Monday 23 October 2017

Eircom unfazed by 'significant' decline in October performance


John Mulligan

John Mulligan

Eircom experienced a "significant reduction" in performance during October, but has insisted the decline is in line with expectations.

The troubled telco, which is facing the prospect of being taken over by lenders, said that there were some "pluses and minuses" during the month.

It said the large business, government and wholesale segments continue to perform in line with or better than expected under its current plan.

But it warned that while the cumulative customer numbers of its retail, consumer and small business segments are as expected, tough economic conditions continue to weigh on sentiment.

"Lower consumer confidence and competition in these consumer and small-business segments are putting continued pressure on fixed-line and mobile average monthly revenue per user," Eircom noted.

The company issued the October trading update after privately presenting results this week to senior lenders in accordance with the terms of a covenant waiver that has been secured with them.

The outcome of a lender vote to extend that waiver will be known tomorrow.

Eircom's future is increasingly uncertain. Current majority owner Singapore Technologies Telemedia (STT) belatedly submitted to the Eircom independent directors this week a plan to lead a restructuring of the Irish group's €3.7bn debt pile.

Eircom's Employee Share Ownership Trust is also "committed to further constructive discussions" with regards to participation in the STT plan, said Eircom.

STT has sought a €200m cash-back guarantee in case the eurozone breaks up, however, under a material adverse change clause.

It's proposing investing €200m in Eircom and handing 25pc of the company to lenders.

If senior lenders reject the STT plan then they are almost certain to take control of the Eircom business subject to the terms of their plan already submitted to Eircom's independent directors. That change in ownership would take place early next year.

Eircom said yesterday that the overall decline in its revenues in October has been largely balanced by continued cost savings, with operating costs during the month lower than expected.

"There are some early signals that consumer confidence continues to weaken performance and may result in some emerging trends that could impact the existing budget," it warned.

Irish Independent

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