King of convergence: Eir’s Richard Moat on the fibre and 5G future

15 Sep 2017

Eir CEO Richard Moat. Image: Eir

Eir CEO Richard Moat says broadband and mobile bundles are enabling better customer retention, and outlines how the company is preparing for the 5G future.

In an insightful interview, Eir CEO Richard Moat – the architect of the incumbent operator’s turnaround in just five years from bankruptcy to leading the fibre charge – has revealed that the company is sticking with a game plan that makes the most of its fixed line and mobile assets.

This week, Eir reported strong financial results, with revenues up 1pc for the full year and strong cashflow. It also revealed how the company’s focus on convergence and bundling is leading to the desired level of stickiness when it comes to keeping customers.

‘Eir Sport has been a key element in us sustaining our broadband position, leading to new and existing broadband customers, and that plays into our bundling approach, which yields great levels of stickiness’

Eir is moving to consolidate its reach in mobile, fibre and TV, and said that a quarter of its overall customer base are now on triple- or quad-play packages.

“Yes, we’ve been pushing to get more people to what we call the ‘value pyramid’ since we had our quad-play capability in 2013.”

To the uninitiated, quad play consists of TV, mobile, phone and internet.

Moat correctly reasons that customers are unlikely to switch service providers once they sign up for two or more services.

“Around 25pc of our customers are on quad play while 75pc are on dual pay and above. The more product they take, the longer they will stay. It makes sense to get into bundles.”

Eir’s own digital transformation

A key feature of Eir’s turnaround is how the deployment of fibre broadband made the company change how it looks at itself. At first, the roll-out was presented as difficult and expensive but, once the company found its pace, it became transformative.

Eir is working towards a target of having 1.9m premises passed by fibre by the end of next year. It also managed to agree a deal with the Irish Government to take 300,000 premises out of the National Broadband Plan intervention area, pledging to invest €200m in the enterprise and complete the roll-out by 2018.

“We are now at just over 1.7m homes and businesses passed by fibre. And, just to clarify, we have 80,000 homes and firms passed as part of our rural roll-out. We will be at 101,000 by 30 September – more than a third of the way – moving to complete the 300,000 by December 2018.

“In addition to being on track, some 12,000 homes in rural Ireland are already using our fibre-to-the-home [FTTH] service.”

Like any astute business person, Moat knows that to win customers and retain them, you have to give them something that they want.

In 2015, Eir moved to acquire sports TV broadcaster Setanta for an undisclosed sum. He rebranded it as Eir Sport and the tactic has worked.

“72pc of Eir Sport customers are people who are new to Eir, so it is a product that people really want. Today, some 220,000 of our customers are accessing Eir Sport – that’s 44pc of our total base. And we believe there is room to get that even higher.

“Eir Sport has been a key element in us sustaining our broadband position, leading to new and existing broadband customers, and that plays into our bundling approach, which yields great levels of stickiness.”

Eir and the 5G future

In recent weeks, Eir moved to rebrand Meteor as simply Eir, bringing all of its 1m mobile customers under the one service.

The company was also one of five to win the first slices of the 3.6GHz spectrum, the band critical for the first 5G services, as part of a €78m auction. Eir obtained 80MHz in rural regions and 85MHz in cities.

Eir CFO Huib Costermans explained: “We bought the spectrum for two reasons. The spectrum allows us to use it purely for capacity, and, as one of the spectrums, we can use for 5G. It has really created an opportunity for us and also makes us less dependent on future auctions in spectrums. You could say we are happy with the outcome.”

While a 5G standard has yet to be agreed globally, Costermans said that Eir realises it is an incumbent operator in a market surrounded by global players with large R&D departments and so, it has to be box clever in how it targets 5G.

“There is no 5G standard but there is still a long way to go to develop those new use cases, and we will be looking closely at what some of those global players will be doing and we will follow those types of developments. We aim to be among the frontrunners.”

Moat added: “We were first to market in Ireland in September 2013 with 4G. We thought that would be essential and, by exploiting the 4G opportunity, a significant proportion of our customer base is now on 4G.

“5G will be different in terms of products and services, and a lot of the products of the future, like driverless cars, could be here sooner than we think. I would say we would probably be a fast follower rather than first out of the traps this time, but we will see how things progress.

“We have a nice combination of mobile and fixed but when 5G comes along, it will require a high density of smaller cells, especially in rural areas. With our current fibre and wireless asset base, I believe we will be ready to attack 5G at the right time.”

Connecting the nation

Despite winning back 300,000 premises from the National Broadband Plan’s (NBP) intervention area – reducing the remaining footprint to around 600,000 – Moat said he has every intention of seeing Eir vie for more segments of the NBP.

“If you step back and look at the last five years, we now have fibre to the cabinet (FTTC) to 1.6m homes and premises and, when you include our rural roll-out, that will increase to 1.9m premises by 2018.

“I know that still leaves 450,000 premises around Ireland in more remote areas without coverage, and they will be addressed by the NBP. We are engaged in the process and the next stage is to submit a detailed solution to show how we can deliver.

“The point of the plan is to ensure these homes all get higher speeds.”

Asked about Enet’s plan revealed last week to deploy fibre broadband to 115,000 homes and businesses in Ireland’s west and north-west regions as part of a €100m investment, Moat pointed out that the plan does not address the dearth of rural broadband in rural areas, and instead is targeting areas where Eir’s fibre service is already operational, including Donegal town, Ballybofey and Stranorlar.

“With respect to Enet, I don’t understand the rationale behind the announcement. If you look at the locations they are talking about covering, all of them are urban areas where we currently have FTTC, and we have FTTH live in three of those locations, with plans afoot for another three. Enet are overbuilding fibre where it already exists.

“They are not addressing the strategic goal of government and industry of bringing fibre into rural areas,” Moat concluded.

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