Eircom eyes IPO after steady gains

Eircom is on track to issue an IPO of its shares in the next two years after figures showed that the company’s fixed-line revenues had stabilised while sales from its mobile operations had increased.

The claim was made by analysts commenting on the latest set of figures from the company.

Eircom exited examinership almost three years ago, but its huge debt load and the need to compete against rivals after years of underinvesting meant that its prospects looked grim.

Chief executive Richard Moat said investment in the ‘quad play’ of fixed line, mobile, broadband, and television services means that Eircom has reached a significant “inflection point” in its business, with revenues steadying for the first time in years.

Revenues of €311m in the three months to March were down only 1% from a year earlier, while operating costs dropped 6% to €191m over the same period. As a result, earnings before charges increased 8% to €120m in the quarter.

“The financial performance of the group in the third quarter is highly encouraging — the business is nearing an inflection point, with fixed-line revenues flattening year on year and mobile performance strengthen-ing,” Mr Moat said.

Revenues from the fixed-line business fell 3% to €235m in the quarter from a year earlier, while mobile revenues rose 5% to €87m over the same period. Earnings from the fixed-line business in the quarter fell 2% from a year earlier to €101m, while earnings from mobile increased 116% to €19m.

Fitch Ratings analysts Stuart Reid and Anna Martinez said they were encouraged by the figures.

“We do think the Irish market is very competitive, most notably from Sky and UPC. This company seems to be dealing very well with this challenge. It is very important that they continue to make the investments in fibre [broadband],” Mr Reid said.

“And it is important that they continue to invest in television because with those two competitors it is difficult to compete without a decent television product.”

Fitch last month upgraded its key long-term default rating on Eircom to B from B-. Fitch is likely to keep its rating unchanged for the time being because Eircom’s debt load of around €2.2bn is relatively large.

Fitch said an IPO of shares remains a possibility “over a two-year horizon”, adding that such a move would allow the company to pay down debt.


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