Revenue at Eircom declines but mobile earnings improve
Company says cost reduction plan ‘on track’ as it delivers 6 per cent savings
Chief executive of Eircom Herb Hribar with Taoiseach Enda Kenny at the launch of Eircom’s National Fibre Network earlier this year. Photograph: Eric Luke /The Irish Times
Eircom said its performance was stabilising as earnings showed quarterly growth, but group revenue was down over the year and the company continued to see a downturn in landline subscriptions.
The incumbent telecoms operator was upbeat, however, citing reduced costs, an improved infrastructure and improving mobile profitability.
The company was announcing its results for the financial year ended June 30th 2013, and its final quarterly results for the period.
Full -year revenue fell to just under €1.4 billion, declining by 8 per cent, or €121 million in the previous year. Operating costs, meanwhile, were cut by €37 million.
Eircom has been implementing a cost savings programme, which has yielded a 6 per cent reduction in operating costs over the 12 months and, according to chief executive Herb Hribar, the programme is on track.
“We have made continued progress during the year on a number of key issues that have helped us to stabilise our bottom line EBITDA performance and to come in ahead of our plan,” Mr Hribar said, noting the launch of Eircom’s e-fibre broadband network and the commencement of 4G services yesterday, which made Emobile and Meteor the first telecoms operator to market with the next generation mobile technology.
“The cost transformation programme is on track and, despite an increase in competitive intensity during the year, we have made progress in reducing our fixed line losses and improving in mobile profitability over the past year,” he said. “However, significant challenges remain and Eircom is committed to addressing many of those challenges in the coming 12 months.”
Year on year, earnings before interest, taxation, depreciation and amortisation were €55 million lower at €487 million, a 12 per cent decline.
Eircom now has more than 1.97 million retail customers, including just under 1.1 million mobile customers. The company has 451,000 retail broadband customers, down 1 per cent on the previous year. PSTN customers fell by 23,000, declining to 917,000. Eircom saw some gains in its wholesale business, where broadband lines were up 18,000 to 218,000.
Eircom’s total customer base including wholesale customers was 2.39 million at the end of June.
Revenues in its fixed line business fell by 9 per cent to €1.1 billion.
Although Eircom’s mobile units saw a 2 per cent decline in customers, to 1.06 million, the business saw 83,000 net additions in the post-pay sector. Mobile revenues fell 5 per cent over the year but Ebidta almost doubled to €17 million.
Chief financial officer Richard Moat said he believed Eircom could retain and grow its customer base.
“During the course of the year, we took a number of steps to stabilise our bottom line performance with continued focus on cost. This has delivered consecutive quarters of EBITDA growth. At the same time we need to address our topline. Now that we have the network capability, we believe that we can provide compelling offers that will retain and eventually grow our customer base,” he said.
The group has also cut its net debt through a €350 million senior bond, which Mr Moat described as “an important endorsement by the market”, and sold off its Eircom PhoneWatch unit to Sector Alarm Corporation of Norway.