O2 raises growth forecasts for UK division

Mobile phone company O2 has raised full-year revenue growth forecasts for its UK operation and margin expectations for its key…

Mobile phone company O2 has raised full-year revenue growth forecasts for its UK operation and margin expectations for its key German business on the back of robust growth.

In its last trading statement before the company releases half-year results on November 16th, O2 forecast UK net service revenue growth of 6 to 9 per cent for the full year, compared with previous guidance of growth in the mid-single digits.

Europe's sixth-largest cell phone group, which still expects a broadly stable full-year EBITDA (earnings before interest, tax, depreciation and amortisation) margin in Britain, increased its German margin forecast to a percentage in the low 20s.

The company, which also expects to raise capital expenditure by about £100 million (€147 million) to between £1.4 billion and £1.5 billion in the year, had previously expected a German EBITDA margin of around 20 per cent for the full year.

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Analysts have long hoped that strong growth at O2 would encourage Chief Executive Peter Erskine to lift what they called conservative forecasts, despite fierce competition in increasingly mature European mobile phone markets.

Mr Erskine said the company was winning a battle to both clinch new pre-paid and contract customers from rivals as well as keep old ones. He added that O2's UK total active subscriber base had topped 15 million for the first time in the second quarter.