Telefónica Ireland said contract customers at its O2 mobile network grew strongly in the first quarter of the year, adding 7,000 subscribers as smartphones drove uptake of data services.
Year on year, O2 increased its contract customer numbers by 5 per cent, or 34,200.
However, O2's total mobile customer base was down on quarterly basis, totalling 1.68 million at the end of March compared to 1.696 million in the previous quarter.
Service revenue revenue also fell during the three-month period. The first quarter of 2011 recorded €177.8 million, lower than the €191 million in the fourth quarter of last year, and lagging behind the €196.2 million in the same period of 20110.
O2 blamed the decline on regulatory changes governing cuts in mobile termination rates charged to other operators to carry calls on the O2 network. Monthly blended average revenue per user fell from €36.60 in the last quarter to €34.39. Pre-pay customers spent an average of €20.11, lower than the fourth quarter's €24.35, and contract subscribers were broadly flat at €53.02 in the first quarter versus €53.06 in the previous period.
Some 39 per cent more O2 customers were using smartphones at the end of the period, increasing data revenue at the network by 18.1 per cent compared to a year earlier. Data now accounts for 41 per cent of total mobile service revenues.
Mobile broadband customers at the network rose 23 per cent compared to the same period in 2010, with the service attracting 170,000 as of the end of the first quarter.
Fixed line business customers rose from 4,000 in the first quarter of 2010 to more than 15,000 at the end of March.
In the first quarter, O2 also moved into financial services, launching the pre-paid O2 Money card. More than 25,000 people have signed up to the use the prepaid card since its launch in February.
Telefonica Ireland's chief financial officer Paul Whelan said there was little sign of recovery in the Irish economy in the first quarter of this year, but the network was pleased with the continued growth in its contract business.
He also signalled an planned expansion of the O2 Money products.
The network has also signed up with Eircom for a mobile network sharing arrangement that it says will hlp bring in new technologies to provide customers with faster broadband speeds.
The Telefónica group reported weak first-quarter results, as the telecoms group struggled to cope with tough competition in Spain as the economy stagnates.
Fast growth in booming Latin America, which accounts for near half of revenues at the euro zone's largest telecom, helped to compensate for slower gains in more mature markets in Europe.
But even as Telefonica's strongest strategic bet, Brazil, continued to pay off, some of the shine was taken off by a poor performance in some pockets of the emerging region, such as Mexico, where traffic and revenue fell.
Telefonica said a 2 per cent fall in net profit to €1.62 billion, compared with a forecast for €1.72 billion, was in line with internal forecasts and reaffirmed targets given at an investor conference last month.
Trouble-spot Spain, the focus of market concern, continued to disappoint, with revenues declining 5.6 per cent to €4.37 billion. Spanish voice service revenues were down almost 9 per cent year-on-year, while internet and broadband revenues were down 4 per cent.
Overall group trends were healthy, with a 6 per cent rise in Telefonica's global customer base to 290 million connections and growing smartphone adoption. Trendy and lucrative internet-ready phones now make up 12 per cent of the company's total mobile connections.
Latin American revenue rose nearly 6 per cent in organic terms or 26 per cent in reported terms, while European revenue - which excludes Spain - rose 8.4 per cent.
Additional reporting: Reuters
