Eircom revenues fall €3m due to slump in DSL and retail subscribers

bealtine

http://www.siliconrepublic.com/news/article/12380/business/eircom-revenues-fall-3m-due-to-slump-in-dsl-and-retail-subscribers

27.02.2009
The deteriorating economic environment, a 42pc decline in DSL numbers and the loss of 41,000 retail customers have all led to a €3m drop in revenue for the second quarter at Eircom, resulting in revenues of €517m at the end of December.

Eircom said this morning that its defined benefit pension scheme has fallen to a deficit of €433m, from a surplus of €20m at 30 June 2008 and a surplus of €422m at 30 June 2007, reflecting the sharp declines in stock markets.

The company has booked a goodwill impairment charge of €720m in the current period. Group revenue for the six months was €1.03bn, in line with the corresponding six months for the previous year. Group EBITDA was €333m, down 4pc.

In the fixed-line segment, the group added 46,000 DSL broadband customers during the first six months of the financial year, down 42pc on the prior period.

During the period, Eircom lost 41,000 retail telephone customers, compared with 8,000 in the corresponding period last year.

Meteor mobile revenues were €255m in the half year, up 7pc on the corresponding period. EBITDA at Meteor was up 6pc to €57m, despite mobile subscriber growth declining 44pc year-on-year at 49,000.

Cash capital expenditure for the first six months of the year was €197m. Eircom has invested approximately €900m in capital expenditure in the past two and a half years.

The company said it is progressing with the construction of Meteor’s 3G network. It will be launching Meteor’s commercial 3G services in the greater Dublin and Cork areas next week, and in major towns across the country during 2009.

DSL broadband services are now available on more than 1.4 million telephone lines. Over 245,000 Eircom Retail customers are now getting speeds of 3Mbps or faster.

The company said that Tetra’s radio network for Ireland’s emergency services is now ready for launch in the Dublin region, and will extend across the country in the coming months.

Eircom’s former managing director of retail, Cathal Magee, has been appointed acting CEO following the departure of Rex Comb.

“Despite the deepening economic crisis and the pressures that this will bring for our business, we are confident that Eircom has the scale, resilience and depth of capabilities to offer our customers competitive products and services over the highest quality fixed and mobile networks,” Magee said.

“The investment we have made over the past few years will serve us well. We now need to focus on reducing our cost base to underpin our competitiveness going forward in these difficult economic conditions,” Magee added.

By John Kennedy

watty

http://www.irishtimes.com/newspaper/frontpage/2009/0227/1224241894622.html

The line rental is too high.

Mobile "Broadband" packages are subsidized by voice calls, so we have people leaving DSL for 3G/HSDPA as the service costs 1/3rd of Line Rental + DSL. But in reality the costs of DSL on existing phone line are about 1/100th to 1/1000th of 20Gbytes a month on 3G/HSDPA and a ten times better service.

We have lines per houshold dropping from over 82% to less than 68% because of cost of line rental.

Mobile Infrastructure is much more expensive than eircom's lines, yet 50 mins of calls costs only €15 on Mobile.

eircom and repeated debt increasing buyouts are to blame. Not the recession.

Mobile pentration is 120%, no wonder "mobile subscriber growth declining 44pc year-on-year at 49,000".

Mr Magee, it's not your "costs" that are the problem (other than servicing your 4.7Billion Debt), but lack of investment and high prices driving away the customers. Concentrate on reducing prices, better service and services and investment.

bealtine

watty wrote: »

http://www.irishtimes.com/newspaper/frontpage/2009/0227/1224241894622.html

The line rental is too high.

Concentrate on reducing prices, better service and services and investment.

The law of diminishing returns seems to be coming into effect here. If line rental prices were reduced to the EU average people would probably take on phone lines again.

Is it better to sell 10 widgets at €50 or 30 widgets at €25? I know which I'd prefer:)

I suppose that is why NTL are trotting out the ads for "broadband for only x per month and you don't have to pay line rental".
It seems obvious to me that the DSL competition is essentially saying "your products are too expensive"

Sponge Bob

The 'New Business' has dropped precipitously SINCE that reporting quarter which is why Cathal Magee promised a focus on cost reductions .

Eircom are therefore meeting the unions next week

Agenda

10% Pay cut for all eircom employees across the Board
4 day week for all engineering staff save those on core network
4 day week for a number of office staff

.... meaning that an engineer on 60k a year now will drop 10% and then go on a 4 day week which amounts to a 25% + drop in salary until new business picks up . eircom are not redeploying them to fix the crummy network up .

eircom will miss their 3g coverage targets by a mile this year but Comreg will do nothing about it

ninjasurfer1

Sponge Bob wrote: »

The 'New Business' has dropped precipitously SINCE that reporting quarter which is why Cathal Magee promised a focus on cost reductions .

Eircom are therefore meeting the unions next week

Agenda

10% Pay cut for all eircom employees across the Board
4 day week for all engineering staff save those on core network
4 day week for a number of office staff

.... meaning that an engineer on 60k a year now will drop 10% and then go on a 4 day week which amounts to a 25% + drop in salary until new business picks up . eircom are not redeploying them to fix the crummy network up .

eircom will miss their 3g coverage targets by a mile this year but Comreg will do nothing about it

Spongebob, where did you hear that?

smellslikeshoes

Eircom really are in a bad position now, I'd imagine with the current economic conditions people dropping the phoneline is going to snowball especially since UPC are adversing hard and rolling out at a decent rate.

I live in the sticks and having a phoneline is my only decent option for broadband but I'd be rid of it in an instant if I was living in a town with decent competition since everyone in the family has mobiles.

In my eyes Eircom are on the road to ruin.

