Eircom Preliminary Annual Results to 30/03/06 . Specumalation Starts Now !

Sponge Bob

http://investorrelations.eircom.net/news/rns_168.htm

and in detail

http://investorrelations.eircom.net/pdf/eircom_preliminary_results_2006.pdf

half of their 'profit' derived from asset stripping , aka property sales .

anyone else see anything of note .

dahamsta

http://today.reuters.com/business/newsArticle.aspx?type=telecomm&storyID=nL15300587

dahamsta

ENN get something right for a change! (CTRL+F for 'mulley'.)

http://www.enn.ie/news.html?code=9687062

damien

Christ, they don't even need to ring me at this stage. "Damien Mulley was unavailable for comment but if he was he'd more than moan about the following:"

Sponge Bob

Ken Shabby wrote:

ENN get something right for a change!

That DSL coverage figure is 57.75% of households as I clearly explained here.

eircomtribunal

Sponge Bob wrote:

http://investorrelations.eircom.net/news/rns_168.htm

half of their 'profit' derived from asset stripping , aka property sales .
anyone else see anything of note .

Do I read those bits about depreciation and investment correctly?
On page 13 Eircom says:

Depreciation increased by 7% in the financial year ended 31 March 2006, ... partially offset by reduced(!) capital expenditure in recent years and the impact of assets which are now fully depreciated.

And on page 16 depreciation is declared at 318 million for 2006 (up from 296 million in 2005)

On the investment side Eircom says on page 14:

During the financial year ended 31 March 2006, we made payments in respect of capital expenditure, of 233 million, compared to 182 million in the financial year ended 31 March 2005. The movement is due to acceleration of capex programmes, timing of payments and the new capex requirements following our acquisition of Meteor. Capital expenditure is used primarily to grow and renew our network's in order to improve
our services and customer satisfaction.

Does that mean:
depreciation of 318 million + investment of 233 million = asset stripping of 85 million? Plus the direct 50 million asset stripping by way of property sale.

Or is that too simple?

P.

Altreab

eircomtribunal wrote:

Do I read those bits about depreciation and investment correctly?
On page 13 Eircom says:

And on page 16 depreciation is declared at 318 million for 2006 (up from 296 million in 2005)

On the investment side Eircom says on page 14:


Does that mean:
depreciation of 318 million + investment of 233 million = asset stripping of 85 million? Plus the direct 50 million asset stripping by way of property sale.

Or is that too simple?

P.

Its like a factory that has machinary thats wearing out at a steady rate but for every €318 worth thats wearing out they are replacing it with €233 worth of new machinary. Net result at that will have have no new machinary within a few years and what they will have will be prone to constant break downs and costly repairs due to been well past their sell by date!! ERGO an even worse service than we have now.
Did you also notice that ISDN sales are up?


The 50 million are assets that are once off and gone forever when sold!!

What i think is interesting is this ........what will Esot say when in a few years time when the inevitible happens and they will have to have wholesale lay offs and shareholders (them included) ploughing hugh sums of money back into the company to keep it viable......my guess is to beg the goverement to nationalise it again!!!

All in all this results document shows the sorry state of telecommunications in this country at the moment!!

Sponge Bob

The biggest jump in expenditure was a €50m upramp in pension payments organise by the ESOT.

Thats a permanent pension funding upramp and will come out of the network budget. Nothing will be allowed to get between Biddy and her fat pension.

Mr_Man

I note that in the Business Section of todays Irish Times that Dr Phil is blaming churn (where they lose BB subscribers back to dialup) on the low cost of dialup services in the country.

Now if this true you'd have to wonder what the usage patterns for these people are if they find it cheaper to go back to (max) 56k on dialup.

M.

viking

As with all of eircom's shareholder/investor/SEC publications it is difficult to determine the exact amounts going into the core network (investment) and money going out (depreciation). All we get are total amounts as far as I can see.

The capex of €233 million eircom made this year could feasibly be broken down as €1 invested into core network and the rest on Meteor network for instance. The same applies for the depreciation charge, we have no way of knowing the breakdown of that figure into network depreciation, fleet depreciation, IT dep. etc etc etc.

One thing we do know however, and this comes from the horses mouth:

...the level of depreciation charges (a non-cash item which affects distributable reserves) in eircom (our principal operating subsidiary) currently exceeds capital expenditure and is likely to do so for the next three to four years, eircom is expected to generate substantially less distributable reserves than cash for at least this period.

Woopsie...

viking

Depreciation increased by 7% in the financial year ended 31 March 2006, ... partially offset by reduced(!) capital expenditure in recent years and the impact of assets which are now fully depreciated.

