Eircom at 50pc of broadband market, revenues fall 9pc

25 Feb 2010

Eircom CEO Paul Donovan has warned that further cost reductions will be required to steer the incumbent telco on the road to stability. He added that Eircom is close to launching a new portfolio of next- generation network services.

The company said this morning that by the end of its financial half year it now has 750,000 fixed and mobile broadband customers and some 1.08 million mobile customers, if you include 32,000 mobile broadband subscribers.

Group revenue for the six months were down 9pc year on year to €933 million. Earnings before interest, taxes, depreciation and amortisation (EBITDA) was down 3pc to €327 million.

Capital expenditure cash flows for the six-month period were €166 million, which Donovan said reflects continued heavy investment in Ireland’s fixed and mobile broadband networks.

“The operating environment in Ireland has not improved,” Donovan warned.

“The group’s revenues remain under pressure and our profits have declined in the quarter despite continued good progress on costs. Further cost reduction will be required in the coming months.

“A number of very important corporate milestones have been reached, and key business issues addressed. In the past weeks, we have met two key objectives by achieving shareholder stability and agreeing to a far-reaching remediation of our pension position with our unions. In addition, we now have more than 750,000 broadband customers on our networks,” Donovan said.

He said that STT’s acquisition of Eircom on 4 January brings “a long-term perspective and deep telecoms industry knowledge.”

Donovan said that Eircom has reached an agreement with trade unions and expects to eliminate the defined-benefit pension deficit and reduce risks in the scheme. “Eircom’s annual contributions to the scheme will be contained at an affordable level, with a commitment to increase from 7.8pc of pay to at least 8.5pc, and will be subject to a floor for three years.”

In terms of broadband, Donovan said Eircom is close to launching a new portfolio of next-generation network services.

“The group’s networks support more than 50pc of all broadband connections in Ireland, underlining both the national importance of our networks and the level of platform competition that exists in the marketplace. Thirty-one per cent of our fixed-line broadband customers are served by retailers other than Eircom, through our wholesale activities.

“Since its launch last March, mobile broadband has provided good growth, with more than 35,000 mobile broadband customers now supported on our 3G network as of 11 February 2010. Mobile data revenues grew 53pc in the second quarter, relative to last year,” Donovan added.

By John Kennedy

Photo: Paul Donovan, Eircom CEO

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years