Faulty network stops Eircom line rental rise

Eircom has postponed making an application for a line rental increase for up to six months because of the number of faults on its phone network.

As Eircom declared its intention to take up ComReg's offer of the State's final third generation (3G) mobile phone licence, chief executive Rex Comb said that a line rental increase was no longer on his immediate agenda.

This marks a departure from Eircom's stated position last November when it indicated that an application for a price increase was imminent.

Citing system faults in December and January, Mr Comb said he wanted to see improvements in the network before seeking a price rise. "It certainly won't be at least for the next three to six months," he said.

"We're very focused on service, we're doing a lot of work at the moment on fixing our service.

"At the moment any price increase is not on the table. I can take one if I want to, but I just don't think it's right to take one."

Eircom is finalising financial arrangements to subscribe to the 3G licence, which was initially granted to Smart Telecom, and pay the capital expenditure required to build a 3G network.

The upfront licence fee is €44 million and it must also put in place a €100 million bond. Mr Comb declined to quantify the capital expenditure, but said Eircom could install "a fair bit" of a 3G system on its existing sites.

An upgrade to 3G standard of the 600 telecom towers in its existing network could cost €60 million, but Eircom has not yet decided to go down that road. Neither has it concluded an examination on whether new towers will be needed.

"We haven't done that work yet," Mr Comb said.

"The bit that we haven't finalised is what the capex would be to roll out the network."

Eircom will receive the licence but the 3G service will be introduced by its mobile arm Meteor, which was not in the Eircom stable when it applied for the licence.

In results yesterday, Eircom's revenues rose about 9 per cent to €490 million in the three months to December when Meteor revenues for the duration of the corresponding quarter in 2005 were included.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 8 per cent to €154 million in the same period, before the impact of restructuring and transaction costs, non-cash pension items and property disposal profits.

"This results in an EBITDA margin on the same basis of 31 per cent for the quarter, compared with 33 per cent for the prior year. This reduction is due mainly to the inclusion of lower margin mobile operations results from Meteor for the entire quarter to December 2006."

The number of broadband subscribers rose 60,000 in the quarter, bringing the total to 360,000.

"Eircom's ambitious target to provide 500,000 DSL lines by the end of 2007 will be reached early," it said.

Fixed line revenue rose 1 per cent to €409 million. Meteor's quarterly EBITDA was €14 million and it had 818,000 subscribers in January.