Monday 26 February 2018

Eir sets €34m aside to fund redundancies as profits rise

Eir chief executive Richard Moat
Eir chief executive Richard Moat
John Mulligan

John Mulligan

Telco Eir will complete its latest round of voluntary redundancies in the coming weeks, as an additional 250 people leave the business.

The company has set aside €34m for redundancy payments for the current financial year, as it continues to hone its cost base in a hugely-competitive environment.

Releasing full-year results yesterday, Eir said that its earnings before interest, tax, depreciation and amortisation (EBITDA) rose 4pc to €520m in the 12 months to the end of June, while underlying revenue was 1pc higher at €1.32bn.

Over the past five years, Eir has cut its headcount by 2,200 to 3,279, and cut its operating cost base by more than €148m a year.

The former semi-state company has witnessed a sharp improvement in its fortunes since it exited examinership in 2012, with rationalisation, investment and a recovering economy helping to revive the business. Eir is owned by investors including US firm Anchorage and Singapore wealth fund GIC.

Part of Eir's strategy has been developing its network and services to be in a position to offer triple- and quadruple-play bundles to customers in an effort to reduce churn.

Eir had 2.19 revenue-generating units per customer household at the end of June, compared to 2.06 a year earlier. A quarter of its customers are now on triple- or quad-play bundles, including mobile, TV, broadband and fixed-line services. It recently retired its Meteor mobile brand, bringing it under the Eir banner, in a further effort to boost bundle sales.

"It's been part of our major strategic thrust to get as many people as possible on to bundles," Eir chief executive Richard Moat told the Irish Independent. "We've got 25pc of people on triple or quad-play bundles and that's going up every quarter. The more products people take from us, the longer they stay with us."

He said that in some European countries, 80pc of telco customers avail of triple or quad-play bundles. Mr Moat said that within three to five years, it's feasible that Eir will have more than 50pc of its customer base availing of triple or quad-play bundles.

About 18 months ago, Mr Moat told the Irish Independent that a stock market flotation of Eir would be "at least" two years away. A €1.29bn equity valuation was placed by Eir on the company last year.

"An IPO (initial public offering) is always a theoretical possibility, but we're concentrating on improving the operational performance of the business. We made 4pc growth in earnings this year, and we want to continue that kind of level of growth going into the future."

At the end of June, Eir had total gross debt of €2.3bn. Its interest bill has been slashed via various refinancings. Chief financial officer Huib Costermans said Eir has no further refinancing immediately planned.

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