Eir looks to recapture lost ground from Virgin in telecoms arms race

Customers trying to get through to us had a really hard time, says Eir boss Carolan Lennon

Eir CEO Carolan Lennon: ‘It’s acknowledged all over the world that fibre-to-the-home is better than cable.’

Eir CEO Carolan Lennon: ‘It’s acknowledged all over the world that fibre-to-the-home is better than cable.’

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“We’ve never been good at it,” admits Eir boss Carolan Lennon about its customer service, the great casualty of the telecommunications age. Contacting a telco with a problem is now on a par with going to the dentist – sometimes necessary, but to be avoided if possible.

Last year, at the height of the pandemic, Eir’s customer service function blew a gasket. The company had been forced to move hundreds of customer care agents to remote working and halt recruitment, resulting in a major decline in productivity.

At the same time, with everyone at home because of lockdown and increasingly reliant on telecommunications, call volumes and queries surged. “It all went the wrong way at the one time,” Lennon says.

At the worst point, in August, call waiting times were averaging about an hour. Customers complained of calls being dropped, of agents being unhelpful, and of routine issues being left unresolved.

Lennon says the company received about 280,000 calls in August alone. While many related to sales and subscriptions, the majority related to customer care and tech support.

She might have been taking credit for the robustness of Eir’s network – it hadn’t been tested to this extent before; or for 220,000 additional broadband subscribers that came onto Eir’s network during the period; or for the €222 million operating profit the company generated in the three months to the end of September.

Instead, she found herself being grilled in the media and forced into a series of embarrassing apologies. An interview on RTÉ’s Prime Time appeared to make matters worse when she laid the blame on Eir’s contact centre in Sligo and the difficulties it had in recruiting the right staff there, which some interpreted as criticism of Sligo itself.

Does she regret going on Prime Time? “No, because we had a problem and I wanted to acknowledge that and I wanted to tell people why we had a problem and what we were doing about it.”

“My attitude is you can’t just be the CEO for the good days. You can’t just rock up when you’re making a network announcement...when things go wrong there’s no getting away from it.”

“There was lots of mitigating factors but the reality was if you were customer trying to get through to us, you had a really hard time,” she says.

It was a challenging period, perhaps the most challenging of her tenureship. To her credit, she fronted up to the issue instead of stonewalling. She has a reputation for plain speaking and this has disarmed critics to a point. That said, the company still ranked second from bottom behind Ryanair in terms of customer experience last year, according to the latest CX rankings.

Lennon took over as chief executive from Richard Moate in 2018 in the wake of the company being sold to French billionaire Xavier Niel and his Iliad telecoms business for €3.5 billion.

One of the first things she did, urged on by the new owners, was to bring the company’s customer care function back inhouse – it had previously been outsourced to a third party, which is now seen as one of the root causes of the current problems.

The high turnover of staff is another. Eir’s basic pay for contact centre staff is €23,000 per annum, which Lennon insists is in line with industry norms. It’s still very low, less than half the average full-time salary in the State.

As Ireland’s largest telco, Eir continues to receive a big volume of complaints, but she says the volume of complaints and call waiting times are down significantly on last year while customer satisfaction has improved. The throng of complaints about Eir on social media has also eased off.

The internal system, which can leave care staff jumping between seven or eight screens, when dealing with customer queries is also being overhauled. “We’re making progress on the customer care issue – it’s not done yet – but it’s our number one priority,” she says. It’s something that’s dogged Eir in recent years and stands in sharp contrast with other performance metrics.

The company, which employs 3,200 staff, is now one of the most profitable telcos in the world – it generates an annual operating profit of about €600 million, according to its most recent annual accounts.

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Originally from Coolock on Dublin’s northside, Lennon joined Eir in 2010 from Vodafone, initially as chief commercial officer, before becoming head of the group’s wholesale arm in 2016. After graduating from UCD, she worked in the financial sector before leaving to do an MBA in Trinity in 1996, which kick-started a career in telecoms, first on the consumer side, then in wholeside and now as chief executive. She and her former Vodafone colleague Anne O’Leary are standouts as female CEOs in a male-dominated industry.

Packages and deals

Telecommunications has become an increasingly complex business with multiple technologies and overlapping infrastructures. Eir offers consumers broadband, mobile, TV and landline services across several platforms and via a myriad of packages and deals. You can buy all four through its “quad play” category.

