Eircom’s half-year profits up 300%

HALF-YEAR profits at Eircom rose by over 300% to €115 million, the telecoms company revealed yesterday.

Eircom said profits in the six months to end September were boosted by higher revenues and the sale of property, which added €47m to the bottom line.

The company, which is in takeover talks with Swisscom, said revenue in the period was €802m, up €2m on the same period last year.

The growth in revenues came from the take-up of broadband internet connections. This offset a decline in revenues generated from phone-calls. In the three months to September 30, revenues from calls dropped 8% as more people switched to mobile phones.

The number of broadband connections rose to 164,000 from 84,000 in 2004 and has increased further since the half-year end.

Eircom boss Phil Nolan said: “We have also continued to grow broadband numbers to over 184,000 subscribers today, increased the number of access lines and developed new products such as an enterprise VOIP offering to be launched later this week. This excellent strategic progress has been underpinned by a very solid operating performance.”

Staff costs continue to fall as more employees left the company. At the end of the half year Eircom employed 7,250, down from 7,725 a year earlier. The company has set a target of reducing its headcount to 7,000.

Eircom, which bought mobile operator Meteor €420m in the summer, said its new subsidiary was trading in line with expectations. It did not release any figures on Meteor’s customer base.

The company declined to give any update on the progress of talks with Swisscom, which made an approach to buy Eircom last month.

“We will not be commenting further on this issue at this time,” Mr Nolan said.

The company said it would pay shareholders an interim dividend of five cent per share.

Brokers were largely positive on Eircom’s results, with revenues higher than had been forecast.

NCB Stockbrokers said: “As we expected following the launch of its new products and pricing in June, the company experienced higher growth in its broadband base. However, most of this increase took place since the end of September. In the six weeks since then 20,000 broadband customers have been added (a rate of 3,333 per week) compared to a rate of 1,333 between the middle of August and the end of September.”

Shares in Eircom slipped almost 1% yesterday to €2.27.