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| mmO2 Group overview |
| mmO2 is a leading provider of mobile telecommunications services in Europe. We were floated as an independent company in November 2001, comprising the wholly owned European businesses that had previously made up BT's mobile and some of its online operations.
mmO2 has operations in the UK, Germany, Ireland and the Isle of Man, including global roaming services as well as a growing mobile data business. We serve 18.2 million customers and employ some 11,750 people. Each day an average of 30 million text messages are sent across our networks. Last year 11.6 billion text messages were sent and received Group-wide. In the year to 31 March 2003, turnover of the Group was £4,874 million, an increase of 14 per cent from the preceeding year. Data, a market where we have a leading position, accounted for 17.3 per cent of service revenues in the same year. |
| The new brand |
| All operating businesses with the exception of Manx Telecom on the Isle of Man, now operate under the O2 brand, which we launched in May 2002. The brand is designed to convey a single face to all our customers and to represent the freshness, life, freedom and clarity that we hope they will increasingly come to expect and enjoy from all our services and products.
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| Our operations |
| The business that makes up O2 UK was formed in 1984 and was previously called BT Cellnet. It is our most significant business in terms of its contribution to revenues and profitability. Our mobile businesses in Germany and the Netherlands both launched Global System for Mobile (GSM) telecommunications services in October 1998. Our German operation, O2 Germany, has continued to grow each year in terms of subscriber base and EBITDA** performance. O2 Netherlands, which also grew significantly from launch, was sold on 3 June 2003.
We acquired a controlling interest in our Irish business, O2 Ireland, in March 2000, at a time when its GSM business was already established. With the launch of more advanced services now fully under way, the business is working to bring wireless broadband to rural areas in Ireland. O2 Ireland was awarded a third generation (3G) or Universal Mobile Telephone Service (UMTS) licence in 2002. Manx Telecom was awarded a licence to operate the Isle of Man's fixed line telecommunications network in 1987, a licence that was extended to mobile in 1994 and to 3G services in 1999. We have established a leading position in the provision of advanced mobile services that will allow customers to use data-rich web-based services and to send and receive multimedia messages using text, sound and moving images. BT Cellnet was the first company in the world to roll out a General Packet Radio Services (GPRS) network and Manx Telecom's 3G network, launched in December 2001, was the first of its kind in Europe to go into full operation. All our mobile businesses now have licences to offer 3G services. O2 Online is our mobile services website portal. Customers use our portal to access their email, send text messages, download ringtones or the latest political and sports news and even build their own mobile internet pages. We believe these new generations of service - offering more capacity, online internet access and the transfer of sophisticated data - will become widely available and used in the next two to three years. |
| Our strategy |
| Our strategy has focused on the following key areas - improved operating performance, managing our business cohesively, and leading in mobile data services. We have made considerable progress in all areas but we recognise that our strategy must continue to evolve to reflect the changing nature of the marketplace. During the recent period of rapid industry growth there was a core product - voice - and customers were perceived as having similar needs. But now mobile phone ownership has evolved into a mass market, and there is no longer a single product but a widening range of both voice and data services, customers' needs, and the options available for satisfying those needs, have become more diverse. Therefore our market emphasis must change. Becoming an integral part of our customers' lives by knowing what is important to them and helping them to get more out of life, is a primary aim of our strategy going forward. If we have a clear understanding of their different needs, we should be able to provide customers with a better overall experience of O2.
To achieve our aim of providing this, we are developing a new segmentation framework to ensure that we really do understand the priorities of our customers. Using this framework we will deliver a range of service packages to different types of customer. At the same time, we are enhancing our IT systems to improve our capability in customer relationships management and help us transform our retail presence. Such a change of emphasis requires continuous and far-reaching change in the Company. It is O2 people who will drive the success of these initiatives. We will continue to build our skills and capabilities in customer service, marketing and brand affinity. We continuously challenge our people to live our brand values - bold, open, trusted and clear - and to keep the customer experience at the centre of our vision. |
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| Group turnover £4,874m up 14% |
Service revenue £4,327m up 18% |
EBITDA** £859m up 98% |
Capital expenditure £944m down 17% |
Year-end net debt £549m down £68 million |
Customers* 19.4m up 11% |
Employees 12,476 down 13% |
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* This table includes data for O2 Netherlands. ** EBITDA is our earnings before interest, tax, depreciation, amortisation and exceptional items, excluding our share of operating profits and losses of our joint ventures and associates. *** O2 Netherlands was sold to Greenfield Capital Partners in June 2003: Turnover £263m; Employees 710; Customer numbers 1.2 million; EBITDA £1m. |
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