Competition hits Eircom earnings

Increased competition sent earnings at the Republic's biggest telecoms company plunging last year, figures released yesterday show.

Eircom said yesterday that earnings before interest tax depreciation and amortisation (Ebitda) in the three months to December 31st dropped €11 million on the same period in 2004 to €142 million. Results for the nine months to the end of December show a €17 million fall in Ebitda over the same period in 2004 to €440 million from €457 million.

Profit before tax dropped to €24 million from €39 million during the comparable quarter in 2004. Profit before tax for the nine months to the end of December were halved to €67 million from €139 million the previous year.

Industry analysts described the results as disappointing. NCB's Tricia McEvoy reacted pointed out that net profit for the quarter was €29 million or 3 cent a-share, as opposed to an expected €39 million or 4 cent a-share. She set a target price of €1.94 on the stock. It closed last night at €2.06 in both Dublin and London.

Chief executive, Dr Philip Nolan, yesterday blamed competition and increased spending on promoting broadband for the performance.

"The reasons behind it are that there is increased competition," he said. "We adjusted prices and we lost some market share.

"The second thing is that we spent more on promotions, we spent an extra €7 million on broadband and line growth."

Revenue for the quarter increased to €424 million from €399 million during the same period in 2004.

An Eircom statement said that the first-time contribution from mobile operator, Meteor, was largely responsible for this growth.

Its figures show that the mobile company had revenues of €23 million for the month.

Eircom took over Meteor in December after raising €420 million through a rights issue early in the quarter to buy it from owner, US-based Western Wireless.

Mr Nolan said that the company was pleased with the performance of its new acquisition.

In 2005, the company grew subscriber numbers by 225,000 to 565,000, an increase of 66 per cent. Meteor is number three of the Republic's four mobile operators, behind Vodafone and O2.