Eir sets €34m aside to fund re­dun­dan­cies as prof­its rise

Irish Independent - Business Week - - BUSINESSWEEK - John Mul­li­gan

TELCO Eir will com­plete its lat­est round of vol­un­tary re­dun­dan­cies in the com­ing weeks, as an ad­di­tional 250 peo­ple leave the busi­ness.

The com­pany has set aside €34m for re­dun­dancy pay­ments for the cur­rent financial year, as it con­tin­ues to hone its cost base in a hugely-com­pet­i­tive en­vi­ron­ment.

Re­leas­ing full-year re­sults yes­ter­day, Eir said that its earn­ings be­fore in­ter­est, tax, de­pre­ci­a­tion and amor­ti­sa­tion (EBITDA) rose 4pc to €520m in the 12 months to the end of June, while un­der­ly­ing rev­enue was 1pc higher at €1.32bn.

Over the past five years, Eir has cut its head­count by 2,200 to 3,279, and cut its op­er­at­ing cost base by more than €148m a year.

The for­mer semi-state com­pany has wit­nessed a sharp im­prove­ment in its for­tunes since it ex­ited ex­am­in­er­ship in 2012, with ra­tio­nal­i­sa­tion, in­vest­ment and a re­cov­er­ing econ­omy help­ing to re­vive the busi­ness. Eir is owned by in­vestors in­clud­ing US firm An­chor­age and Sin­ga­pore wealth fund GIC.

Part of Eir’s strategy has been de­vel­op­ing its net­work and ser­vices to be in a po­si­tion to of­fer triple- and quadru­ple-play bun­dles to cus­tomers in an ef­fort to re­duce churn.

Eir had 2.19 rev­enue-gen­er­at­ing units per cus­tomer house­hold at the end of June, com­pared to 2.06 a year ear­lier. A quar­ter of its cus­tomers are now on triple- or quad-play bun­dles, in­clud­ing mo­bile, TV, broad­band and fixed-line ser­vices. It re­cently re­tired its Me­teor mo­bile brand, bring­ing it un­der the Eir ban­ner, in a fur­ther ef­fort to boost bun­dle sales.

“It’s been part of our ma­jor strate­gic thrust to get as many peo­ple as pos­si­ble on to bun­dles,” Eir chief ex­ec­u­tive Richard Moat told the Ir­ish In­de­pen­dent. “We’ve got 25pc of peo­ple on triple or quad­play bun­dles and that’s going up ev­ery quar­ter. The more prod­ucts peo­ple take from us, the longer they stay with us.”

He said that in some Euro­pean coun­tries, 80pc of telco cus­tomers avail of triple or quad-play bun­dles. Mr Moat said that within three to five years, it’s fea­si­ble that Eir will have more than 50pc of its cus­tomer base avail­ing of triple or quad-play bun­dles.

About 18 months ago, Mr Moat told the Ir­ish In­de­pen­dent that a stock mar­ket flota­tion of Eir would be “at least” two years away. A €1.29bn eq­uity val­u­a­tion was placed by Eir on the com­pany last year.

“An IPO (ini­tial pub­lic of­fer­ing) is al­ways a the­o­ret­i­cal pos­si­bil­ity, but we’re con­cen­trat­ing on im­prov­ing the op­er­a­tional per­for­mance of the busi­ness. We made 4pc growth in earn­ings this year, and we want to con­tinue that kind of level of growth going into the fu­ture.”

At the end of June, Eir had to­tal gross debt of €2.3bn. Its in­ter­est bill has been slashed via var­i­ous re­fi­nanc­ings. Chief financial of­fi­cer Huib Coster­mans said Eir has no fur­ther re­fi­nanc­ing im­me­di­ately planned.

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