UK based mobile operator, O2, expects profits for 2004 to be in the 12-15% range, with slower growth in the second half reflecting the impact of the approximately 30% cut in termination rates in September, the loss of the BT contract, and the general competitiveness of the market.
According the group’s update, issued prior to entering the close period for its preliminary results for the 12 months to 31 March 2005, the full year profit margin will be stable on a like for like basis.
Commenting on the operator’s performance in the UK, Peter Erskine, chief executive of O2 said: “Our aim this year was to maintain a stable profit margin and to deliver strong service revenue growth. This was achieved, and we expect to report a profit margin well ahead of our forecasts at the start of the year.”
He added: “Looking ahead to 2005/2006 in the UK, we expect mid-single digit service revenue growth, as new customer growth slows across the margin. We are again targeting a broadly stable margin, because we plan to deploy significant additional resources into the customer-facing areas of our operations.”
O2 in Germany is expected to enjoy an impressive 20% increase in profit margin, Erskine said: “This year we achieved our aim to increase the profit margin into the high-teens, and to accelerate the rate of customer and revenue growth to take advantage of the market opportunity.”
O2 expects to continue to drive profitable growth throughout 2005/2006. The preliminary results for the 12 months to 31 March 2005 will be announced on 18 May 2005.
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