1,000 Eircom workers to lose jobs in cost-cut plan

Galen

http://www.independent.ie/national-news/1000-eircom-workers-to-lose-jobs-in--costcut-plan-1656950.html

Dramatic fall in customers as owners report losses of €724m


By AILISH O'HORA

Saturday February 28 2009

UP to 1,000 workers at Eircom are to lose their jobs as the company slashes one in nine of its workforce.
Unions at the beleaguered telecoms firm will be informed of the company's plans over the coming weeks.
Babcock & Brown Capital, the Australian fund which owns 65pc of the company along with one of its affiliates, yesterday reported a loss of over A$1.4bn (€724m), mainly due to a €720m fall in the value of its investment in Eircom and its increasing pension deficit which hit €433m last year.
The other shareholder in Eircom is the Employee Share Ownership Trust (ESOT), with 35pc of the company.
Eircom is saddled with about €4bn in debt and its owners are struggling to sell off assets.
Losses
While the telecoms firm yesterday would not comment on the extent of job losses planned, the Irish Independent has learned that the owners of the company are looking for 1,000 cuts across the board where about 9,000 people, including contract staff, currently work.
Informed sources said yesterday that unions are meeting the Eircom human resources director on Monday to discuss the job losses.
It is not yet clear whether the cuts will target permanent or contract staff, or both.
It is understood that the job losses have been targeted to reduce the company's cost base, which would also make the former State telecoms firm more attractive to a potential buyer -- although this is unlikely in the short to medium term considering the global economic crisis.
The deteriorating economic environment, the loss of 41,000 fixed-line customers and a 42pc drop in fixed-line broadband numbers all contributed to a €3m drop in revenue at Eircom for the second quarter and half-year ending December.
Group earnings were €333m, down 4pc.
The dramatic loss of 41,000 retail customers, compared with 8,000 in 2007, reflects the increasing use of mobile telephony and competition in the sector.
Eircom's mobile arm, Meteor, reported revenues of €255m in the half-year, up 7pc on the same period in 2007.
The figures come at a difficult time for Eircom's owners who paid €2.36bn for the firm less than three years ago.
BCM chairman Kerry Roxborough recently told shareholders that the company has started a formal process to consider approaches received for Eircom and any future contacts in relation to the purchase of the firm.
The company is also attempting to sell off another asset, the Israeli Golden Pages, at a knock-down price.
Shares in Eircom's ultimate owner Babcock & Brown, which is a Sydney investment bank, have also been suspended as it strives to agree new lending terms.
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."
- AILISH O'HORA

BostonB

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."
- AILISH O'HORA

Eircom didn't compete even when it no restrictions. For years it offered poor value for money and profiteered and abused its monopoly of the market. They were only interested in protecting their monoploy than truely trying to bring new services to Ireland. They must have held the country back 10 years. How many years did we have to pay through the nose for ISDN is just one small example.

I have no sympathy. I'm with NTL BB because eircom are unable and/or unwilling to find out why my line fails the line test. I have a much better call package with another provider, and yet Eircom must have cold called abut 20 times, (until I wrote to complain) trying to get us to switch back to a worse package. They couldn't even do that right.

crawler

Firstly let me say - I feel extremely sorry for anyone who loses their job and I feel the losses in this instance are of no fault of most employees.

Ofcourse the unions are COMPLETELY wrong regarding the reasons this has happened and this is just media spin

ComReg Q3 quarterly report (latest data available)

"This quarter Eircom has made gains in its market share relative to the OAOs in both retail
narrowband and retail broadband categories"

http://www.comreg.ie/_fileupload/publications/ComReg08101.pdf (Page 13)

And how terrible it is for eircom to only have 67.4% market share, almost FIVE TIMES that of it's nearest rival.

And if ComReg are such a burden on them, maybe their CFO should not state that they enjoy a "light touch regulatory environment"

All utterly untrue and Steve Fitzpatrick should stick with the facts.

This antiquated view of - "It would be much nicer if we could return to a cosy monopoly please with 100% market share - then we can increase prices nicely. Oh and while we are at it could you rid the world of those pesky Mobile companies, Cable operators and LLU providers...." is so out of date for today's environment.

