Eircom recovery ahead of target

Eircom is ahead of schedule in terms of its long-term recovery plan, its management has claimed, despite its latest annual results showing further earnings and revenue declines.

The former State-owned telecommunications company, yesterday reported group revenues of just under €1.4bn for the 12 months to the end of last June.

This was down by €121m, or 8% on the previous financial year. Earnings before interest, tax, depreciation and amortisation (EBITDA) declined by €55m, or 12%, to €487m. However, chief financial officer Richard Moat noted that the latter figure is €22m ahead of target and the €123m EBITDA figure for the quarter marked the second successive quarter of earnings growth.

Mr Moat added that Eircom’s recovery is an ongoing process and the last financial year, though successful, was just the first of a five-year turnaround plan. A total of 850 people left the company last year as it continues its plan to realise 2,000 job cuts by June of next year. Operating costs were reduced by €37m — to €612m — last year, and cumulative cost savings should amount to €100m by the end of next June.

“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 top line. Now that we have the network capability, we believe that we can provide compelling offers that will retain and eventually grow our customer base,” Mr Moat said.

Eircom closed out June with 2.39m customer, 3% down on the previous year, but a slowdown in customer losses. Broadband customers dipped 1% to 451,000, but Eircom expects growth in its current year.

In mobile — taking in the e-Mobile and Meteor brands — customer numbers fell by 2%, to just under 1.06m, but earnings almost doubled to €17m, with a near 70,000 increase in post-pay customers. The 83,000 extra post-pay customers represented the best performance in the market.

Mr Moat said Eircom’s ability to be first to market with new fourth generation (4G) services, this week, has been “vital”, as it shows the company can be an industry leader, in new product offering, rather than a follower.

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