Fully depreciated assets have reached end of life in terms of depreciated value, however this may not be the market actual value of the asset but it shows in the books as zero. Depreciation is always as a percentage of the asset value so if no new assets are bought then depreciation would reduce, conversely if new equipment is bought then depreciation increases. If the assets are machinery/equipment then it probably means that the equipment is due for an upgrade.

Most likey these assets are the network and related equipment as land and buildings, for example, will be appreciated rather than depreciated in today's current market.

eircomtribunal

Altreab wrote:

Its like a factory that has machinary thats wearing out at a steady rate but for every €318 worth thats wearing out they are replacing it with €233 worth of new machinary. Net result at that will have have no new machinary within a few years and what they will have will be prone to constant break downs and costly repairs due to been well past their sell by date!!

I understand it like that, but my question is:
Could that be a wrong, simplistic or otherwise screwed conclusion from the eircom spreadsheet?
Or to ask it differently: Would the likes of BT, German Telecom etc not show up similar results (with the depreciation/investment figures) in their balance sheets?
If other incumbent telcos showed up similar figures, then our criticism of Eircom in this regard would not be sustainable.

P.

lucernarian

Are 85% of lines connected to ADSL enabled exchanges? I just want to clarify this...

eircomtribunal

To_be_confirmed wrote:

Are 85% of lines connected to ADSL enabled exchanges? I just want to clarify this...

Philip Nolan, who will soon be checking out of these shores, (please take your henchman David McRedmond with you) signs this:

Our investment in DSL Broadband is now delivering consistent growth, with around 250,000 customers today.
Currently c.85% of our lines are connected to broadband enabled exchanges, allowing around three-quarters of the population to access broadband. DSL broadband availability in Ireland is now at a comparable level to our European peers.

85% of lines originating from broadband enabled exchanges does not translate into "allowing around three-quarters of the population to access broadband". That is a lie, and Philip knows that it is a lie, and none of our journalist in RTE dares to put Eircom on the spot about this lie. And the DCMNR and the regulator are subservient enough, for their own reasons, to back up and repeat this lie.
Not to forget: three quarters of the population "allowed" to access broadband is a pretty damn poor figure – and DSL availability in Ireland is now not comparable with our European peers. (Only if Philip considers Greece, Latvia and Poland our European peers...which he might well do and change to another vulture based company soon, which prefers to scavenge on the poor sucker countries).
P.

lucernarian

The figures for lines are true. Page 13 of the Oireachtas sub ctte DCMNR progress report:
http://www.oireachtas.ie/viewdoc.asp?fn=/documents/Committees29thDail/CommitteeReport2006/sixth__report_consultantcy.doc
The Amber Programme paragraph mentions an 88% pass rate once completed... I am fairly sure that the programme is in full swing.

88% of 85% is equal to 74.8%

It is far less likely that population coverage also equals 74.8% thanks mainly to multiple business lines.

I would guess that 3/4 of the population are served PTSN by enabled exchanges. Finding out the total population who have passing lines at home can only be speculated... But it's lesss than 75% I'd say.

eircomtribunal

To_be_confirmed wrote:

The figures for lines are true. Page 13 of the Oireachtas sub ctte DCMNR progress report:
http://www.oireachtas.ie/viewdoc.asp?fn=/documents/Committees29thDail/CommitteeReport2006/sixth__report_consultantcy.doc
The Amber Programme paragraph mentions an 88% pass rate once completed... I am fairly sure that the programme is in full swing.

88% of 85% is equal to 74.8%

It is far less likely that population coverage also equals 74.8% thanks mainly to multiple business lines.

I would guess that 3/4 of the population are served PTSN by enabled exchanges. Finding out the total population who have passing lines at home can only be speculated... But it's lesss than 75% I'd say.

Simon Nugent and Sadhbd McCarthy in their report for the Oireachtas Committee rely on information about these figures from ComReg (!) and Eircom (!) and they are cautiously suggesting a 88% pass figure by, what I would think, means end of 2006.

Once this programme is completed in 2006 88% of those lines in the enabled exchanges ought to be able to access DSL services.

They are it seems not taking into account that failure rate on the smaller ones of the later-on enabled exchanges will be higher.
And line rate is, as you point out, quite different from percentage of telephone line subscribers that will have access to DSL.
While I do not know exactly how different those two figures are, I have a fair idea that the percentage of customers passing the line test is significantly lower than the percentage of lines that pass the test.
P.

Sponge Bob

eircomtribunal wrote:

I have a fair idea that the percentage of customers passing the line test is significantly lower than the percentage of lines that pass the test.

Correct. However Comreg and Eircom are sitting on the figures in the national interest (as they see it not as the real world sees it)

I explained clearly that 57.75% of households can get BB from eircom today . Piddling around witha few lines here and there may get the availability above 60% by the end of the year.

