Esat BT - the State's second-largest fixed line phone business - lost €185 million last year. But the group met the challenge set by its parent, British Telecommunications, of breaking even at the operating level or else facing closure.
Earnings before exceptional items and other costs were €18.5 million in the year to the end of March 2003. The firm reached the milestone of positive earnings despite seeing a small drop in group turnover.
The pre-tax loss was boosted by the firm's decision to buy back its bonds during the year, a move that added €73 million in exceptional costs .
Mr Bill Murphy, Esat BT's chief executive, said the results were an impressive reversal for the firm, which was on course to be cash flow positive this year.
Last year, British Telecommunication's new chief executive, Mr Ben Verwaayen, set all the firm's overseas subsidiaries a deadline of March 31st to generate positive earnings or face closure.
Esat BT reported €18.5 million earnings before interest, tax, depreciation and amortisation yesterday, up from a €47.5 million loss on this basis in 2002.
Lower capital expenditure and tight cost control at the firm contributed to the better performance, according to the company.
Turnover fell to €253.2 million in the year to March 2003, down from €259.8 million last year. This decline in revenues follows a strict review of its business by Esat BT and a sharp fall in the number of residential customers.
Esat BT said it now has just 60,000 residential telephony customers, down from more than 120,000 two years ago. It said further regulation was required in this market because of Eircom's aggressive win back campaigns.
Mr Murphy described Eircom's decision to increase its line rental charges to consumers by 15-20 per cent in the past few months as "outrageous". He said the decision would increase inflation in the Republic and hurt the economy's competitiveness.
Meanwhile, Mr Murphy said Esat BT was evaluating a return to the mobile phone market and would seek talks with mobile networks later this year.
He said this would enable the firm to provide a package of integrated fixed and mobile services to its customers.
Esat BT will seek further integration with BT Northern Ireland by seeking to provide similar telecoms services on an all-Ireland basis.
It will also continue to push sales of its broadband internet service IOL broadband, which have now reached 1,000, according to Mr Murphy.
Meanwhile, Esat BT's parent British Telecommunications delivered strong full-year profits and a better-than-expected dividend yesterday.
It also put some fears to rest about its £6.3 billion sterling (€8.8 billion) pension fund deficit when it disclosed that its annual cash contribution to the fund would rise by only £32 million to £232 million, far less than the £100 million increase predicted by analysts.- (Additional reporting Reuters)
