Eircom moves on costs as revenues dip

Telecoms firm Eircom said it would seek further cost cuts as competition and the economic environment caused revenues to fall in the third quarter.

Group revenue at fell to €455 million for the quarter, 7 per cent lower than a year ago, as both fixed and mobile revenue dipped.

Adjusted earnings before interest, tax, depreciation and amortisation were down 4 per cent to €170 million, and operating costs were 8 per cent lower as the company's wage bill was reduced.

The company said it was accelerating efforts to reduce its workforce by March 2011. Last year, the company said it was seeking to reduce costs and capital expenditure across both Eircom and its mobile arm Meteor.

Capital expenditure cashflows for the nine month period were €218 million, as the company invested in its fixed and mobile broadband networks.

"Building upon the shareholder stability achieved with the arrival of STT as a strategic shareholder in January, we are continuing to actively rebuild Eircom for the future," said chief executive Paul Donovan.

"Our continued relentless focus on cost reductions has delivered material improvements in our ability to compete. The company retains a strong cash balance and positive headroom in servicing its debt."

The company said it had eliminated a €407 million pension deficit reported in December 2009, with the fund now showing a small surplus. In the last quarter, Eircom reached a deal with the Trade Union Alliance that limited the future growth of pensionable pay, and increased the firm’s contribution from 7.8 per cent to 8.5 per cent.