Phil Nolan confirmed this as did John Doherty in Comreg , only 75% of households are connected to a BB enabled exchange

Phil (from ET quote)

allowing around three-quarters of the population

But Phil never told us what the failure rate is at the moment.

Last year Eircom told the SEC that the failure rate or pass rate (not sure what you call it ) was such that 70% of connected lines could get BB. Now eircom are saying that by END 2006 under the amber program 88% of lines will pass. Yet there are no more exchanges to go live bar 2 or 3 small rural ones

At present all we can say for sure is

57.75% of households in Ireland can get DSL for sure.

Eircom now promise that by end 2006 the pass rate may be as high 66% of households. (88% of the 75% of households connected to a DSL enabled exchange) but no metrics proving this one way or another will be released into the public domain .

Then there is the issue that businesses tend to be in towns nearer the exchanges while peoples are more dispersed. The 66% figure aggregates Homes and Businesses but the failure rate will be lower for business. As the amber program is indeed resulting in passes since the test was relaxed in April I will , however, concede that over 60% of households in the e-Tub of Europe can now get DSL for the first time ever. Are we not such an ambitious little nation ????

lucernarian

I didn't realise that ComReg had confirmed the percentage of households connected to ADSLed exchanges. The 88% pass rate however was on All lines and as business lines are increasing the average pass rate (usually closer to the exchange) and this would mean that household availability is at most 66%, as Sponge Bob rightly said.

I found this interesting paragraph in the SE filing:

Based on internal estimates, we believe that our access network reaches approximately 99% of the population, with 99% of our customers connected to exchanges that are ISDN-enabled. As of 31 March 2005, we had 240 sites equipped with ADSL nodes, covering approximately 1.52 million working paths. Approximately 77% of paths (1.17 million) connected to these nodes would be capable of carrying ADSL at speeds from 1Mb to 4Mb. The total current capacity of our network is 2.29 million PSTN channels. The access network consists of approximately 3.7 million cable pairs. Approximately 98% of customer premises are connected to our network using copper lines, and the remainder use a mix of fibre and fixed radio. We currently have 83 narrowband fixed wireless access sites and 25 broadband radio access sites.

Seems a little bit misleading, doesn't it?

jman

Sponge Bob wrote:

Yet there are no more exchanges to go live bar 2 or 3 small rural ones

Is this really the case ? only 2 or 3. Is a list of these available anywhere ?

Sponge Bob

jman wrote:

Is this really the case ? only 2 or 3. Is a list of these available anywhere ?

The 'to be done list' a month back , together with live target dates, was as follows ( from Shamrogue )

Annacotty ACY (26/04/06)
Duncannon DCN (26/04/06)
Drumshambo DMO (26/04/06)
Glenamaddy GMY (26/04/06)
Enniskerry EKY (26/04/06)
Ballyfarnan BYF (26/04/06)
Passage East PSG (26/04/06)
Portlaw PTW (26/04/06)
Riverstown RIV (26/04/06)
Spiddal SPL (26/04/06)

Most are already live and none are 'big' and were counted in the '75% of households are connected to a DSL enabled exchange' statement made by Doherty of Comreg to the Tribune in early may and repeated this week by Phil Nolan in his annual results.

Thats the end of the DSL installation program . Whatever is left will not bring the household connected to DSL enabled exchanges above 75% except by a fraction .

Sponge Bob

To_be_confirmed wrote:

I didn't realise that ComReg had confirmed the percentage of households connected to ADSLed exchanges.

Yes, Doherty was on the defensive over the Ioffl Map and blurted it out thinking it looked better than the map

Where did you get that 1Mbit figure TBC, only last year this is what Eircom told the SEC

We have also undertaken rollout of ADSL. As of 31 March 2005, we had 240 Alcatel ADSL sites commissioned, covering approximately 1.52 million working paths. Approximately 77% of paths (1.17 million) connected to these sites would be capable of carrying ADSL at speeds from 256 kbit/s to 512 kbit/s.

Page 56 (numbered at bottom of page) and below is my source on the SEC site. 256k may get you into project Amber since it was launched in April 2006 but at the time of filing last year 256k was a fail was it not meaning that the pass rate was not 77% but a lower figure again. As amber now works the pass rate , including amber conditional passes, may be 77% now as in since April 2006 .

http://www.sec.gov/Archives/edgar/data/1088652/000104746905018471/a2160287z20-f.htm

Sponge Bob

UNike the ****e swallowed and regurgimatated by the Irish Business press when eircom pimp their results the actual hard data presented to the SEC in New York is more revealing and less obfuscated . The form 6k and is available here .

http://www.sec.gov/Archives/edgar/data/1088652/000119312506113430/d6k.htm

Juicy bits.

