Third Quarter and Nine Months Results Announcement to 31 March 2014

  • Financial results continue to stabilise in the third quarter
  • Underlying Q3 EBITDA[1]of €119 million flat on prior year[2]
  • One-off network repair costs of €10 million due to unprecedented winter storms
  • Revenue decreases 5%to €315 million
  • Operating costs[3]down by 2%2,€100 million target achieved
  • Group broadband base grows 6%, fourth consecutive quarter of growth
  • Post-paid penetration of mobile base increases 8 percentage points to 39%
  • Ireland’s largest fibre network passes 800,000 premises4
  • 4G rollout reaches 50% population coverage ahead of schedule
  • Only operator with quad play capability
  • Working with advisors to explore options to further strengthen company’s financial position

eircom Group today announced results for the third quarter and nine months ended 31 March 2014.

Commenting on today’s announcement, Herb Hribar, CEO eircom Group, said: “Our third quarter and nine month results highlight continued stabilisation in our underlying bottom line and progress on cost reduction. However, due to a series of unprecedented storms during January and February, we incurred €10 million in one-off costs to repair faults on our network that reduced our reported EBITDA during the quarter.

“Our significant programme of investment continued, and at the end of March 2014 the fibre footprint had passed 800,000[4] homes and businesses. We are on track to pass 1,000,000 premises during summer 2014 and 1,400,000 premises by 2016, which will provide 70% of all homes and businesses in Ireland access to high speed broadband. During the quarter, eircom became one of the first operators in Europe to deploy vectoring technology, which enables broadband speeds of up to 100Mb/s. We are starting to see the benefit of our investments with some 103,000 customers already taking up our high speed broadband services at the end of March, representing a 13% penetration of the 800,000 premises passed. Our 4G roll out is ahead of schedule and now covers 50% of the population in Ireland. Our investment in converged billing platforms enables us to be the only operator to offer a ‘quad play’ of services, including TV on a single bill.

Finally, the Irish macro economy continues to provide a positive backdrop for the business.”

Commenting on the results, CFO Richard Moat said “The Group generated underlying EBITDA1 of €119 million for the quarter to 31 March 2014, which is broadly in line with our expectations and the prior year, and demonstrates continued stabilisation in business performance. Reported EBITDA of €109 million included €10 million of network repair costs and as a result reduced by 8% compared to the same period in the prior year2. The Wholesale segment continues to perform strongly and year to date has gained an equivalent of 84% of Retail access losses. Mobile revenue is stabilising and the profitability of the mobile business continues to improve increasing by €4 million compared to the prior year quarter. The quality of the customer base also continues to improve and at the 31 March 2014 39% of our base comprised of postpaid customers (including mobile broadband), an increase from 31% in the prior year.

“Our programme of cost transformation continues. To date, 1,747 employees have exited the Group since 1 January 2013. A further 200 employees will leave the business by the end of December 2014. In addition to delivering cost savings, these exits deliver a flexible and streamlined organisation. We have also achieved €100 million[5] in operational cost savings on an annualised basis by the 31 March 2014, three months ahead of target.

During May 2014, we received an opinion of non-compliance from ComReg in relation to procedures regarding the termination of customer contracts. While we remain fully engaged with ComReg in relation to this matter and will vigorously defend our position, we have taken a prudent approach and during the quarter to March 31 2014 made a full exceptional provision of €7 million.

Finally, following the successful outcome of the Amend and Extend process, the maturity of a significant portion of our loan facility has been extended by two years from 2017 to 2019. Together with our advisors, we are now exploring a number of strategic options with a view to further strengthening the financial position of the company.”

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