Eir seeks ratings upgrade to spur fresh talks with lenders

Eir will seek talks with ratings agencies early nest year to seek an upgrade to its debt rating. This is part of a plan to secure further concessions on the interest it pays on its debt pile.

The telco, which on Thursday reported a rise in first-quarter revenues and earnings, recently repriced a €1.6 billion senior loan facility, which, together with a €51 million repayment, saved it €27 million in annual interest charges.

Huib Costermans, its chief financial officer, said it had no more scope for balance sheet restructuring "in the short term".

“However, in early 2017 we will have discussions with ratings agencies and hope to convince them to move us up a notch. This could be the trigger for renewed discussions on our bonds.”

He said a ratings upgrade would not automatically trigger discussions with its lenders, but the company would push for talks.

The company is close to announcing a number of new board appointments to reflect the arrival on its share register of Singaporean outfit GIC. Chief executive Richard Moat said the board changes would reflect that Eir was now in the grip of three major shareholders, including Anchorage and Davidson Kempner.

He said news last week that Anchorage has taken a majority of the voting rights would not impact on the ongoing board renewal process.

Increased earnings

Eir has reported increased earnings and revenues for its first quarter until the end of September. Earnings before interest, taxes, depreciation, and amortisation (ebitda) were €122 million, up 1 per cent, while revenue increased 1 per cent to €327 million.

Mobile revenues fell 2 per cent due to discounts given to customers bundling with fixed-line services.

Mr Moat said it was a positive set of results, with the company remaining on track to meet its full-year guidance.

"We are firmly committed to our investment in fibre, particularly our rural 300,000 rollout programme which will be completed by the end of 2018. This means 1.9 million homes and businesses, or over 80 per cent of all premises in Ireland, will have access to high-speed broadband in just over two years."

Mr Costermans said the results were positive even when factoring in the impact of regulatory price reductions and a weakened sterling which reduced revenue growth by €3 million. “This is a good start to the financial year, but we remain focused on delivering improved operational KPIs against the backdrop of a very competitive market.”

Operations

The company’s operations are broken into broadband, mobile and fixed-line services.

By the end of the quarter its total group broadband customer base was 867,000, a growth of 13,000 in the quarter, and 69,000, or 9 per cent, compared to the prior year period.

Wholesale broadband connections grew by 19,000 during the quarter and 80,000 for the year, bringing total wholesale broadband lines to 424,000.

Its retail broadband base decreased by 5,000 in the quarter to a total of 443,000 customers. Eir said 463,000 customers were now using its fibre-based high-speed broadband service, an increase of 35,000 customers during the quarter and 138,000 since September 2015.

Over 53 per cent of broadband customers are connected to its fibre network.

Improvement

Fixed-line net access losses for the quarter and 12-month period were 12,000 and 31,000 respectively. Eir said this was a “significant improvement” on previous losses of 16,000 and 73,000.

In its mobile business, earnings (ebitda) for the quarter decreased €2 million to €13 million. Mobile revenue (before intra-company eliminations) was €88 million for the quarter, a decrease of €3 million when compared to the same period of the prior year.

The mobile customer base increased by 6,000 in the quarter to a total of 1,066,000, driven by growth in the pre-pay area.

In fixed-line revenue (before intra-company eliminations) for the quarter was €249 million, an increase of 2 per cent. Earnings (ebitda) of €109million for the quarter increased 4 per cent year-on-year.