MmO2 confident of meeting earnings target

28 Mar 2003

MmO2 is on course to achieve its earnings targets for the current financial year.

In a pre-close statement issued this morning the mobile operator said that the full year EBITDA (earnings before interest, tax, depreciation and amortisation) figure would be in line with consensus expectations in the market. Analyst forecasts range between £804m sterling and £892m sterling with the consensus coming in at around £838m sterling.

The company is scheduled to announce the preliminary results for the 12 months to 31 March, 2003 on 21 May.

The statement said that O2 Ireland is expected to report further EBITDA growth and margin improvement in the second half of the financial year.

In the UK in the second half, the group expects to deliver service revenue growth in the mid-teens, and thus report full-year service revenue growth above the 10pc target established at the beginning of the year. The group has previously stated that it is aiming to achieve an EBITDA margin of 30pc in the year to 31 March, 2004, and in the second half expects to demonstrate further steady progress towards this target.

In the first half, O2 Germany delivered positive EBITDA for the first time, well ahead of previous targets. The operational and financial momentum that the business had developed in the first half continued into the second half, and O2 Germany is expected to deliver an increased positive EBITDA.

The company also confirmed that capital expenditure in the second half is expected to be higher than in the first, due primarily to higher investment in the Airwave business, some UMTS (universal mobile telecommunications system) spending in the UK and Germany and certain projects having been deferred from the first half.

Peter Erskine, chief executive of MmO2, commented:
“In the second half we have continued to make good progress towards our key targets. In the UK, our service revenue growth and EBITDA margin improvement are on track. In Germany our market share growth and financial performance are ahead of original expectations, and we have a competitive and cost-effective 3G strategy in place. Capital expenditure and cashflow have been tightly managed across the group.

Looking ahead, we are confident that we can continue to deliver improved operational and financial performance, and to build the value of the group.”

By Brian Skelly