Any change to free telephone will hit Eircom

Any move by the Government to cut free telephone services for older people as part of the budget tomorrow would have serious implications for the finances of troubled telecom company Eircom, it has emerged.

Government sources have signalled that the budget will see cuts introduced to the package of household benefits provided to older people, such as the electricity, gas and telephone allowances, as well as the free TV licence.

It has been suggested that Eircom receives about 60 per cent of the estimated €100 million paid to telecom operators by the Government for the provision of the telephone allowance to older people as part of the package of household benefits.

A company spokesman said last night: “A significant cut to the telephone allowance would leave Eircom with no alternative but to review the priorities in our business plan.”

Last month Eircom announced plans to shed 2,000 jobs over the next 18 months in an effort to save €100 million a year. This was twice the level of redundancies previously indicated by the company, and represents 35 per cent of its 5,700 workforce.