Eircom turns profit of €77m despite continuing slide in voice call revenue

EIRCOM reported pre-tax profits of €77 million for the three months to June, turning around losses of €6m in the same quarter last year.

The fixed-line phone company, which announced a €420m takeover of mobile operator Meteor last month, said figures were boosted by a once-off profit of €46m on property sales.

Overall revenues showed a slight fall from €401m to €399m as it struggled to prevent a continuing slide in voice call revenues. Total income from voice traffic tumbled 8% to €128m.

Local call revenue slipped €3m to €24m, while national calls delivered €1m less at €12m. Calls to mobiles remained the most important category with revenue of €50m, down from €53m last year, while international call income was €2m lower at €23m.

The pain was eased by a 10% hike in income from line rental and connection fees, which rose to €145m. Eircom is one of the few fixed-line operators in Europe generating more money from line rental than from day-to-day usage fees.

The company said it has signed up 156,000 broadband internet customers by August 18. This compared with 141,000 at the end of June and 54,000 in June 2004.

Operating profit bounced up from €25m to €112m. This was driven by the non-recurrence of restructuring costs of €48m incurred in the corresponding period last year.

The company made steady progress in stripping out staff costs as its headcount reduction programme continued. Numbers on the payroll fell from 7,877 to 7,263 in the last 12 months, which dragged down the wages and salaries bill by 2%.

But total staff costs still climbed 8% on the back of higher pension-related charges. The company’s pension fund was €773m in deficit at the end of March, 350m worse than last year.

There was good news on the earnings per share line, which improved from a loss of 1c to positive earnings of 8c. An announcement is expected within days on the company’s planned rights issue to fund the Meteor takeover, which will be completed later this year.

Eircom used yesterday’s announcement to restate its results for the year to March to take account of the new International Financial Reporting Standards (IFRS) regime.

The main impact of the restatement was a slight reduction in earnings before interest, tax, depreciation and amortisation from €619m to €610m. Analysts said the IFRS-related changes to the accounts were mostly in line with expectations.