Post-IPO eircom reports positive outlook

2 Jun 2004

Irish incumbent telco eircom reported a return to profit before exceptionals in its fiscal 2003/04, although costs relating to its IPO in March meant that the company’s total loss widened to EUR531 million (USD650 million). The former state-owned operator was re-floated three months ago, less than three years after it was privatised, and charges relating to refinancing ahead of the IPO totalled EUR51 million, whilst venture capital investors received EUR400 million. These costs ate into eircom’s EUR23 million profit before exceptionals in the year to 31 March 2004, a turnaround on the EUR36 million loss posted the year before. Operating profits were up 39% to EUR118 million thanks to tighter margins and lower costs, although turnover was down 3% to EUR1.63 billion due to discontinued business. eircom says it plans to knock off around EUR200 million from its EUR1.9 billion debt pile and said it was committed to spending a minimum EUR150 million in the coming fiscal year. The company is planning to pay its first dividend following its fiscal half year results (for the six months ending 30 September 2004).

Since the fixed line market was deregulated at the end of 1998 eircom has seen its market steadily eroded. It is increasingly adjusting its focus to its broadband business and boasted 38,000 DSL customers at the end of March, from 3,400 the year before, equal to an 80% share of the residential market. The telco said this had reached 50,000 by the end of May and it expects its DSL customer base to exceed 100,000 by the start of 2005. The number of total access channels rose 2% to 1.997 million, whilst traffic remained steady at 13.155 million minutes and wholesale traffic rose 3% to 7.05 million minutes.

eircom, PriMetrica’s GlobalComms Database

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