Mm02 boss seeking 3G trades

Nick Goodway12 April 2012

CONTINENTAL Europe should follow the lead given in Britain's draft Communications Bill and allow mobile phone operators to trade the third-generation spectrum that cost them billions of euros, Peter Erskine, chief executive of mmO2, said today.

Erskine said he was unlikely to buy extra spectrum but believed that some smaller players, particularly in Germany, would sell out to the bigger ones: 'Inevitably there will be fewer players. That is where this story is going.'

Meanwhile, Erskine feels under no pressure to sell his German or Dutch businesses. 'As we keep improving them, they become worth more and more,' he said.

But Erskine admitted that mmO2's share price performance since last November's demerger from BT had been disappointing: 'We really do believe we have got the right strategy, we have cut costs and capital expenditure and will deliver value.' The shares fell 5 3/4p to 42 1/2p, way below November's 93p peak.

The maiden full-year results contained few surprises following a detailed trading update in March. Earnings before interest, tax, depreciation and amortisation (ebitda) were slightly higher than expected at £433m for the year ended March, compared with a loss of £39m a year ago. Pre-tax losses narrowed from £3.5bn to £873m. Turnover rose 11.5% to £4.28bn with service revenues up 18% at £3.7bn. The loss per share fell from 40.7p to 9.8p and there was no dividend.

Erskine said the change to the O2 brand across all four countries - Britain, Germany, the Netherlands and Ireland - had gone remarkably well. The demerger had cost mmO2 £27m, with BT picking up the rest of the £100m tab.

He predicted revenues and ebitda would continue to improve although subscriber growth was slowing and the market for mobile data services was still in its early stages of development. Erskine said mmO2 would roll out its 3G services from the middle of next year but that it would match capital spending on 3G with availability of handsets and the development of content.

He forecast that data, including text messaging, which doubled to 12% of services revenues last year, would rise to 25% in 2004 and be more than half of revenues by the end of the decade. MmO2 has sold some 6000 Blackberry handheld e-mail systems and 300 corporate customers are using it.

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