Saturday 10 December 2016

Eir's ownership remains fluid, but the telco's future looks brighter

Published 28/10/2016 | 02:30

Eir chief executive, Richard Moat. Photo: Damien Eagers
Eir chief executive, Richard Moat. Photo: Damien Eagers

It's only four years ago, but it's as if the country was on a different planet the day Eir entered examinership with more than €4bn in debt.

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That was in March 2012 - Ireland had been bailed out just over a year earlier - and its economic credibility was rock-bottom.

New investors in Eir, or Eircom as it was then, demanded a premium for loans to the telco.

Despite having its debt slashed by 40pc when it exited examinership, Eir's very viability was still uncertain. But as the economy's fortunes improved, so too did Eir's.

It slashed its headcount, cut costs (and is still doing so) and stuffed money into a broadband network upgrade. It even bought Setanta Sports last year.

Eir's risk profile for investors is also now much better than it was a few years ago.

That's evidenced in its ability to issue new bonds at much lower coupons, or interest rates, than previous debt had cost.

In June, Eir had planned to issue a €350m bond. But such was the interest among investors that it upped it to €500m. The debt carried a 4.5pc interest rate - less than half the rate attached to €350m of bonds sold by Eir in 2013.

But ratings agencies still classify Eir's bonds as non-investment grade. They're high yield - technically "junk bonds" - but the outlook by agencies Fitch, Standard & Poor's, and Moody's on the company's ratings is positive.

Chief executive Richard Moat has said a stockmarket floatation is still at least two years away. But how quickly things can change.

Irish Independent

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