Eircom to spend €1bn on fibre-to-kerb strategy

15 Nov 2006

Eircom this morning said that it plans to invest up to €1bn on upgrading its nationwide network across Ireland over the next three years, including plans to roll out fibre-to-the-kerb infrastructure that will see up to 25MB per second broadband reach homes and businesses.

A spokesman for the company told siliconrepublic.com that this investment comprises previously announced fixed-line and mobile capital expenditure of €250m as well as an incremental capital expenditure of up to €300m over the next three years.

Eircom says the investment will enable it to offer an end-to-end customer experience and gain internal efficiencies through improved IT architecture and platforms.

As part of the investment it will roll out enhanced broadband services, develop a next-generation core IP network as well as initiate the rollout of fibre to the kerb (FTTK) technology.

FTTK allows broadband speeds of up to 25MB per second to support new services such as IPTV and video on demand.

The company said its mobile wing Meteor will also benefit from the capital investment, pursuing 3G services if the outstanding 3G license is issued to Eircom by ComReg.

Eircom says the investment will be funded through existing cash flows, uncommitted capital expenditure allowed under Eircom’s senior facilities as well as further investment by Babcock & Brown and other Eircom investors.

“We will be making a substantial investment in Ireland’s telecommunications infrastructure that will fundamentally enhance the communications services that we provide to customers in Ireland,” said Eircom chairman Pierre Danon.

In a related development, Eircom Group’s parent company, BCM Ireland Preferred Equity Limited, has launched a €425m payment in kind (PIK) notes offering. PIK notes are fixed-income securities that pay interest in the form of additional bonds rather than cash.

The notes, which will mature in February 2017, will bear non-cash interest and the proceeds will provide Eircom’s shareholders with additional liquidity that they may reinvest in Eircom.

By John Kennedy