Eircom warns it may accelerate jobs cut programme

EIRCOM has warned that it will have to make further cost reductions to cope with competitive and economic pressures, following a tough quarter which saw a further deterioration in profits and revenue.

The company also said that it will be looking to accelerate its previously stated March 2011 head count reduction target.

Last year, management said it was aiming to reduce group staff levels by 1,200 people by March 2011. It has already shed 894 of those jobs.

Chief executive Paul Donovan said the economic, competitive and regulatory environment continues to put pressure on the company’s revenues and EBITDA (earnings before interest, tax, depreciation and amortisation).

“As a result, further cost reductions will be required,” he said.

It is unclear as to exactly where those reductions will be made and if any additional job losses will materialise.

Yesterday, Eircom, which recently underwent its fifth change of ownership in little over a decade when the Singapore-based ST Telemedia (STT) took a controlling stake, reported a 4% year-on-year reduction in third quarter EBITDA, to €170 million, for the three months to the end of March. For the same period, group revenue fell by 7% to €455m.

However, operating costs also fell, by 8%, in the quarter. Mr Donovan said the company’s “relentless focus” on cost reductions has delivered “material improvements in our ability to compete”.

Revenue in Eircom’s fixed-line business was down 7%, year-on-year, at €356m, while revenue from its mobile division, Meteor, suffered a 5% decline, to €112m.

Meteor’s customer base fell by 21,000 people during the three months in question.

Meanwhile, management added that its pension proposals with the trade unions have been endorsed and have led to an elimination of the €407m pension deficit that was reported at the end of 2009.

The company said that its pension fund is now showing a small surplus.