Eircom this morning reported that it has returned to financial health with an operating profit before restructuring programme costs of up to €66m from €11m a year ago and an operating margin of 16pc up from 3pc a year ago. The company also revealed that it has reduced its headcount by 10pc since last year and is making strong progress towards re-entering the mobile market.
The incumbent operator reported that at the end of December it had 114,000 broadband users and by this morning this had risen to 117,000 users.
For the third quarter the company reported a 3pc increase in earnings before interest, taxes, depreciation, and amortisation (EBITDA) to €155m and an increase in EBITDA margin to 39pc.
For the nine months ending in December, Eircom reported an adjusted EBITDA rising 3pc to €465m due to improved gross margins and lower operating costs.
Operating profit for the nine months before restructuring costs and exceptional operating costs were factored in rose to €195m with the operating margin increasing to 16pc.
The company said that an ongoing restructuring of the company cost it €57m in the nine months ending December and that it had reduced the headcount of the company by 499 people by 31 March last year. According to the company’s figures, the current headcount of Eircom is 7,482 workers, down 10pc on the 8,286 employees it had last year.
Eircom chief executive Philip Nolan (pictured) said that the quarterly results reflected solid progress towards Eircom’s goals of defending its core business, increasing broadband customers and returning to the mobile market.
“In a tough operating environment we have met our targets in our core business. Revenue has been held flat and profitability is ahead at EBITDA and operating levels. Capital spending is on target, and cash generation is strong,” he said.
Nolan said the company has achieved the objective of 100,000 broadband customers ahead of schedule and that DSL growth continues apace. “At 31st December 2004 Eircom’s wholesale and retail base stood at 114,000 and is more than 117,000 today. The business is now focused on a new target of 500,000 broadband connections by December 2007. The momentum established by Eircom in this market will, we believe, see Ireland become a broadband leader in Europe.”
In terms of Eircom’s impending return to the mobile arena, Nolan said: “In mobile, the most significant development in the quarter was the announcement by ComReg of its intention to direct Vodafone and O2 to provide mobile virtual network operators on a commercial basis. Failing that, the Commission for Communications Regulation [ComReg] has said that they will impose specific remedies, including cost orientation. ComReg’s initiative has been formally endorsed by the European Commission. It may take some time for the impact of this decision to become clear.”
By John Kennedy
