Business Irish

Tuesday 11 December 2018

'Difficult' to see Eir reversing its broadband decision: Moat

Eir chief executive Richard Moat. Photo: Chris Bellew/ Fennell Photography
Eir chief executive Richard Moat. Photo: Chris Bellew/ Fennell Photography
John Mulligan

John Mulligan

Eir chief executive Richard Moat has said "it's difficult to see" how the company might be persuaded to re-engage with the crisis-struck National Broadband Plan.

New accounts also revealed that Eir spent €12m preparing the sale of a near 65pc stake in the business to NJJ and Iliad, firms linked to French billionaire Xavier Niel. NJJ is Mr Niel's investment vehicle, and will own 32.9pc of Eir.

Stock market-listed telecoms firm Iliad was founded by Mr Niel and he owns 52pc of the firm. Iliad will hold the remaining stake being sold in Eir in a €650m deal.

The results come after Eir dramatically pulled out of the race this week to secure the State contract to roll out a €1bn-plus rural broadband network.

Mr Moat said the process have become "onerous" and would cost Eir too much.

"You can never say never," Mr Moat said when asked by the Irish Independent if the group could become part of the process again.

An Enet-SSE consortium is the only remaining contender for the National Broadband Plan contract.

"Under present circumstances, it's difficult to see how that would make sense for us," said Mr Moat.

"There were a number of very onerous aspects of the proposed contract that we couldn't live with," he said.

"For example, the need to establish a completely duplicate wholesale division… would cost tens of millions and wouldn't make sense.

"The overarching investment environment for fibre given the potential changes to regulated wholesale rate is not looking that attractive for us.

"Put those things together and it's very difficult to make a positive business case." Mr Moat said that some factors that framed its decision to exit the NBP are "unique" to Eir because it is designated as the country's universal service provider for fixed-line by regulator Comreg.

"To a certain extent, it was going to be more challenging for us to make a positive case, but nevertheless, we've taken this decision and we intend to stick by it."

Eir has been working on rolling out its own rural fibre-to-the-home broadband project, having already passed 170,000 homes and businesses. It aims to pass 300,000 by the end of this year.

Mr Moat said Eir was "not abandoning" rural Ireland.

The chief executive was speaking yesterday as Eir unveiled second-quarter results. Its revenue slipped 2pc to €322m, while pre-exceptional earnings before interest, tax, depreciation and amortisation (EBITDA) were up 4pc at €125m.

Reported EBITDA was jut 1pc higher, at €122m when €3m in storm-related repair costs were taken into account.

In relation to M&A fees, Eir chief financial officer Huib Costermans agreed they were "high", but insisted they reflected the complexity of the deal.

Mr Costermans said the costs included significant legal, pensions and tax advice and other "strategic project-related costs" .

Irish Independent

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