Sponge Bob

Phone connections are dropping like flies , they have a promotion right now for free line connection ( including cabling if required) . This is unremarkable in itself except for the bold bit which is a new one on me .

eircom Residential PSTN Standard Connection Promotion
Promotional Period : 23rd February to 22nd May 2009 (inclusive)
Promotional Connection
Offer
Standard Connection Exchange line zero
(where connectable linework is not fully insitu or pending available and
manual technician intervention is required)
Residence Removal of Exchange Line
Standard Connection Exchange line zero
where connectable linework is not fully insitu or pending available and
manual technician intervention is required)
1. The offer applies to Residential Standard PSTN Connection and Residential Standard PSTN Removal Orders received during the promotional
period. A maximum of one order per account may avail of the promotional offer.
2. The offer applies to Residential Accounts only. The line must be retained on a Residential Account for a minimum period of six months. If the
line is transferred to a Business Account, or ceased and then re-instated on a Business Account, eircom reserves the right to apply the Standard
fee of €107.43 (ex VAT).
3. Normal line rental charges will apply.
4. eircom reserves the right to withdraw this offering by giving relevant notice in accordance with normal requirements.
5. Usage of eircom PSTN service is deemed to be acceptance of the eircom general Terms and Conditions of telephone service.

6. A Standard PSTN Connection is one where the telephone service cannot be activated

Another remarkable bit is that they are so desperate for new BB customers that !!!

http://www.boards.ie/vbulletin/showthread.php?t=2055499557

eircom second line bargain alert
If you are within 5 miles of a BB enabled exchange but can't get DSL you can now ring eircom and get a second phone line for FREE (normally €121)

NOTE: you will have to pay line rental for the 2 lines but once you get BB up and running you can cancel your old line and move your number across (takes 1 phone call)

you must ring 1901 and order it before the end of march to get it free

And what is even more remarkable than all that is that they did not publish this in the telecommunications scheme here and you can only go with eircom ....it is not a wholesale product . They know that Comreg will do nothing anyway .

http://www.eircom.ie/About/Activities/internet_special_offer.pdf

bealtine

Sponge Bob wrote: »

they did not publish this in the telecommunications scheme here and you can only go with eircom ....it is not a wholesale product . They know that Comreg will do nothing anyway .

So no change there then (with Comreg) still staying true to form...
Even when regulators across the EU are coming under pressure, Comreg go
and hide?

Sponge Bob

Starting last year eircom have been introducing products in the knowledge that Comreg will do nothing ...well they did bleat about one of them a few weeks back

'Special' Line Connection offers and tie ins to eircom bundles
Eircom Talktime bundles with Meteor tie ins
Vodafone @ Home which is a special Bitstream/Talktime bundle available only to Vodafone and nobody else .

Comreg pretends not to notice . The country is ****ed

ninjasurfer1

ninjasurfer1 wrote: »

Spongebob, where did you hear that?

I ask again:spongebob,where did u hear about the wage cuts? Is it speculation or do u know something for definite? My brother works there and has heard nothing about this (despite rumours abounding).

mumhaabu

I have rumours of this also but I believe nothing will happen as the CWU is a pretty powerful union and with the ESOP I cannot see anything changing for the Eircom workers. If something is tried they will quickly bring the network down crippling the countries Telecommunications infrastructure which would see the comapany quickly backing down.

Sponge Bob

I heard they will try it on with the CWU not that it is a done deal .

The ESOP is mainly comprised of EX eircom staff not current eircom staff, so get real.

Blaster99

This is a pretty funny quote:

Yesterday, unions representing Eircom said they were appalled at the company's financial situation.

Commenting on the figures, Communications Workers Union general secretary, Steve FitzPatrick said he was "appalled but not surprised" at the gravity of the financial situation now facing Eircom and its workforce.

He added: "The reckless promotion of competition at all costs by ComReg and the Department of Communications Energy and Natural Resources, together with restrictions placed on Eircom's ability to compete, has resulted in a serious haemorrhaging of its customer base to a point where it lost 41,000 customers in the six months to December 31 last."

watty

The CWU needs to study economics, ComReg and the Telecom Industry in Ireland. That's not funny at all.

eircom would have 140,000 to 200,000 extra customers if they had rolled out the DSL they have to day 5 years ago and reduced line rental.

In fact it is a lack of real competiton, poor regulation and short-sighted short term revenue policies (delaying DSL to protect diallup internet and high line rental) that have caused this. Instead of fixing what is broken (services & prices) they are going to cut back maintenance, investment and costs generally, digging their hole deeper. The servicing of 4.7 Billion debt is the most major cost, a cost created and increased by each group of investors purchasing the company. That shows a flaw and lack of Financial regulation that a major infrastructure can be repeatedly asset stripped and laden with progressively more debt on each take over.

Without the artificial debt and high line rental (now needed to pay the Debt!) eircom would be the most profitable and fast growing ISP and Telco in Ireland. Instead they are a millstone round all our necks.

bealtine

Blaster99 wrote: »

This is a pretty funny quote:

That's utter nonsense but what else would you expect from a bunch of money grubbing clueless types?
Rex Comb himself has pointed out on numerous occasions eircom have benefited from "light touch regulation". You can't have your cake and eat it...
Either you benefit from the highest line rental in the EU or you don't.

It has to be said though I think that overall Rex did a good job and I wish him well back down in the Antipodes. Hopefully he finds people of vision down there, unlike here.

thebman

At least he was honest. He pretty much said that eircom were just doing what any private company would do with their market position.

He said this on programs where Comreg wouldn't even turn up to represent the public and where there was nobody really to counteract any nonsense lie defense he could have put up. He choose told it like it was and he probably did more to improve services than the regulator has since it was created.