Eircom revenue declines

Revenue at telecoms company Eircom fell in the first quarter of its fiscal year, declining 5.6 per cent to €442 million, while debts remained high.

The recession and increased competition have hit revenues at the former State company, leading it to seek ways of reducing its costs.

Operating costs at the company, which was taken over by Singapore-based STT in January, have fallen by 8.7 per cent compared with the same period last year as the company cut pay costs, totalling €274 million for the three months ended September 2010.

Eircom has previously announced plans to cut €90 million from its labour bill, and is still in talks with unions. However, it recently agreed on a restructuring programme within its technology organisation. The company has cut staff numbers by 117 since the previous quarter.

Adjusted earnings before interest, tax, depreciation and amortisation were flat at €168 million.

In its statement today, the company once again warned that net debt was still high, and if it did not take any action, it may breach some of its financial covenants within the coming 12 months.

The group currently has a cash balance of €361 million.

Eircom's debt position has been discussed in recent months, with the company warning in August that it could default on debts within 18 months unless action was taken.

Chief executive Paul Donovan said the company was managing its business in a difficult and uncertain economic environment, and revenue pressures remained across all its units.

"Management sees no signs of growth or increased spending by customers. We do not anticipate this situation to change in the near to medium term," Mr Donovan said in a statement.

"We continue to make good progress on our journey of transformation, but the uncertainties surrounding demand and disposable income make the execution of our three year plan ever more important."

The number of fixed lines continue to fall, with Eircom losing 20,000 during the quarter. Voice traffic was also down, falling 12 per cent compared to last year.

In broadband, the company said it had a total of 695,000 subscribers for its DSL service in both the retail and wholesale markets. It predicted some 280,000 customers would be using its 8MB broadband service by the end of the year, with more than one million lines upgraded for the service by Christmas.

In the mobile sector, revenues and profits fell for the quarter as average revenues per user fell. This was due to lower priced plans, mobile termination rate reductions and changes to the traffic mix. Eircom also unveiled a second mobile offering, eMobile, at the end of September, which is designed to complement the existing Meteor brand.

By September 30th, Eircom had more than one million mobile customers, with its total mobile broadband subscriber base up 28,000 to 45,000.