Business Opinion/John McManus: Last week O2, the second-largest mobile operator in the State, reported its results for the year to March. It said that it now has 1.38 million customers, an increase of 136,000.
Tomorrow will see Vodafone reporting its figures and, no doubt, it will also say that it has added to its customer base of around 1.8 million. The third player in the market, Meteor, has 200,000 customers, according to its parent, Western Wireless, which reported a few weeks ago. This comes to a grand total of around 3.4 million customers.
According to the 2002 census, there are 3,917,203 souls living in the Republic. The census breaks the population down by age groups and a quick glance reveals the following: if there really are 3.4 million mobile customers in the State, then every single member of the population over the age of 14 must have one. In addition, 310,000 of the 827,000 people who fall into the under-14 category must also have a mobile phone.
Assuming that the 827,000 people in this bracket are spread evenly over the years (i.e. around 60,000 in each year), then every single man, woman and child in the Republic over the age of eight must own a mobile phone.
The alternative is that mobile phone companies are being somewhat economical with the truth when it comes to customer numbers.
Vodafone claims that 99 per cent of its Irish customers are "active" but there are plenty of explanations for how the customer figures could be exaggerated. They include lost and stolen phones, or accounts that have not been dormant long enough for the company to consider them dead. There are also plenty of people with more than one phone.
If, as seems obvious, the customer figures are exaggerated, it has consequences for the average revenue per user (ARPU) figures - the key statistic for mobile phone companies and, in the State, the most controversial.
Irish ARPUs are among the highest in Europe, if not the world. According to last week's figures, the ARPU for O2 in Ireland is €559, while in Germany it is €336 and in the UK is £272 (€412).
Vodafone's most recent numbers are an ARPU of €582 for Ireland, €311 in Germany, £303 (€459) in the UK, €359 in Italy and €369 in Spain.
The Republic is clearly in a league of its own when it comes to ARPUs. But if these figures are calculated on the basis of exaggerated customer numbers, then the gap between Ireland and the rest may be even larger.
According to the mobile phone firms, the explanation is simple. They claim that calls here are no more expensive than elsewhere but that bills are large because we talk so much more than everybody else in Europe.
The problem with this argument - apart from flying in the face of common sense - is that the mobile companies will not provide the data to back up the assertion.
Vodafone discloses the average minutes per user (AMPU) for Ireland and for the group as whole, but it does not provide the figure for comparable territories. O2 does provide AMPU figures, but the only other markets that it operates in are the UK and Germany. For the record, the latest O2 AMPU for Ireland is 188 minutes compared to 107 for the UK and 109 for Germany.
But in the absence of such data for other markets - which Vodafone could easily provide - it would be foolish to accept that we pay bigger bills simply because we talk so much.
It is also worth bearing in mind that Ireland is one of the most profitable territories in Europe, on an operating profit per user basis, for both Vodafone and O2. It is also the the market in which they have their biggest market shares, with Vodafone having in the region of 55 per cent and O2 around 40 per cent.
Profits per customer are in the region of €97 per customer for O2 and €108 per customer for Vodafone. Compare this to the UK, where O2 has around 30 per cent of the market and Vodafone something similar, with the remainder split between a number of aggressive competitors. Profit per customer is around €40 and €60 respectively.
In the US, where Vodafone has only 24 per cent share of the market, profits per customer are nearer €30.
It is hard to escape the conclusion that the reason mobiles are so expensive here has more to do with the lack of real competition between Vodafone and O2 as it does with our apparent fondness for the sound of our own voices.
jmcmanus@irish-times.ie
