mmO2 raises revenue forecasts again

30 Sep 2004

The UK-based mobile group mmO2 has raised its full-year financial forecasts for the second time this year on the back of better than expected subscriber additions. The operator now expects to see revenue growth of between 9% and 12% in the UK for the financial year ending March 2005. mmO2 had previously raised its revenue forecasts to between 7% and 10% following the announcement of first-quarter customer statistics in July.

mmO2’s UK subsidiary has the largest customer base of its three main subsidiaries, with 13.52 million subscribers at the end of June 2004, up from 12.31 million a year before and 11.17 million in June 2002. Customer numbers are expected to show another increase for the second financial quarter which ends today. mmO2’s chief executive, Peter Erskine, says in a company statement that he expects a “stable” EBITDA margin for O2 UK in the current fiscal year; last year’s figure was 30%. Erskine says the continued increase in subscriber numbers is likely to offset the expected fall in service revenues following a 30% cut in connection charges which is being enforced by UK regulator Ofcom.

For mmO2’s German operations, meanwhile, Erskine repeated earlier forecasts for a “strong” performance of first half service revenues, with the full year EBITDA margin expected to be in the “high teens”; the 2003-04 figure was 15%. O2 Germany had 6.32 million subscribers by 30 June 2004, up from 5.04 million twelve months earlier.

mmO2 has been content to watch rival operators such as Vodafone push ahead with the introduction of high speed 3G services while it consolidates its position in its existing markets. mmO2 has yet to announce a launch schedule for its next-generation networks and Erskine says 3G services will not have a material benefit on the company’s revenues until 2005. The telco’s share price peaked at 112 pence earlier this year following a takeover bid by Dutch operator KPN, but has since fallen back to below 96 pence, valuing the company at around GBP8.3 billion.

United Kingdom, Telefonica O2 Europe
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