Eircom quarterly revenues down by 11%

bealtine

http://www.rte.ie/news/2011/0527/eircom-business.html


Eircom says it continues to see trough trading conditions. It says that it is compliant with all its financial covenants to the end of March, it said it was likely that it will breach those covenants with its lenders within the next three months.

Revenues for the third quarter to the end of March fell by 11% to €455m from €407m, while earnings before interest and tax fell by 6% to €170m from €160m the same time last year.

Eircom, majority-owned by Singapore Technologies Telemedia (STT), in March warned of a significant risk of a covenant breach within three to six months and said it would talk to shareholders about possibly injecting new equity. Its net debt stood at €3.75 billion in December.

'It is imperative that we accelerate the discussions with our lenders and shareholders about how we manage a potential breach,' chief executive Paul Donovan said.

'We will need to put the company on a sustainable footing with regard to a future financial structure and that includes the amount of debt that we have on our balance sheet and the terms of that debt,' he added.

Total mobile customers stood at 1,044,000 at 31 March 2011, 2% lower than the prior year though Eircom says it did grow the number of post pay customers. The company's monthly blended average revenue per user for the quarter reduced by 14% to €28.30 cents.

In the fixed line business, revenues fell by 9% from the same time last year, while DSL broadband retail customers fell by 9,000 to 491,000 by the end of March.

Eircom says it still believes that the economic and competitive environments are unlikely to improve in the near term.

'Despite sustained progress to reduce operational costs, the underlying fundamentals of the Irish economy and intense competition continue to create trading challenges for the group across both our fixed and mobile segments,' Eircom's chief executive Paul Donovan said.

'This quarter demonstrated the impact of additional personal taxation changes on our customers as well as the impact of regulation on the business in the form or reduced mobile termination rates,' he added.

The company also said this morning that it will launch the iPhone 4 here in the coming weeks through its Meteor and eMobile brands.

drunkmonkey

What would it mean for Eircom if they did breach a covenant? Would we see parts of the company sold off? I doubt they would call in the debt as it's too large.

paulm17781

bealtine wrote: »

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In the fixed line business, revenues fell by 9% from the same time last year, while DSL broadband retail customers fell by 9,000 to 491,000 by the end of March.

Is this a first time they've seen a decline? I would imagine this is mainly due to UPC but it's really not looking good for Eircom if they're beginning to lose DSL customers now.

sgb

paulm17781 wrote: »

Is this a first time they've seen a decline? I would imagine this is mainly due to UPC but it's really not looking good for Eircom if they're beginning to lose DSL customers now.

You are 100% correct, retail customers are now looking for higher speeds and UPC seem to be responding to the market. It is only going to get worse for Eircom and the future looks grim

watty

Customers are looking for higher speeds OR cheaper or both.

A significant number of people go for Mobile even though it's inherently x100 more expensive to provide it's sold about 1/2 the price of eircom if you cancel your line. Subsidised by voice calls.