O2 Ireland added 17,000 new subscribers in the three months to the end of March but saw its profit margins fall slightly as competition intensified in the market.
The second-biggest Irish mobile phone operator now has 1.53 million customers and saw total revenue increase 13.3 per cent to €859 million in the year to the end of March 2005. Average revenue per user (ARPU), a key metric in the industry that measures how much each subscriber spends on services in a year, was €565, a rise of €6 on a year ago.
O2 reported strong operating profits of £158 million (€229.3 million) for the year to the end of March, up from £140 million a year earlier. However, the company's earnings margins fell slightly to 38.1 per cent, down from 39.3 per cent last year.
Ms Danuta Gray, O2 Ireland chief executive, said the fall was a factor of increased competition in the Irish marketplace. The firm also said the number of customer additions in the year may have affected earnings margins. Ms Gray said that the high ARPUs enjoyed by O2 Ireland were a feature of high usage rather than high prices. She said she disagreed with the interpretation by the regulator that mobile firms were charging consumers too much for mobile services.
She said O2 Ireland was still opposed to the regulator's decision to try to force network operators to open their networks to rivals. She said O2 would only sign a deal if it was commercially viable for it to do so.
O2 Ireland's capital expenditure almost doubled to €145 million during the year, mainly due to the increased investment in third-generation (3G) mobile technology. The firm will not introduce its consumer 3G offering until the run up to Christmas, when it expects to offer the I-Mode service in the State.
Meanwhile, O2 Group topped average forecasts with a maiden dividend of 2.25p and 29.3 per cent higher core earnings, as strong growth in Germany helped offset a tough UK market.
Group chief executive Peter Erskine said O2's fourth consecutive year of growth since its formation was proving increasingly competitive, but he said the company was well positioned to weather brutal markets - especially in Britain. - (Additional reporting Reuters)
