Eircom revenues, operating profits fall

EIRCOM’S REVENUES and operating profit declined in the three months to the end of September – the first quarter of its financial year – as the effects of increased competition and the recession continued to bite.

Eircom yesterday reported a 9 per cent year-on-year drop in group revenues to €468 million for the period. Its operating profit declined to €58 million compared with €77 million a year earlier.

Earnings before interest, tax, depreciation and amortisation (Ebitda) and a non-cash pension charge was down 1 per cent at €168 million. When various finance costs are taken into account, Eircom posted an after-tax profit of €16 million – up from a surplus of €6 million a year earlier. The company’s net debt stood at €3.42 billion at the end of September.

Chief executive Paul Donovan said the operating environment “remains challenging from an economic, competitive and regulatory perspective. Within that context, the group has delivered a set of results that underline the commitment to continued strong cost control.”

Operating costs were 11 per cent lower year-on-year at the end of September. In March, Eircom announced plans to trim its workforce by 1,200 over two years. By the end of September, 649 staff had left. Eircom now employs just over 6,000 workers.

Eircom’s fixed-line revenue fell by 9 per cent to €364 million, reflecting lower voice traffic and higher bundle discounts. Its fixed-line Ebitda fell by 1 per cent to €140 million. Eircom lost a net 23,000 fixed-line telephony customers in the three months.

In the mobile market, Meteor increased its customer base by 38,000 year-on-year to 1.046 million but its average revenue per user slipped 8 per cent to €36.02. This reflected price reductions and a change in its traffic mix.

Mobile revenues fell 6 per cent to €119 million while Ebitda of €28 million was flat compared with the same quarter of 2008.

Meteor has a 21 per cent share of the mobile market.

In relation to Eircom’s proposed acquisition by Singapore-based STT Communications Ltd, Mr Donovan said the company “supports the [sale] process”, which is due to be completed on January 4th.