O2- Upwardly mobile
Tomorrow mmO2, the company responsible for the O2 mobile phone network, will release its first interim results since its demerger from BT. They will show a reasonable growth in revenue despite tough market conditions.
The results for the six months up to 30 September 2002 should be in line with the company’s full-year target of 10% service revenue growth and are the first step in mmO2’s aim to achieve an earnings before interest, tax, depreciation and amortisation margin of 30% by 31 March 2004.
The O2 brand launched on 30 April this year, a few months after the company de-merged from BT. The group, formerly known as BT Wireless, has made good progress despite a flat market. A large marketing campaign and the release of own-brand wireless devices, such as the XDA, have helped raise the profile of the new name, which replaced the BT Cellnet brand.
Significant challenges still lie ahead for the company. Third generation licenses, which offer high-speed data access and a range of multimedia services for mobiles, were bought at massive prices in a government auction.
It soon became clear that recouping these costs would be a struggle, especially since the appetite of consumers for similar services such as WAP and GPRS has so far been small.
Chief executive officer Peter Erskine said that the potential imposition of large price caps on what the operators can charge for services could also smother investment in 3G services, which is expected to start ramping up next year. The Competition Commission is to make a ruling in January on whether the networks are charging too much for incoming calls from other networks and phone lines.
The company has just launched its multimedia messaging service, which allows users to take, send and alter pictures on their phones. It is hoped the new service will help bolster revenues in a industry with rapidly dwindling new customers, due to the number of phones already on the market.