Eircom denies talk of AT&T sale

Eircom has scotched talk of it being taken over by US telecommunications giant, AT&T, with management saying there is no truth in the rumour.

While Eircom’s ongoing strategic review is expected to result in it seeking a third IPO, in a bid to reduce its €2.3bn debt, other options including selling to an industry rival haven’t been dismissed. Recently, speculation arose linking AT&T with a takeover move, which would see the US firm seek a cheaper tax base here.

However, Eircom’s chief financial officer, Richard Moat, said yesterday that there is “no truth to the rumours”. He added that the company’s structural review is ongoing, with all options still open and that it hoped to come to a decision by the end of the year.

Mr Moat was speaking following the publication of Eircom’s latest annual results, for the 12 months to the end of June, which saw continued stabilisation of the financial performance, with revenue declines narrowing further.

However, net losses jumped from €118m to €309m, following exceptional charges of €235m, due mainly to redundancy and pension scheme costs.

Eircom said it had exceeded its cost savings target of €100m and is seeking €50m in savings for the next three years. After a large and steady number of redundancies in recent years (2,500 in all), it is now comfortable with its workforce size of 3,500 and will be seeking future cost reductions from non-pay costs like IT support, transportation and utility costs.

Group revenue was down by 6% at just over €1.28bn; compared to an 8% fall in the previous year. Eircom’s chief growth metric — EBITDA — showed a 1%, or €3m, annualised fall to €479m; representing a stable continuation.

Eircom also saw its total customer base rise to 2.3 million, helped by broadband clients rising by 7.5% to 718,000. It has already got a 60% share of the population with its new 4G services, has signed a new network sharing agreement with Three (replacing its existing one with O2 Ireland) which will run until 2030, at least, and has increased its fibre broadband target to 1.6m premises by the end of 2016, after suggesting its initial target of 1.4m premises will be met early.

Mr Moat said that there are early signs of commercial momentum at the company.