-service staff to support its operations. Up to 50 managerial and administrative staff will lose their jobs to help pay for the new positions.
Meanwhile, O2's German mobile operation will report earnings margins in the high teens in 2004/5. The margin in the second half of the year will be lower than the first reflecting faster customer acquisition in the period.
O2, which has about 23.2 million subscribers in Britain, Germany and Ireland, said it expected a stable British EBITDA margin in 2005/6
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