Revenues up 21 percent at Eircom

04-08-2006

by Maxim Kelly

Eircom reported a year-on-year increase in quarterly revenues on Friday but profits margins dipped slightly on the back of the Meteor acquisition.

The Irish telecommunications company, which recently confirmed a takeover by an alliance of Australian investment house Babcock & Brown and the company's Employee Share Ownership Trust, posted turnover of EUR483 million during its first fiscal quarter ended 30 June, compared to EUR399 million for the corresponding quarter last year.

Despite this 21 percent rise in revenue, Eircom said its profit margins were down slightly as a result of the company's EUR420 million acquisition of mobile operator Meteor last year.

Unadjusted loss per share stood at EUR0.10 compared to earnings per share of EUR0.07 in the corresponding quarter of 2005. Adjusted EPS for the quarter were EUR0.04 compared to EUR0.03 in the corresponding quarter in 2005. Adjusted EPS excludes the profit on disposal of property and investments and the additional finance costs due to the anticipated early repayment of debt.

Overall Eircom posted a 9 percent increase in earnings before interest, tax, depreciation and amortisation (EBITDA) of EUR162 million. Meteor itself posted an EBITDA figure of EUR13 million -- in line with expectations. The profitable mobile arm now has 700,000 customers based on figures recorded at the end July.

Eircom reported EUR74 million in capital expenditure during the quarter, which it said was spent on increasing capacity, demand-led growth, capital expenditure in Meteor, and the continuing broadband rollout.

In relation to broadband, Eircom said it had 260,000 DSL customers in June, rising to 274,000 customers as of 27 July 2006. A spokesman for Eircom told ENN the company expects 300,000 DSL subscribers by the end of August.

The current quarterly figures are the last to be released by Eircom before its takeover by its new owners.

Eircom's outgoing chief executive, Dr Phil Nolan, attached a brief statement to the financial results thanking management and staff who he said had "performed outstandingly to deliver on what we promised".

Dr Nolan will be replaced by an appointee of incoming executive chairman Pierre Danon. In recent weeks speculative reports in the Irish press named former managing director of MCI Europe, Andrew MacLeod, as a possible lead man in Eircom now that shareholders in the London- and Dublin-listed company have approved the sale to the Babcock & Brown/ESOT consortium.

The institutional shareholders who have approved the bid for the Eircom have made a 62 percent profit on their investment since the telecommunications company floated in 2004. That compares to a suspected loss of around 25 percent for the 500,000 individuals who bought Eircom shares when the Irish government originally privatised the company six years ago.