Telefónica O2 Ireland operating review

Telefonica O2 Ireland recorded net additions of 24,620 in the second quarter (-1,082 in the second quarter 2007 and +16,805 in the first quarter of 2008). With 41,425 net additions throughout the first half of the year, the total customer base was 1.7 million customers at the end of June, 3.4% higher than a year ago with the number of mobile broadband customers at 47,814.

Telefonica O2 Ireland added 18,798 contract customers in the second quarter, 36.0% higher than the same quarter last year, and 1.1% higher than the first quarter of 2008, to add 37,395 customers in the first half of the year (+35.0% year-on-year), ending the period with a contract customer base of 592,622, making up 35.1% of the total base at the end of June vs. 31.4% in June 2007. The prepay customer base grew by 5,822 customers in the quarter, a significant improvement over the second quarter last year (-14,889) and the first quarter of 2008 (-1,792). As a result, prepay net adds for the first half were 4,030 customers to reach 1.1 million at the end of June (-2.1% year-on-year).

Churn showed a quarter on quarter improvement of -0.1 percentage points to reach 2.8% in the first half of the year (-0.4 percentage points year-on-year).

MoU grew 1.6% year-on-year in the first half of 2008 to reach 245 minutes.

Total ARPU in the second quarter was 7.5% lower than in the same period last year, and for the first half was 43.3 euros, a decline of 4.8% year-on-year. Prepay ARPU declined 10.4% year-on-year in the second quarter and for the first half was 26.8 euros, a decline of 7.9% year-on-year. Contract ARPU in the second quarter was 12.0% lower than the same period last year due to the introduction of new customer offers and promotions, and for the first half was 74.6 euros (-10.0% year-on-year).

Data ARPU in the second quarter was 5.4% lower than the same period last year, driven by customer promotions offering unlimited SMS as part of the new better value Experience tariffs (SMS volumes +33.6% year-on-year), and for the first half was 10.9 euros, down 4.2% year-on-year, while non-SMS revenues grew by 38.0% year-on-year in the first half on the back of the increasing mobile broadband base.

Revenues in the second quarter decreased 5.1% compared to the same period last year. For the first half revenues were 469 million euros, a decline of 3.6% compared to last year, due to the lower prepay base and re-fresh of the tariff portfolio to enhance competitiveness.  Mobile service revenue for the quarter decreased 4.9% compared to the same period last year, while for the first half it declined 2.9% year-on-year to reach 448 million euros.

Operating income before depreciation and amortization (OIBDA) for the second quarter decreased 12.9% year-on-year due to lower revenues and increased investment to regain momentum in the market. Like for like3, OIBDA declined by 15.6% year-on-year. For the first half OIBDA was 150 million euros, 8.6% lower than the same period last year (-10.1% like for like3). OIBDA margin in the second quarter was 31.7%, while for the first half it was 32.0%.

CapEx for the first half totalled 30 million euros. Operating Cash Flow (OIBDA-Capex) for the first half amounted to 120 million euros.