Broadband take-up rate collapses

THE rate of broadband take-up in Ireland has collapsed, according to figures published yesterday by Eircom.

The fixed-line phone operator said only 26,000 broadband connections had been registered so far this year. This works out at around 1,250 per week but is less than half the sign-up rate achieved late last year, when 3,000 customers were signing up every week.

Around 3,000 connections are needed weekly to meet the target of 500,000 high-speed internet subscribers by the end of 2007. But Eircom chief executive Philip Nolan said the company was still on track to meet the target.

Speaking at the publication of the company’s full-year results, which were the company’s first since its return to the Irish stock exchange last year, Dr Nolan said new broadband customers would need to be tempted by better products and lower prices and that more people needed to be convinced of the benefits of signing up. He added that new broadband products were in the pipeline but gave no details.

Eircom’s results were broadly in line with market expectations, as turnover fell 2% to €1.6 billion in the year to March. The company reported a pre-tax profit of €52 million after a bottom-line loss of €89m last year. Operating profits, which exclude hefty interest payments on the company’s €1.9 billion net debt, surged ahead by 50% to €179 million.

Dr Nolan said the fall-off in revenues was in line with expectations. It was driven by a 10% fall in voice revenues, which tumbled to €538 million as customers shunned fixed-line phones to make more calls with their mobiles. But higher line rental and access charges cushioned the blow and surged 14% to €557 million on the back of an 8% hike in line rental charges that was approved by the telecoms regulator.

Last year was the first time Eircom made more from line rental than from voice calls.

The company made no comment on the upcoming sale of mobile operator Meteor but reiterated its commitment to re-entering the mobile market, which it exited in 2001 with the sale of its Eircell subsidiary to Vodafone. It is expected to bid for Meteor but is also in talks with other operators and may become a so-called “virtual operator” that will offer a mobile service under its own brand but using the infrastructure of an existing operator.

The company will pay a final dividend of 6c per share, bringing dividends for the year to 11c. Eircom shares fell 4% yesterday.