Bondholders get lesson in financial facts of life from CEO
Eircom chief Paul Donovan made it clear to bondholders yesterday that the company remains in need of major overhaul.
On a conference call, he told debt analysts that management "have to be confident of progress" on a number of fronts if the business is to become an "investable proposition".
Clearing the hurdle of refinancing its debt pile is the major stumbling block in the short-term.
"The days, primarily, of financial engineering are over," Mr Donovan told analysts, referring to previous ownership of Eircom where debt had been substantially increased.
"It is operational change and the transformation of the company that is going to unlock competitiveness and value," he said.
He added that Singapore Technologies Telemedia (STT) remained committed to Eircom for the long-term. "Yes, they are of course concerned about short-term trading performance and the very necessary process of modernisation that we are leading," he said.
"But equally, they are very concerned about what this business will look like in five, six or seven years' time."
But what shape Eircom will indeed take remains unclear.
Further sustained stabilisation of the company's EBITDA is certainly required and in the current environment that hasn't been easy.
Mr Donovan said that the last quarter's low 0.6pc slippage in EBITDA couldn't yet be taken as a trend.
Competition is also increasingly fierce on the fixed-side of the business, with rival UPC slowly eroding Eircom's residential fixed-line base.
Major investment in next generation broadband is required in Ireland, and neither Eircom nor STT can afford to foot the bill.
The only outfit with deep enough pockets to do that is the Government, and it's far from certain whether public funds will be made available to do so.