Eircom reports 11% fall in Q3 revenue; 9M turnover down too

27 May 2011

Irish former monopoly fixed line operator Eircom today announced its financial and operational results for its fiscal third quarter and nine months ended 31 March 2011. For the three months under review Eircom booked group revenue of EUR407 million (USD576 million), down 11% on the corresponding period of 2010. Adjusted EBITDA stood at EUR160 million, down EUR10 million year-on-year, and operating costs (excluding non-cash pension charges/credits) fell 13% to EUR247 million, due to lower salary costs resulting from a lower headcount, cost saving initiatives and lower direct sales costs arising from the reduction in revenue and lower mobile termination rates.

Third-quarter fixed line revenue (before intra-company eliminations) reached EUR326 million, down 9% y-o-y as a result of reduced call volumes and the impact of difficult economic conditions in the Republic. Fixed line EBITDA climbed EUR3 million to EUR142 million, although Eircom reported a net loss of 5,000 retail xDSL customers for the three months to 31 March 2011, compared to a net gain of 12,000 in the year-earlier period. Eircom closed out March with 491,000 retail DSL subscribers; including wholesale, the figure reached 678,000 (down 4%). Net PSTN line losses reached 28,000 in its fiscal third quarter, up from losses of 15,000 a year ago, and 22,000 in the last three months of 2010. Mobile revenue (before intra-company eliminations) fell 17% y-o-y to EUR93 million as a result of lower ARPU and a reduction in the pre-paid customer base, which was partially offset by growth in post-paid and mobile broadband customers. Mobile EBITDA of EUR18 million was down EUR13 million from the corresponding period of 2010, as the combined mobile base for Meteor Mobile and eMobile fell 8,000 to 1.044 million as at 31 March 2011.

For the nine months to end-March Eircom posted group revenues of EUR1.287 billion, down 7% on the same period a year earlier, while EBITDA fell 3% to EUR482 million. Nine-month fixed revenues of EUR1.013 billion reflected a 6% fall year-on-year, although fixed line EBITDA rose 4% to EUR431 million as a result of lower pay and other costs. Total PSTN lines at 31 March 2011 were 1,402,000, down 88,000 year on year. Wholesale LLU customers stood at 52,000, at the same date, up 30,000 on the prior year. Mobile revenue stood at EUR312 million, down 11% y-o-y due to lower ARPU and a reduction in the pre-paid customer base – again only partially offset by mobile broadband and post-paid customer growth. Post-paid customers stood at 190,000 at end-March, up 23% from 31 March 2010. Average monthly blended mobile ARPU of EUR30.95 for the nine months ended 31 March 2011 was down 11% due to competition, lower mobile termination rates, an increased proportion of mobile broadband customers and changes in traffic patterns, it said.

Commenting on the group’s results, chief executive Paul Donovan said: ‘Despite sustained progress to reduce operational costs, the underlying fundamentals of the Irish economy and intense competition continue to create trading challenges for the Group across both our fixed and mobile segments. This quarter demonstrated the impact of additional personal taxation changes on our customers as well as the impact of regulation on the business in the form of reduced mobile termination rates. Our recent union collective agreement is another important step towards securing the future of the Group and the introduction of exit schemes will help to further reduce pay costs. Despite these steps, the Group is likely to see an accelerating decline in EBITDA in the coming twelve months.’ The company also said this morning that it will launch the iPhone 4 in the coming weeks through its Meteor and eMobile brands.

Ireland, eir