Eircom posts stable 1Q results despite ‘difficult and uncertain economic environment’

26 Nov 2010

Ireland’s former monopoly operator Eircom today posted its financial results for its fiscal first quarter ended 30 September 2010. The telco said group revenue reached EUR442 million (USD589.5 million), down 6% on the corresponding period of 2009, while group adjusted EBITDA of EUR168 million was unchanged year-on-year. Eircom’s operating costs of EUR274 million were down 9% it said, reflecting lower pay and non-pay costs – largely resulting from cost saving initiatives and lower interconnect costs. The group posted CAPEX cash outflow of EUR49 million, compared with EUR92 million in the year earlier period, due to timing of cash flows and the conclusion of a number of large scale capital programmes. Fixed line revenue, before intra-company eliminations, fell 5% year-on-year to EUR347 million on the back of lower voice traffic and PSTN volumes, and higher bundle discounts. The operator registered a net loss of 20,000 PSTN lines for the quarter ended 30 September 2010, closing the period with 1.128 million retail PSTN lines and 324,000 wholesale lines. Nevertheless, fixed line EBITDA edged up 4% to EUR144 million, thanks in part to the impact of ongoing cost saving initiatives.

Despite a dip in fixed line connections in the first quarter, Eircom’s broadband division performed solidly. The unit reported 1,000 net additions for retail DSL customers, while the number of LLU wholesale DSL customers increased by 16,000 connections, offsetting a 14,000 net fall in wholesale DSL lines. As at 30 September Eircom boasted a total of 695,000 DSL customers (excluding LLU), including 497,000 retail DSL customers, up from 673,000 total lines as at 30 September 2009. Wholesale LLU customers stood at 38,000 at the same date, up from 24,000 a year earlier.

In the mobile sphere, Eircom’s cellular arm Meteor booked revenue of EUR108 million (excluding intra-company eliminations), which was 9% lower than for the year-ago quarter, due mainly to lower ARPU. Mobile EBITDA stood at EUR24 million in the July-September 2010 quarter, compared to EUR28 million previously, due to lower revenue, partially offset by lower operating costs. Meteor reported a net loss of 7,000 subscribers in its fiscal first quarter to 1.036 million – despite adding a net 4,000 mobile broadband customers. Of the total, post-paid customers stood at 162,000, representing 16% of the subscriber base. Mobile broadband customers reached 45,000, compared with a total of 28,000 for 30 September 2009. Eircom said blended monthly average revenue per user (ARPU) fell 10% year-on-year to EUR32.32, impacted it said by more competitive call price plans, MTR reductions and changes in traffic mix.

Commenting on the Group’s performance, Paul Donovan, CEO of Eircom, said: ‘Eircom continues to manage its business in a difficult and uncertain economic environment. EBITDA remained steady for the quarter at EUR168 million, but revenue pressures remain across all areas of the business offset by continued progress on cost reduction. Pay and non-pay costs fell 9% on the corresponding quarter in the previous year.’

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