Business Irish

Thursday 19 April 2018

Eircom to cut costs by up to €80m over the next three years

Chief executive Richard Moat, pictured at the company's Dublin headquarters, said Eircom has 'turned a corner'
Chief executive Richard Moat, pictured at the company's Dublin headquarters, said Eircom has 'turned a corner'

Paul O'Donoghue

Eircom is to shave €60m to €80m off its operating costs over the next three years, as CEO Richard Moat hailed the firm for "turning a corner".

The telecommunications company yesterday reported that its revenue decline is beginning to slow.

Eircom took in €311m in the three months to the end of March, a 1pc drop on the €315m the company took in the year before. However, the 2014 figure was a 5pc fall on the year before.

In the three month period the company made a loss of €19m, which compared to a loss of €43m the year before.

However earnings before interest taxes depreciation and amortization (EBITA) was up by 8pc year on year, although the previous year's results were depressed due to storm damage.

The company also saw a 6pc drop in its operating costs to €191m - mainly due to a 17pc reduction in its payroll costs. Eircom has restructured operations in recent years, including making more than 2,000 staff redundant since 2012.

Speaking to the Irish Independent Mr Moat said that while he is pleased with the latest results, he is still aiming to reduce costs at the firm by up to €80m over the next three years. However, he added that the savings would not come from a reduction in headcount.

"I think we have turned a corner. We've been talking about it for a long time and I think we're finally seeing it now," he said. He added that the firm has saved roughly €140m in operational costs since he took over as CEO in November 2014 and added that "a lot of that was reducing headcount".

"I would hope to save more costs going forward, about €60m-€80m over the next three years, [but] the size of the business headcount is just about right," he said.

Mr Moat said the firm would be looking to reduce costs in areas such as "procurement, our supply chain and the cost of our customer service".

He is hopeful that the company will start to reverse its declining revenue in the next quarter, saying that he expected a "modest increase" in turnover.

He pointed to the strong performance of the company's mobile division which saw revenue increase by 5pc to €87m as it added 9,000 postpaid customers for the quarter.

He admitted the firm is looking for a way to "stem the losses" of its fixed line customers, with 22,000 clients leaving over the three-month period.

He also said that he was unsure what impact, if any, the company's recent price hikes would have on Eircom's slowly recovering performance.

Although the company announced the increase of up to €8 a month in January for phone, TV and broadband customers, as the hike did not come into effect until mid-April it was not reflected in the firm's results.

"It is our first price increase in four years so we're hoping that there won't be a dramatic response and we're hoping that the impact will be limited."

The company also announced yesterday the appointment of Huib Costermans as its chief financial officer and Erik Slooten as chief information officer.

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business