Moody's warns cost-cutting weakens Eircom's prospects

Eircom may face a larger drop in revenue as cost-cutting measures risk jeopardising its long-term prospects and the country’s economic outlook remains uncertain, Moody’s Investors Service has said.

“The effect of ongoing austerity measures, spending cuts, and tax increases on consumer spending could lead to a steeper decline in Eircom’s revenues,” Moody’s said in a report yesterday. Cost-cutting measures to generate cash “cannot be maintained over a long period of time as these cuts weaken long-term prospects”.

Eircom last month went into examinership, Ireland’s biggest corporate insolvency, with €3.8 billion of net debt.