THE country's second largest mobile operator, O 2Ireland achieved pre-tax profits of 107m in the year to March 2003, allowing the company to post its first return on investment in its seven year history, stand-alone accounts for the Irish operation show.
Profits in the period were almost 40% ahead on the previous year despite only a 6% increase in sales to 681m.
O 2Ireland retained profits in the year of 91m, after paying corporation tax for the first time, allowing the company to wipe out its start-up losses.
Since the company won the licence to operate a cellular service, as Esat Digifone, shareholders had invested 459m in the operations. In an interview with The Sunday Tribune, O 2Ireland chief financial officer Niall Norton said the return on capital to date represent a mere 9% or less than 1% per annum over the seven year period. However, the firm has a further eight years to run on its original '2G' licence.
O 2Ireland has been keen to refute suggestions that it is making excess profits in the Irish market. The results show that the company earned almost one quarter of parent MMO 2's pretax profits, even though it only accounts for less than 10% of the total number of subscibers. Norton said that the company's Irish rates were extremely competitive and that tariffs had fallen by 40% in real terms in recent years.
Earlier this year, the company released minute usage figures for the Irish, UK and German market showing that the Irish usage was 75% higher than the UK. Nortn said that the impressive profit figures offer relative low growth in sales was due to "high operational leverage and strong cost management".
The finance director said that the British operator would not "get much change out of 600m" on its investment in a new generation or 3G mobile telephony network. The new network is expected to go live in December and offer commerical services in the first quarter of this year.