Like all telco incumbents, Eir is busy replacing its traditional copper network with a fibre one, one that can cope with the increased demand for high-speed broadband. Some 250 million hours of Netflix were consumed on the Eir network last year alone.

Unlike most incumbents, however, Eir has only a minority stake in the urban broadband market here, playing second fiddle to Virgin’s cable network, the latter has a 60 per cent plus market share in Dublin while Eir has less than 30 per cent, a reflection of the underinvestment that followed the former semi state’s privatisation in the late 1990s.

Lennon is vexed by the privatisation/underinvestment narrative. It predates her time at the company and she believes Eir has been on an entirely different path since exiting examinership in 2012 and since the arrival of new investors in 2018.

In the period after privatisation, Eir became something of a plaything for international investors; flipped several times, landed with debt and starved of investment.

Lennon is adamant there’s been a sea-change since then. “They are buyers, not sellers, they make long-term strategic decisions,” she says of the new owners. She also insists the company is investing more in its network than most of its international peers. Eir’s capital expenditure for the 2020 financial year – a key metric for telcos – was in the region of €250 million.

Perhaps more significantly for Irish consumers, it is spending more than €500 million on a new fibre-to-the-home (FTTH) network, now viewed as the gold standard of connectivity.

The network currently passes 749,000 homes, including 340,000 that had originally been earmarked for the National Broadband Plan (NBP). The aim is to extend this to 1.7 million over the next three years. The rollout is rapid, passing roughly 70,000 premises a quarter.

The pandemic has accelerated the adoption of fibre, Lennon says, with take-up increasing by a third to 314,000.

The focus for Eir is now firmly on recapturing lost ground from Virgin, particularly in urban areas where take-up and revenue are stronger and easier to predict.

“It’s all about taking share from cable and we believe we can do that because we have better technology. It’s acknowledged all over the world that fibre-to-the-home is better than cable,” she says.

Refocus

The arms race between Eir and Virgin – and their two infrastructures – looks set to dominate the telecoms landscape here for the next decade.

The company’s refocus on urban areas has been facilitated, at least in part, by its controversial exit from the Government’s €2.9 billion NBP process – it left in 2018, citing complexities with the tender.

It has, however, been accused of gaming the process by hiving off the low-hanging fruit – the easier-to-get-at homes – while leaving the most rural and high-cost premises to someone else.

Prior to being chief executive, Lennon headed up Eir’s wholesale division – Open Eir – and masterminded its NBP strategy. She says she was disappointed when the company pulled out of the process “but it just wasn’t going to work for us”. Eir still stands to make up to €1 billion from the scheme as National Broadband Ireland, the winning bidder, will utilise Eir’s existing network of poles and ducts and pay a handsome rent in return. Lennon was elevated to chief executive shortly after its NBP exit.

Another big area of investment is mobile. Traffic on Eir’s mobile network increased by over 80 per cent last year as remote working, video conferencing and Netflix watching soared during the pandemic.

Lennon claims Eir’s 4G mobile network is now available to more than 99 per cent of the population while its new 5G service, which promises much faster speeds, is available to over half the population.

The company’s no-frills, SIM-only GoMo service, which offers users unlimited data and calls – the unlimited aspect is disputed – for as little as €13 a month has undercut the traditional mobile contract model and attracted 250,000 customers in its first year of operation. It has eaten into the market share of rivals Three and Vodafone and reveals how fierce competition in this area has become. “People bought into the simplicity of the proposition,” she says.

Lennon is clearly ambitious. She told her predecessor and former boss Richard Moate that she wanted his job and to become the first female chief executive of Eir. It didn’t seem to hamper their relationship. “It’s important to be upfront about what you want,” she says.

Becoming the head of the group’s wholesale division in 2016, she believes, was key to her rise. “You get into the network once you’re in Open Eir and that’s the heart and soul – the DNA – of the business,” she says.

Eir chief executives don’t tend to last too long in the job. The average tenure of the last five incumbents has been around four years. Her immediate predecessor only lasted three. Lennon has been there for three but insists she’s not going anywhere – provided of course she keeps pleasing her shareholders and can reduce the volume of customer complaints.

CV

Name: Carolan Lennon

Age: 54

Lives: Churchtown, Dublin.

Family: Married with three sons.

Interests: horseriding and early morning head-clearing walks.

Something you might expect: she’s a huge Dubs fan - though the only member of her family to miss the historic “five-in-a-row” final.

Something you might not expect: She regrets never having had a party piece and is taking singing lessons.

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