DSL customers increased to 230,000 at 31 March 2006 and to 250,000 customers as of 12 May 2006.

c.3000 a week incl bitstream reselllers

Revenue from access increased by 7% in the financial year ended 31 March 2006, due primarily to an increase in ADSL and bitstream revenue, as a result of increased customer demand for our low-cost ADSL service, and WLR revenue partially offset by lower line and equipment rental.

This means that every form of per minute traffic to everywhere dropped.

			                                      2005	2006		Less %
Total basic voice traffic revenue		    455	  	423	  	7
Advanced voice services traffic revenue		83	     74	            12
Total voice traffic revenue		  	      538	  497	  	8
Data traffic revenue		  	 	  	 	  	 
PSTN data		  	                          64	  	63	  	1
ISDN data		  	                           33	  	25	  	22
 		  	 	  	 	  	 
Total data traffic revenue		  	       97	  	88	  	8
 		  	 	  	 	  	 
Total traffic revenue		  	                 635	  	585	  	8
 		  	 	  	 	  	 
Traffic (in millions of minutes, except percentages)		  	 	  	 	  	 
Local		  	                                      3203	  	2942	  	8
National		  	                             1019	  	961	  	6
Fixed to mobile		  	                           1174	  	1118	  	5
International		  	                            478	  	439	  	8
 		  	 	  	 	  	 
Total basic voice traffic minutes		      5874	  	5460	  	7
Advanced voice services minutes		  	   677	  	677	  	—  
 		  	 	  	 	  	 
Total voice minutes		  	                 6551	  	6137	  	6
Data traffic volume		  	 	  	 	  	 
PSTN data		  	                           3700	  	3464	  	6
ISDN data		  	                             1352	  	923	  32
 		  	 	  	 	  	 
Total traffic data minutes		  	          5052	  	4387	  	13
 		  	 	  	 	  	 
Total traffic minutes		  	                   11603	  	10524	  9

But Hark !!!!

Data traffic
Revenue from data traffic decreased by 8% due to the decline in data minute volumes in the financial year ended 31 March 2006 partially offset by higher yields from flat rate packages. This decrease in data minutes volumes is primarily due to the continued migration of heavy data users to ADSL and bitstream.

thats nice, pseudo flat rate is a better earner then is it?

Our investment in DSL Broadband is now delivering consistent growth, with around 250,000 customers today. Currently c.85% of our lines are connected to broadband enabled exchanges, allowing around three-quarters of the population to access broadband. DSL broadband availability in Ireland is now at a comparable level to our European peers.

eircomtribunal

To_be_confirmed wrote:

I didn't realise that ComReg had confirmed the percentage of households connected to ADSLed exchanges.

Well, ComReg Commissioner John Doherty confirmed it according to the Tribune:

John Doherty of the Commission for Communications Regulation (ComReg) added: ‘It is important to realise that the 400 enabled exchanges on this map represent about 75% of the population.

Phil Nolan's quote does not, I think, say this:

Currently c.85% of our lines are connected to broadband enabled exchanges, allowing around three-quarters of the population to access broadband. DSL broadband availability in Ireland is now at a comparable level to our European peers.

He's again bullshîtting us with the fudge "allowing to access", which is Phil Nolan speak for "theoretically allowing to access, as their lines are originating from broadband enabled exchanges".
P.

P.S.: Has not Doherty said in a Last Word interview – there was once a link to the audio stream on boards – that now 90% of the population have access to broadband? Is this link/audio file still findable?

eircomtribunal

False Phil blames the Irish public for sticking with beloved dial-up.

Eircom, which has been slowly rolling out broadband services to this economically booming country of 4 million, said it now had about 250,000 broadband customers.
Analysts said this figure was disappointing and called into question Eircom's ambition to have 500,000 broadband customers by the end of the year. But Nolan rejected criticism that the company hadn't invested enough in developing broadband services, insisting that it was chiefly the case that Irish consumers were sticking more doggedly than expected to old-fashioned, dial-up Internet connections.

P.

jman

Sponge Bob wrote:

Whatever is left will not bring the household connected to DSL enabled exchanges above 75% except by a fraction .

Furbo ?

lucernarian

Like I said SB, I got it from the SEC filing. Page 55 of the August 2005 Filing.

I judged that Eircom meant that c. 77% of lines could pass the test, which was a minimum of 1 Mbit. After their "tests" (they copied BT) they increased the limit of 1 Mbit ADSL to 60 dB / 5 km. The 256 to 512 kbit part I thought was a cop-out in case that for some reason, say, poor internal wiring or a cordless phone etc., the connection would not work at 1 Mbit.

Am I right in saying that [most of] the people who got on through the Amber programme are able to connect at the full 1 Mbit?