Eircom set to scale back its eMobile operations
TV service will take on UPC and Sky
Published 24/02/2013 | 04:00
Eircom is planning to slim down its eMobile operations as part of its €1.6bn expansion plan involving the rollout of new technology and services.
The eMobile operation is likely to be downgraded from a standalone business to mere branding for the mobile part of its "quad play" offer due in September.
"When eMobile was launched it was meant to be an upmarket premium brand. Now we'll market it more as a proposition rather than a brand," said Eircom chief finance officer Richard Moat. "It'll be less of a distinct brand."
Eircom is preparing to park its tanks on the lawns of both Sky and UPC with the launch of its new television service in september. Chief executive Herb Hribar told the Sunday Independent that the company was in negotiations with studios and television companies over acquiring rights to channels ahead of the launch.
The TV service will be at the forefront of Eircom's drive for new customers as it will be part of a "quad play" offer, which will provide landline, broadband, mobile and TV in one bill. Hribar said the TV package would compete at "the value end" of the market.
The new service will include the likes of Netflix and iTunes movies.
Last week, Eircom reported second-quarter results showing sales dropping by 6 per cent to €361m. Hribar indicated the telecoms company would suffer one more grim quarter before stabilising. It is staking its growth plans on the provision of new services to win back customers. Eircom is spending €400m this year as part of its €1.6bn investment over six years to ramp up its Irish service. This major investment will be funded from cashflow, according to Moat. "We had €227m in cash at the end of the last quarter. We'll have plenty to run the business," he said.
Eircom, which is owned by around 100 lenders ranging from hedge funds, banks and giant private equity group Blackstone, went through the State's largest ever examinership last year as lenders took a 40 per cent haircut on their loans. Recently, tranches of Eircom debt were traded at 87 cent in the euro.
However, the company has ruled out any major corporate activity for the next year. There may be some movement on debt in 2014 when a debt-equity "staple" agreed by the lenders expires.
Meanwhile there will be one major disposal. "We're going to initiate the sale of the PhoneWatch business," said Hribar. "It's not a core asset." Proceeds from the sale – first revealed by the Sunday Independent – will be used to pay down debt. Investment bank Rothschild is handling the sale. Eircom remains tightlipped about valuations, other than to confirm that PhoneWatch is profitable. The sale is expected to complete in the summer.
The transition from a landline telephone company to something more 21st Century continues apace. Eircom's cloud business has won some big contracts and now hosts Amazon's node for Europe.