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Shares fall on O2 full-year figures
Wednesday, May 29 2002
by Ciaran Buckley


MmO2's shares plunged over 7.5 percent in early trading in London following the
release of the firm's results, which showed higher operating losses. 

Although the firm beat consensus estimates for EBITDA losses, the London market
focused on the company's operating losses before exceptional items, which
increased to STG706 million from STG343 million a year earlier, hit by increased
depreciation and amortisation costs.



Furthermore, in its full-year results released on Wednesday, mmO2 reported
increased indebtedness despite the group's cutbacks in capital expenditure over
the past twelve months.  MmO2 recorded a net year-end debt of STG617 million,
of which STG506 million was inherited when it demerged from British Telecom. The
debt increase comes despite job losses and cuts in capital expenditure at mmO2
over the past twelve months. Capital expenditure for the full-year was STG1,142
million, a 28 percent reduction from 2001.





Yet the firm was able to produce a number of positive figures, saying its active
customer base grew by 12.2 percent to 17.5 million customers and service revenues
increased by 17.7 percent to almost STG3.7 billion. The firm's total revenue rose
by 11.5 percent to STG4.2 billion. 





EBITDA also came in stronger at STG433 million, significantly reversing the
company's EBIDTA loss of STG39 million last year. The firm's pre-tax loss was
STG873 million, a marked improvement on an almost STG3.5 billion loss the year
before. Basic and diluted losses per share were STG0.098, an improvement from the
STG0.407 it reported last year. 



MMO2 also said that data services now accounted for 13.4 percent of service
revenues and that the company has more than 300 corporate customers using the
mobile data device BlackBerry. 





"This year, we will see a greater uptake of mobile data services as the market
moves on from pushing technology to selling services that customers want," said
Peter Erskine, O2's chief executive officer in a statement. "More than half of
O2 customers are now using data services, including text messaging services,
mobile Internet and medium-speed data services." 





He went on to say that revenue generated from data more than doubled during the
year and the company aims to increase this to more than 25 percent in 2004 and
above 50 percent by the end of the decade.





MmO2 listed its purchase of Telenor's 49.5 percent share of Irish mobile operator
Digifone among its acquisitions for the year. It paid STG877 cash for the stake
and incurred STG884 million on its balance sheet in goodwill for a total cost of
STG1.76 billion. The consideration included STG17 million payable to Barry
Maloney, O2's former chief executive officer for his two percent stake in the
non-voting shares of O2 Ireland Limited. 





O2 Ireland reported full-year service revenues of STG367 million, up 27 percent
from last year. Total revenues for the full-year grew by 28 percent to STG395
million. The business' Irish customer base rose by 21 percent during the year to
1.18 million and data revenues increased by four percent to 10 percent of total
revenues. 







O2 Ireland also announced that it would begin its rollout of 3G phone services in
2004, if its application for a 3G licence is successful. The licences are due to
be announced in June of this year.  



The firm has already rolled out 3G services on the Isle of Man and has acquired
3G licences for the UK, Holland and Germany. In these market, the business hopes
to roll out 3G services from the middle of 2003 onwards.