O2 Ireland writes down £1.4bn

21 May 2003

Europe’s fifth largest mobile operator, MmO2, posted strong annual results this morning, but the news was overshadowed by the announcement that the firm is to slash the value of its assets by £9.66bn sterling. Total turnover grew 14pc to £4.8bn sterling while earnings, as measured by earnings before interest, tax, depreciation and amortisation, almost doubled to £859m sterling, from £433m sterling in 2002.

The mobile operator is cutting the value of its assets by £9.66bn sterling – £8.3bn sterling of which stems from losses relating to goodwill and 3G licences across its national operating units. O2 Ireland accounted for £1.36bn sterling of this amount. Its chief executive, Danuta Gray, told siliconrepublic.com that the figure relates entirely to a loss of goodwill on the company’s assets now compared with the value placed on them at the time of Esat Digifone’s takeover by BT.

In contrast, £3.8bn sterling of the £4.7bn sterling asset write down by O2 Germany was for its 3G licence, the remainder being goodwill.

Gray said she was “very satisfied” with the underlying performance of O2 Ireland, which holds a 40pc share of the Irish mobile market according to ComReg figures. Turnover at Ireland’s second network rose to €686m from €640m the previous year, earnings climbed to €239m from €198m and profit margins jumped from 30.9pc to 35.5pc.

O2’s Irish customer base grew by 6.4pc during the year to 1.255 million and average revenue per user (ARPU) figures reached €546 per annum, slightly ahead of the previous quarter’s €543. This compares with €340 in Germany and €346 (£247 sterling) in the UK.

For the first time, the company revealed user-minute figures, which seemed to confirm the company’s claim that Irish mobile users ‘talk more’ than other nationalities. Irish users spend 188 minutes on their mobiles each month compared with 109 in Germany and 107 in the UK. “These figures should quash suggestions that we’re overcharging in Ireland,” Gray commented.

Encouragingly for the operator, mobile data grew to 15.3pc of service revenues for the year, from 9.7pc in the previous year. This was driven by an explosion in text messaging – the number of texts sent during 2003 having risen to 992 million from 666 million in the previous year.

By Brian Skelly