Comment: Eircom needs more fibre to keep pace
Published 19/05/2015 | 02:30
What do Eircom's results really tell us about its prospects in the near future? Has it turned itself around?
By the standards of recent years, the results are good.
Quarterly revenue growth, even taking into account seasonal factors, is a decent achievement.
If such growth continues, as executives are guiding, confidence will increase.
The company is a lot leaner than it was two or three years ago, too, and appears to have successfully changed its focus to high-speed broadband, an area it largely ignored until it almost collapsed two years ago.
But it still has some big decisions ahead. The biggest one is whether, and to what extent, it is prepared to walk the walk in terms of rolling out fibre broadband.
That means proper fibre broadband that is piped directly into homes and businesses, not the type that only connects to old-fashioned copper phone lines from half a mile away. (Such 'eFibre' lines may be perfectly adequate for most of today's uses, but are not long-term solutions.)
Eircom would undoubtedly prefer to 'sweat' its existing infrastructure - its copper landlines - for as long as it possibly can before having to invest several hundred millions more. That would mean relying on 'eFibre' DSL copper-hybrid infrastructure.
But rival entities such as the new ESB-Vodafone fibre broadband firm Siro are set to plough ahead with a €450m investment to connect 500,000 premises to direct fibre by 2018. And UPC, whose broadband speeds are over twice what Eircom can achieve with its current technology, has hoovered up a huge percentage of broadband subscriptions in urban areas. So if Eircom is to keep pace, it needs to invest hundreds of millions in new fibre infrastructure, even if it forestalls a return on investment for shareholders.
Is it prepared to do this? So far, it has indicated that it will match fibre roll-out plans in 50 towns by the ESB-Vodafone's Siro company. And it could get a big boost if it wins the Government's upcoming National Broadband Plan tender, which is likely to prioritise fibre to 700,000 rural premises. But it needs to keep investing to keep its momentum going.