Eircom boss warns of more cost-cutting as revenue falls
Published 26/02/2010 | 05:00
Eircom boss Paul Donovan warned yesterday of further cost cutting at the company after group revenue declined 10pc to €465m in the quarter to the end of December and group adjusted earnings fell 5pc to €159m.
A 3pc decline in earnings before interest, tax, depreciation and amortisation (EBITDA) to €327m in the first half of Eircom's financial year came as it slashed operating costs by 13pc. Mr Donovan, who was appointed chief executive last summer, described the results, which were released yesterday, as "not a bad performance" given the state of the economy.
Last year Eircom, control of which was formally acquired by ST Telemedia last month, said it would cut 1,200 jobs from its 6,000-plus workforce over two years, and had already let more than 700 of those go.
Mr Donovan told the Irish Independent that Eircom would be scrutinising "every dimension of cost within the organisation", but declined to specify what areas could be targeted. He said there were no immediate plans to announce further job cuts, but said costs such as pay would continue to be monitored, while non-wage costs including those related to Eircom's service provisioning could also be tackled further.
Revenue, before €6m of intra-company eliminations, at Eircom's Meteor mobile arm fell 8pc to €120m in the quarter, amid one of the busiest times of year for mobile companies. Meteor's EBITDA sank 12pc to €23m. For the six months to the end of December, revenue was down 7pc to €239m and EBITDA was 6pc lower at €51m.
Although at the end of December Meteor had 12pc more post-pay customers than it did a year earlier, its revenue from post-pay customers was down 14pc to €31m in the last quarter. Post-pay customers usually spend more than pre-pay subscribers. Pre-pay revenue declined 6pc to €79m. Meteor had 156,000 post-pay customers at the end of December and 930,000 pre-pay.
Eircom said the average monthly revenue per user from Meteor customers fell 10pc to €34.97 in the six months to the end of December. Mr Donovan said the Meteor business remained "pretty well positioned" within the market. The number of its landlines in use around the country fell 5pc to just over 1.5m in the six month period. Eircom also said it had done a deal with unions regarding the pension scheme deficit.