Valentia Telecommunications, the company which owns the telecoms firm Eircom, recorded a loss of €477 million in the three months to the end of September.

The exceptional loss was recorded because Valentia paid a dividend worth €472 million to its shareholders, who include Sir Anthony O'Reilly, Soros Private Equity and Providence Private Equity during the quarter.

The accounts, which are published every quarter for Valentia's bondholders, show Valentia's operating performance is reasonably strong. The company made operating profits before tax of €34 million in the quarter, up from the €1 million profit made in the same quarter of 2002.

But revenues at the group fell to €415 million in the three months to September 2003, down from €426 million in the same quarter in 2002. The dip in revenues reflects reduced voice traffic and call costs on Eircom's network. This was partially offset by increased data revenues from internet traffic and price hikes in Eircom's line rental.

Valentia's cost of sales fell 18 per cent to €106 million in the quarter, down from €129 million in the equivalent quarter in 2002.

Operating costs fell 9 per cent to €155 million in the third quarter of 2003 due to a reduction in headcount at the firm. In the same period of 2002, operating costs were €171 million.

The accounts show interest charges rose to €37 million in the quarter, up from €27 million in the equivalent quarter of 2002.

Meanwhile, Valentia spent €100 million on capital expenditure in the three months to the end of September 2003. This is in line with its intention to maintain expenditure at €200 million per year for the next five years.