Rebranded Eircom is now worth 'much more' than €3.3bn
Published 17/09/2015 | 02:30
Eircom, whose name was changed yesterday to Eir, is worth more than the €3.3bn price tag placed on it earlier this year by an unnamed suitor, according to chief executive Richard Moat.
"You must anticipate that the business can grow to levels beyond that," he said, speaking after Eircom unveiled a €16m rebrand that's the biggest by any company in Ireland in about 20 years.
The Eircom name has existed since 1999, when Telecom Eireann was rebranded ahead of its stock market flotation. The new brand was designed by London-based agency Moving Brands, whose clients have included the likes of Netflix, Google, Sony and Hewlett-Packard.
Mr Moat said that the company's biggest shareholder - New York-based private equity firm Anchorage Capital - is fully supportive of the group's current strategy, which has included significant capital expenditure in order to roll out high speed broadband around the country.
Anchorage Capital now owns close to 40pc of Eircom, having snapped up a 25pc stake from Blackstone (GSO) in May.
"Anchorage are now our largest shareholder," said Mr Moat. "They were there for many years before that. We know them very well. They're pursuing exactly the same strategy that GSO was in terms of supporting the continuing, significant investment which we need to make in the company."
Eir has invested €1bn in its business over the past three years and will spend a total of €2.5bn over a 10-year period, according to Mr Moat.
"All that that cash has been made by the company," he added. "Our debt position has not changed for three years. Everything that we've done, all of the investments that we've made, the cost of the rebranding, has come entirely out of the cash generated by the business. We're self-sustaining as a business in cash terms."
He said an improved service to customers has created a "much more stable company with a much better future".
Mr Moat also said that the name of the group's Meteor mobile brand will not be changed. Eir also unveiled a new, super-fast broadband product called Eir Extreme.
A planned €3bn stock market flotation of Eircom was pulled last year, a move that prompted the departure of its then chief executive Herb Hribar. Mr Moat, who had been chief financial officer, then took over the reins.
Its private equity shareholders preferred to wait for an improvement in the telco's trading.
The proceeds of that initial public offering (IPO) had been earmarked to pay down Eir's €2.3bn net debt.
"The only circumstances in which we would IPO is if we use the proceeds of an IPO to reduce our debt," according to Mr Moat. "If you have leverage of over three times, then people won't buy it. Our leverage today is about 4.5, so we would have to use the proceeds of an IPO to reduce our debt in order to reduce the leverage to three, so it would be viable. That was the case last year and I'm sure it will be the case in the future."
Recently released results showed that Eir's revenue was flat at €1.26bn in the 12 months to the end of June, while earnings before interest, tax, depreciation and amortisation (EBITDA) was 3pc higher at €481m. In the three months to the end of June, it reported the first quarterly revenue increase in seven years, with the figure rising 5pc to €325m, while EBITDA climbed 12pc to €135m.