Revenue down 9% as Eircom feels the heat of competition and recession

28 May 2010

Irish former monopoly fixed line operator Eircom said turnover for the nine months ended 31 March 2010 fell 9% year-on-year amid intense competition in the country and the impact of economic recession. Consolidated revenues dropped to EUR1.388 billion (USD1.707 billion) from EUR1.518 billion in the same period a year ago. Broken down, sales from fixed line services dipped 9% year-on-year to a little over EUR1 billion, while mobile revenues from Meteor contracted 6% to EUR351 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) declined by 3% y-o-y to EUR497 million, and group operating costs, before non-cash pension charges, of EUR891 million, were down 11% reflecting Eircom said, reductions in pay and non-pay costs resulting from cost saving initiatives introduced during the year, and lower direct cost of sales in line with the reduction in revenue. CAPEX for the nine-month period was EUR218 million, compared with EUR270 million previously. Net debt as at 31 March 2010 was EUR3.3 billion and it had cash balances of EUR265 million.

Eircom reported that its fixed line (PSTN) customer base stood at 1.490 million at the end of March 2010, down 75,000 year-on-year, although DSL customers increased to 703,000, from 658,000 in March 2009, of which 496,000 were retail DSL lines (+24,000 y-o-y). Meteor Mobile reported 1.065 million cellular customers at the end of the period under review, up 32,000 from 31 March 2009; post-paid customers stood at 155,000, up 11% y-o-y.

Commenting on the results, Paul Donovan, CEO of Eircom said: ‘Building upon the shareholder stability achieved with the arrival of STT as a strategic shareholder in January, we are continuing to actively rebuild Eircom for the future. In March, we confirmed the far-reaching pension benefit changes agreed with our Trade Unions. Our continued relentless focus on cost reductions has delivered material improvements in our ability to compete. The company retains a strong cash balance and positive headroom in servicing its debt. However, the ongoing economic, competitive and regulatory environment continues to put pressure on the group’s revenues and EBITDA and, as a result, further cost reductions will be required. We have moved to accelerate the achievement of our March 2011 headcount reduction target.’

Ireland, eir, eir Mobile