Eircom on target to upgrade 1m lines to 8Mbps by Xmas

26 Nov 2010

Eircom said today that while revenues are down 5.6pc year on year to €442m and net cash flow has plummeted 87.5pc to just €13m, the company is still on track to reach a million homes with 8Mbps broadband.

Eircom CEO Paul Donovan said management at the incumbent operator sees no signs of growth or increased spending by customers at present.

The company has lost 16,000 PSTN line customers, 14,000 wholesale bitstream customers and 4,000 wholesale customers. While it has gained 16,000 wholesale LLU (local loop unbundled) customers and 4,000 mobile broadband customers, it lost 11,000 mobile handset customers.

Employee headcount at the operator fell by a further 117 since the previous quarter and labour resources, excluding agency, fell by 1,675 since March 2009.

While the headcount reduction has boosted the company’s competitive position, Donovan said: “Much more remains to be done as part of the group’s three-year transformation programme.

“Management sees no signs of growth or increased spending by customers. We do not anticipate this situation to change in the near to medium term. Last quarter, we announced a plan to achieve at least €90m in labour cost savings.”

He said the group’s current cash balance is €361m but net debt remains high – he warned that in the absence of action by Eircom, the associated financial covenants may be breached in the next 12 months.

Eircom in the communications market today

“In the broadband market, we are aggressively upgrading our customer base to our up to 8Mb uncongested service. We are on target to upgrade more than 1 million lines by Christmas, with 280,000 customers using this service by the end of the year. Total DSL subscribers across retail and wholesale stood at 695,000 for the period ending 30 September 2010.

“Fixed PSTN lines continue to fall. This quarter, Eircom lost 20,000 lines, compared to 23,000 lines for the corresponding period last year. Voice traffic minutes fell 12pc on the corresponding period last year.

“In the mobile segment, eMobile launched as our second mobile offering on 29 September 2010. Targeted at Eircom customers, it offers an innovative range of mobile voice and data services which complements the Meteor brand.

“Mobile revenues and profits fell for the quarter due to lower average revenues per user (ARPU). The reduction in ARPU is largely due to new lower-priced plans, mobile termination rate reductions and changes to the traffic mix. Total mobile customers stood at 1,036,000 at 30 September 2010. Mobile broadband customers stood at 45,000 at 30 September 2010 up 28,000 customers from the corresponding prior year quarter.

“We continue to make good progress on our journey of transformation, but the uncertainties surrounding demand and disposable income make the execution of our three-year plan ever more important,” Donovan warned.

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