Eircom warns on debt as profits drop

bealtine

http://www.rte.ie/business/2010/0831/eircom.html



Telecoms company Eircom has reported a fall in underlying profits for the year to the end of June after drop in revenue. It has also said it is looking at how to tackle its high debt levels.

Eircom's adjusted earnings before interest, tax, depreciation and amortisation were €669m, down 3.3%, while revenue dropped 8.5% to €1.8 billion.

The company lost 70,000 landline customers in the year, but the number of broadband and mobile customers have continued to grow. Lower prices meant revenue and profits at the Meteor mobile business fell, however.


Since March 2009 staff numbers have fallen by more than 1,500. Chief executive Paul Donovan said Eircom had made progress in reducing costs, but much more needed to be done as its revenues remained under pressure. Eircom is in talks with unions in an effort to cut labour costs by another €90m over the next three years.

The company also warned that its debt remained very high and the absence of action could lead to its breaching its financial agreements in the next 12-18 months. Eircom said it was reviewing its options to address this issue.

bealtine

Full report here : http://investorrelations.eircom.net/pdf/ERC_Ireland_Finance_Ltd_4th_Quarter_and_Twelve-month_results_report_to_30_June_2010.pdf

watty

Mobile is shooting the legs off the fixed line business.

Fixed line + calls + broadband should be cheaper than Mobile and make much more profit for same revenue as Mobile Data. I know Meteor has to "compete" with O2, Vodafone and 3, but every DSL or phone customer that goes to Meteor loses eircom profit. They simply lose more profit by those customers going to other Mobile operators.

They have obviously past point of no return on Line Rental and need to have a €19.95 bundle of Line Rental, DSL and calls. Also reduce line rental to €5 to €9 instead of €26. Otherwise there won't be a fixed line business. It would still be profitable (apart from debt) and the costs much lower than the same customers on Meteor. In case anyone has been asleep the last few years, I'd point out that eircom Mobile is rebranded Meteor, and since Meteor is owned by eircom, it makes little sense to to have the customers transferring from cheap to run Fixed line to poorer performance lower customer price but more expensive costs to operate Mobile for data and cancelling the phone line.


The current business model is doomed.

bealtine

watty wrote: »

The current business model is doomed.

The current business model is indeed doomed to abject failure. It's unsustainable that the cheapest dsl package eircom offer is "only" e47 per month and the cheapest phone only package at approx e30. This is crazy and simply leads to "substitution" especially for those who only need a phone line.

As it stands the only reason to have a fixed line is that that you can get broadband and in the cities eircom simply cannot compete in the "free" market.

The only solution is to bring line rental into line with european norms.