Eircom rings up losses of €11m in second quarter

THE country’s main telecommunications group, eircom, fell to an €11 million loss in the second quarter of the year.

That compares with a small profit of €2m in Q1.

After dividend payments and taxes the total loss for the period jumped to €25m against €11m in the first quarter of 2003.

Now owned by Valentia Telecommunications, an international consortium in which Tony O’Reilly holds a 5% stake, the company recently raised €1 billion in a bond issue, €512m of which was paid back to the investors.

Dr O’Reilly got €20m on the basis of his holding in the group.

At the time it was estimated that the workers under their ESOT deal with the consortium achieved a massive €250m thanks to their 30% stake in the group.

Apart from Dr O’Reilly and the ESOT, the remainder of the investors are US-based private equity funds.

The latest set of figures show sales up modestly from €410m to €424m, but the cost of sales rose from €113m to €131m eating into the returns for the quarter.

Operating profits fell from €35m to €25m and the figures point to a pretty flat year for the telecoms giant which is precluded from commenting on the figures at this stage of the year.

Last year eircom recorded a sharp increase in operating profits to180m which was a major improvement on the operating loss of 51m the year previous.

The result was achieved on the back of a sharp drop in restructuring costs and better cost control since the takeover of the group.

At the time of the launch of the 1bn bond document, eircom said it would spend €200m in capital upgrading of its equipment every year to ensure adequate infrastructure for the economy.

However, in the previous year, capital spending was up, at over €504m the year previous, falling to less than €200m in the year to end March 2002.

The group played down the dip in the capital expenditure figure pointing out that, in the previous year, eircom’s international investments at that stage were a major factor.

Eircom employs 8,400 people and plans to reduce that figure by 1,000 by the end of next year.

The Eircom directors were paid a total of €2.1 m during the last financial year.

The proposed dividend in the second quarter is €7m which is €1m up on the same quarter last year.