If you read the BCM report, they actually state that many of the PSTN losses were offset by WLR gains - and as WLR is retail minus 14% the impact is minimal.

Eircom is in trouble because

BCM overpaid for it and Senior debt due in 2014 - Impairment charge and servicing the debt
The Company maintained old ways in a new world - protectionism
Did not embrace wholesale as a revenue generation channel -Wholesale = competition = evil
Pension deficit

thebman

There is feck all competition. Line rental is massive and the cost of service low so eircom get most of the money from the resellers of their services.

People are running away to any alternative even if it means a decline in service because their service costs so much.

They have also not invested to the point that even mobile services look competitive to their services. Eircom are due to enable my parents exchange this year and I asked my father just last weekend would he switch and he said no because he O2 was more than what he needed and was cheaper.

Now I know the problems with mobile technology but we are right beside the O2 mast and can use it for VOIP and gaming and everything most of the time as it isn't a busy area either. Parents are getting 1Mbps at peak times and higher off peak for 20 euro a month so why would they pay for eircom's services?

Why would anyone that just browses the web and checks email use eircoms services over their rivals who are cheaper and in many cases offer faster speeds.

ninjasurfer1

I heard today that eircom staff were being told they have to take a salary cut of up to 10% to help the company out of trouble.

There were no guarantees about this helping to save jobs either.

If they go belly up, do the pre 84's (and the pre 95's who also pay less stamps) have to be redeployed within the Civil Service?

Sponge Bob

They will be sent off to clean the toilets in the ' bad bank ' .

croo

Sponge Bob wrote: »

They will be sent off to clean the toilets in the ' bad bank ' .

Or maybe to a "rubber room" of An Post.
http://www.independent.ie/national-news/an-post-boss-paid-8364106000-wages-for-11-weeks-work-1574935.html
Which I guess would, in a way, be going home!

moneyhead

I was in the accounts dep. of eircom for most of my workin life.. there is no money left to pay pensions..wages will be big problem end of 2010. customers are leaving in 1000s .. years of bad work practice and lazy employes take there toll..standard workin hours for average worker out in the vans 25 hours per week..last straw was when they lost a major broadband contract ..they have bled the company dry ..millions in overtime that doesent happen e.c.t..the west of ireland is the worst as the paper work shows..jobs for the boys..well boys all good things come to an end.. there is no money even to pay yous off.:mad::mad::mad:

ninjasurfer1

moneyhead wrote: »

I was in the accounts dep. of eircom for most of my workin life.. there is no money left to pay pensions..wages will be big problem end of 2010. customers are leaving in 1000s .. years of bad work practice and lazy employes take there toll..standard workin hours for average worker out in the vans 25 hours per week..last straw was when they lost a major broadband contract ..they have bled the company dry ..millions in overtime that doesent happen e.c.t..the west of ireland is the worst as the paper work shows..jobs for the boys..well boys all good things come to an end.. there is no money even to pay yous off.:mad::mad::mad:

Is it not 'cos of the pre 84 and pre 95 (i.e. bluebook agreement)that they cannot get rid of a lot of "Bad work practise and lazy employees"?

From my understanding of it, on a high level, comreg won't allow eircom reduce its line rental due to it's cost base of which staff headcount forms a major part. As such, until they can get rid of a lot of the "jobs for life" brigade, they won't be allowed reduce their line rental, which i presume they would want to do to get more customers back.

SkepticOne

ninjasurfer1 wrote: »

From my understanding of it, on a high level, comreg won't allow eircom reduce its line rental due to it's cost base of which staff headcount forms a major part. As such, until they can get rid of a lot of the "jobs for life" brigade, they won't be allowed reduce their line rental, which i presume they would want to do to get more customers back.

So have Eircom made formal requests to ComReg to reduce line rental? This would be a major change from the past were Eircom repeatedly requested line rental increases to the extent that line rental became the most expensive in the world.

SeaSide

SkepticOne wrote: »

So have Eircom made formal requests to ComReg to reduce line rental? This would be a major change from the past were Eircom repeatedly requested line rental increases to the extent that line rental became the most expensive in the world.

Is there not some kind of mythical basket containing line rentals and call charges. So call charges can fall and line rental can go up in return. Which is what has happened.