Monday 23 October 2017

Eircom's sales and earnings plunge in year of collapse

Donal O'Donovan

Donal O'Donovan

TELECOMS giant Eircom suffered double-digit falls in both sales and earnings over the last financial year, which also saw the business collapse into examinership under the weight of massive debts.

The poor results are no surprise. They cover the period up to Eircom's emergence out of examinership over the summer.

Sales at Eircom dropped 10pc to €1.5bn and earnings for the company have fallen even more steeply, the telecoms giant said yesterday.

The company did not reveal how much money it made or lost in 2011, although it said that earnings before interest, tax and amortisation fell 16pc.

Earnings are a key measure for indebted companies, and fell by €104m to €542m in the 12 months to the end of June. Even after its examinership, Eircom has debts of €2.4bn.

That debt level can be supported by current trading levels, top executives said yesterday.

Revenue and earnings fell as the company lost many fixed- line customers, managers said.

Shoring up fixed-line customers is a key focus for the firm, according to chief executive Herb Hribar, who took the helm at Eircom in August.

Competition from UPC for the broadband and cable TV market and a recent move by Sky into the Irish market will add to pressure on the one-time monopoly.

Eircom plans to compete on price to hold its share of the market, Mr Hribar said.

Investment

The company is also pushing ahead with a €400m, five-year investment in up-to-date broadband infrastructure that can be funded from current cash flows, managers said yesterday.

In contrast to the decline in the fixed-line market, the number of mobile phone customers increased over the period, driven by an increase in customers on contract tariffs.

Mobile phone penetration is now 115pc, but Eircom believes there is still scope for expansion.

Chief finance officer Richard Moat said the average penetration across Europe is 136pc, leaving some room for catch-up.

The results followed the biggest bankruptcy in Irish history, when the company was forced to beg the courts to write off €1.7bn of unsustainable debt.

Eircom is now owned by its former lenders, who swapped a portion of the debt they were owed for control of the business during the examinership.

Global investment giant Blackstone is now the biggest shareholder in Eircom through its debt investment vehicles GSO and Harbourmaster.

Both Herb Hribar and Richard Moat have joined the business since then.

Chairman Ned Sullivan announced his intention to resign this month, and a search for a replacement is under way.

Meanwhile, Blackstone has moved to merge GSO and Harbourmaster, an Irish business it bought last year, into a single Dublin-based investment giant.

GSO is reported to have cut staff numbers in London as management of the debt funds business moves to the Harbourmaster offices in Dublin.

Blackstone bought Dublin-based Harbourmaster in October last year, in a deal that tripled its European debt investments to €11.5bn.

Irish Independent

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