MMO2 Faces Asset Write-down

The European GSM network, MMO2 has issued an advisory about its expected full year results. The company expects to report full year income at the EBITDA level at about US$1.3 billion, in line with analysts expectations. However, the company does expect a write down of the value of some of its assets and projects an increase in capital expenditure during the second half of the year.

In the second half the Group's UK division expects to deliver service revenue growth in the mid-teens, and thus report full-year service revenue growth above the 10% target established at the beginning of the year. The Group has previously stated that it is aiming to achieve an EBITDA margin of 30% in the year to March 31 2004, and in the second half expects to demonstrate further steady progress towards this target.

MMO2 says that in the first half, O2 Germany delivered positive EBITDA for the first time, well ahead of previous targets. The operational and financial momentum that the business had developed in the first half continued into the second half, and O2 Germany is expected to deliver an increased positive EBITDA.

In the second half O2 Ireland is expected to report further EBITDA growth, and margin improvement. Following the negative EBITDA reported in the first half, O2 Netherlands is expected to deliver positive EBITDA for the second half and to be close to EBITDA break-even for the full year. O2 Online, and the Group's other businesses and central resources, are expected to deliver second half results in line with the first half.

Peter Erskine, chief executive of mmO2 commented "In the second half we have continued to make good progress towards our key targets. In the UK, our service revenue growth and EBITDA margin improvement are on track. In Germany our market share growth and financial performance are ahead of original expectations, and we have a competitive and cost-effective 3G strategy in place. Capital expenditure and cash flow have been tightly managed across the Group. Looking ahead, we are confident that we can continue to deliver improved operational and financial performance, and to build the value of the Group."

Posted to the site on 1st April 2003