EIRCOM’S revenues declined by 9 per cent in the six months to the end of December as its fixed-line and mobile businesses felt the full force of the recession.
However, the company said it had reached agreement with its trades unions on a series of measures that would eliminate its €407 million pension deficit. It also managed to trim its cost base by 13 per cent to €606 million during the period.
This meant that group earnings before interest, tax, depreciation and amortisation declined by just 3 per cent to €327 million. The company recorded an operating profit of €75 million at the end of December, compared to a loss of €575 million a year earlier.
Group turnover declined to €933 million in the period, from €1.03 billion a year earlier. Eircom said its fixed-line revenues fell by 10 per cent during the six months. Its mobile turnover – represented by Meteor – was down 7 per cent.
The reduction in mobile revenues was in spite of an increase of 46,000 in the number of subscribers in the period, which represents the first half of Eircom’s financial year. Eircom had just shy of 1.1 million mobile phone customers at the end of December.
Its average monthly blended mobile revenue per user declined by 10 per cent to €34.97. The company said this was due to the impact of new call price plans, an increased proportion of mobile broadband customers, and changes in traffic mix.
Paul Donovan, Eircom’s chief executive, told The Irish Times that the cost of acquiring mobile subscribers was high. “It’s no different to what we’ve seen with our mobile competitors,” he said.
On a positive note, Eircom said its fixed and mobile broadband customer base passed 750,000 on February 11th.
In relation to the pension scheme, Eircom has agreed to increase its contribution from 7.8 per cent to 8.5 per cent. It has also agreed limits on the future growth of pensionable pay. Eircom said the proposals would allow the scheme to “remain open to future accruals”, and were an “essential element of our plan to rebuild Eircom for the future”.
Commenting on business levels in the first two months of 2010, Mr Donovan said there had been few signs of a recovery. “It’s largely been a continuation of what we have seen in the past six months,” he added. “We’re not yet seeing any real changes from an economic point of view.”
Eircom is currently in the middle of a voluntary severance programme that will reduce its headcount by 1,200 by March 2011. Mr Donovan said the company was ahead of target, with “more than 760” workers having already left the business. “We’re pressing hard to deliver that ahead of time.”
At the end of December, Eircom employed 6,009 staff in its fixed-line business, and 768 in Meteor. Eircom’s net debt stood at €3.3 billion at the end of December. When asked whether any moves were in train to address this, Mr Donovan said: “The debt is there, it’s not an issue.”
