O2 Writes off Double its Market Value

mmO2 has reported a huge accounting loss of US$16.75 billion following the write down of assets by US$15.8 billion. The company itself has a stock market valuation of just US$5 billion. The write down, which had been widely expected included a US$9.7 for the devaluation of the company's 3G assets, US$4 billion in goodwill and US$2.3 billion for the sale of its Dutch operations last month.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose to US41.4 billion for the full year, from US$711 million the previous year.

Peter Erskine, Chief Executive of mmO2 plc, commented "In mmO2's first full year as an independent company, it was vital for us to deliver on the commitments made at the time of the demerger; these results demonstrate this was achieved, with the Group delivering strong growth and performance improvement.

"We launched the O2 brand, and across the Group it has achieved awareness and appeal well ahead of expectations. We successfully restructured our businesses in the UK and Germany, making them more efficient and getting them closer to their customers. We implemented a lower cost 3G strategy in Germany that will allow us to compete on equal terms with the market leaders. We acquired a 3G licence in Ireland. We maintained our strong position in mobile data, leading in the fast-growing UK text market, and launching a stream of innovative data products. All these factors contributed to the growth, and improvement in performance, that we are determined to sustain going forward".

O2 UK says that it continues to target service revenue growth of 10%, driven by a combination of customer growth and higher ARPU. The increase in ARPU is expected to be driven primarily by higher revenues from mobile data services, with less growth coming from voice services.

Net debt at the year-end was reduced by US$112 million, to US$900 million."

Posted to the site on 22nd May 2003