TELECOMS: EIRCOM HAS told its lenders that its earnings before interest, tax, depreciation and amortisation (Ebitda) declined sharply in the second half of 2011.
“As expected, the estimated consolidated Ebitda for the six months through December 2011 shows a significant reduction in performance compared to the corresponding period in 2010,” it said in a statement yesterday.
The company did not reveal the level of the decline or the actual Ebitda number for what is the first half of its financial year.
However, it was revealed last year that Eircom’s business plan forecast that its Ebitda would fall to about €550 million in the 12 months to the end of June 2012 from €699 million in the previous year.
The statement yesterday suggests that the actual figure could be lower.
Lenders were given an update on Eircom’s business plan out to June 2017 as per a provision in their covenant waiver.
Eircom added that the ability of cost control measures to compensate for declining revenue was “diminishing”.
“Consequently, the company has revised downward its forward forecasts through June 2017 to reflect the changing environment and business prospects,” Eircom added.
The reduction in earnings is largely concentrated in the consumer and small business segment. The company is struggling to retain mobile and fixed-line customers, while those who remain loyal are spending less on average.
The company said Eircom wholesale, Eircom business and group technology divisions continue to perform in line or slightly ahead of expectations.
The updated management plan also envisages accelerated fibre rollout, but reduced overall capital expenditure.
Eircom had cash of about €326 million at December 31st.
Eircom said it continues to “consider and discuss” proposals received from first lien and second lien lenders as part of its balance sheet remediation process aimed at dealing with its €3.65 billion net debt.
Morgan Stanley has been engaged to seeks offers for the company by mid March.
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