Sales fall 9% at Eircom as recession and competition take toll

EIRCOM'S SALES fell by 9 per cent in the nine months to the end of March 2010 as the company continued to be affected by the recession and increased competition.

Group revenues fell to €1.38 billion, the company said yesterday. Fixed-line sales were 9 per cent lower at just over €1 billion, while its mobile revenues fell 6 per cent to €351 million.

Tight cost management meant the decline in its earnings before interest, tax, depreciation and amortisation (Ebitda) was just 3 per cent to €497 million.

Its fixed-line customer numbers fell by 75,000 year-on-year to 1.49 million, but it added 32,000 mobile customers over the period.

Eircom lowered its costs by 8 per cent, “reflecting reduced labour costs and non-pay expenses”.

Its capital expenditure in the nine-month period was €218 million, compared with €270 million in the previous 12-month period.

Eircom’s net debt at the end of March was €3.3 billion and it had cash balances of €265 million.

The company said yesterday that further cost cuts would be required in the business and that it would seek to “accelerate the achievement of our March 2011 head count reduction target” – a plan that envisages 1,200 staff leaving by next March.

But Paul Donovan, Eircom’s chief executive, said this target should be reached by the end of September. “We currently have 900 there and so the other 300 will be announced ahead of time.”

He said there was significant scope for greater efficiencies across the business and that ultimately there would be fewer people employed by the company.

“That needs to be the result of careful planning,” Mr Donovan added.

He said the company would continue to pursue voluntary redundancies as part of any future job cuts.

“We have no plans for compulsory redundancies . . . we have voluntary mechanisms,” he said.

On the performance of the wider economy, Mr Donovan said he didn’t see too many green shoots.

He believed it would be at least the middle of 2011 before a recovery began. “I hope to be proved wrong.”

Mr Donovan said he was disappointed that the Eircom-led OneVision consortium had not been able to agree commercial terms on the introduction of commercial digital terrestrial television (DTT).

“We found it impossible to conclude a contract with RTÉ NL but that’s more of a problem for RTÉ than for us.”

He said OneVision “still exists” and was willing to enter into discussions with the Broadcasting Authority of Ireland (BAI) on DTT in the future.

“We await the BAI’s determination on DTT,” he said.