Eircom chief executive Herb Hribar enters the boardroom of its impressive offices overlooking Heuston Station smiling but looking a tad weary. He has just arrived in Dublin from Washington DC that morning.
Hribar a big man. Over six foot and as broad as a barn door. He’s also a ringer for US actor Elliot Gould.
He takes a seat in a swivel chair that looks about one size too small for his big frame.
Those broad shoulders should prove useful to the former US navy officer as he seeks to drill Eircom into shape in what is his second tour of duty with the company.
Hribar rejoined Eircom in September of last year for a five-year stint, having previously headed its networks and wholesale division between 2002 and 2004.
After years of stagnation and underinvestment in its network, and the biggest examinership in the history of the State in 2012, Eircom is finally back in growth mode.
Thanks to a “billion six ” investment over six years Eircom is busily upgrading its copper network to fibre, preparing for the launch of 4G next-generation mobile in the summer, and the launch of TV services around September/October.
Yesterday Enda Kenny was the star turn for the launch of its eFibre, superfast broadband. It will offer customers up to 70MB speeds, with costs starting from €40 a month when bundled with offpeak unlimited home phone.
According to Hribar, this product will give a “much better customer experience”, which isn’t hard to imagine give the hit-and-miss broadband speeds available from the company to date.
“We’re gonna be competitive again in the marketplace and I think that’s just an exciting thing,” the American says. “We’ll pass 600,000 homes [ with fibre ] by the end of the calendar year and ultimately will pass 1.2 million homes by June 2015.
“We’ll have the largest fibre network by some margin when we finish this build-out. It’s a great story for us, and gives us a real chance to compete again.”
Eircom’s top speed still won’t match that offered by cable rival UPC but Hribar counters by saying its network will be uncontended and offer “predictable speeds”.
Hribar says its faster broadband will also be available to competitors on a wholesale basis. Might this include British satellite broadcaster Sky, which recently entered the Irish broadband market in a campaign fronted by actor Pierce Brosnan?
“They are one of the organisation we think would be interested in us. We’d be excited to work with Sky.”
On whether the two are talking, Hribar says that’s “commercially sensitive”. Sky is currently wholesaling from BT. But it uses the Eircom network where BT has blindspots around the country.
Breaking with the past is Hribar’s key goal. He likes to see himself as a man who gets things done.
This month Eircom closed out a €350 million fundraising from bond markets.
Burden of repayment
In the past the company's various owners used these capital raisings as a way of rewarding themselves financially. The burden of repayment was placed on the back of the company and rose to an unsustainable €4 billion by the time it changed hands from Babcock & Brown to Singapore-based STT in 2010.
After years of frantically trying to keep its head above water, Eircom eventually slipped into a pre-planned examinership. Its lenders agreed to reduce the debts to €2.35 billion and took control of the business from STT and the employee Esop.
This debt is due in September 2017 in one bullet payment. Hribar says the latest bond offering was a first tentative step in refinancing its debts to spread out the repayments. It even managed to shave €20 million off the debt pile by buying back some of its loans at a discount. It’s a small beer but a positive sign.
“We are actually paying down debt with this; this isn’t adding to the debt pile. So that’s really a huge difference to what happened in the past. This time we’re working to whittle away that debt and spread it out and improve the long-term capital structure of the company.”
He also defends the potential €60 million in incentive payments that executives could potentially share over the coming years if Eircom hits certain performance targets.
Is this fair given that the company is looking to shed 2,000 jobs by voluntary redundancy by the middle of 2014?
Former glory
"There's nothing that any executive is going to get from this incentive plan until we return Eircom to its former glory," he says.
“We have a big road to hoe here in terms of new products. Management is [ also ] investing in the company. It’s not something that’s been handed to them.”
Eircom originally intended to cut 1,000 staff from the payroll but Hribar decided on a bigger bang approach that would once and for all “right size” the business. It followed a 1,000-page report last year from consultants Oliver Wyman on how Eircom ranked against its European peers in terms of efficiency. Not well was the answer.
“What we’ve decided to do this time is to understand where the target is and get to it as quickly as we can. So we can stop talking about people leaving the business and can get to the right number to stabilise the business, with the right processes so that we can deliver on customer services.”
With faster broadband speeds now available, Eircom’s next target is 4G mobile. Eircom spent €144 million buying spectrum licences from the State and it will spend a total of €240 million building out its 4G capability.
The first test cell is being trialled on an Irish Rail mast in Heuston station and Hribar expects it to be an “early mover” in the market.
“The user experience will be much more satisfactory,” he says.
Eircom currently has two mobile brands – Meteor and eMobile – and industry watchers regularly speculate that Meteor, which largely focuses on a younger demographic on pre-pay, might be sold to help reduce the debt burden.
Speculation
Hribar appears to nail this speculation by saying: "We're really happy with Meteor and we're committed to Meteor for the long term."
In relation to the launch of a TV service in the autumn, Hribar will say only that it has “identified a place to compete with UPC and Sky”.
“I’ve been in TV a while and I think this is going to be a really interesting product,” he says.
Do you expect to take customers from UPC and Sky?
“I think we’re going to take customers, yes I do. Our selling proposition to our customers is going to be unique and different. We’ve tested it in the market and customers tell us they like what they see.”
Born in Pittsburgh in 1951, Hribar has lived a colourful life. He won gold in the shot putt at the Pennsylvania high school state championship in 1969. “I was good but not great,” he says with a raucous laugh and a neat pirouette in his chair.
He joined the naval academy in 1970, serving until 1982 and rising to the rank of lieutenant commander. Hribar served mostly in the Pacific region but prefers not to go into the fine detail of his career.
“Those years were very valuable to me. It taught me discipline, leadership, structure and determination.”
He has degrees in engineering , business and computer science, and has held a number of senior executive roles in telecoms and cable TV working for seven other companies, along with a year or so as a consultant.
'Long term'
Hribar accepts that he's moved around quite a bit in his career but insists he's here for the "long term".
Why return?
“The company’s got an inordinate amount of challenges that are eminently solvable. The investment plan is what’s really interesting. The fact that we’re investing and going to be competitive again is unbelievably exciting.”
He expects revenues and earnings to stabilise over the next 12 to 18 months.
Hribar is also delighted to be back here. He is an Irish passport-holder courtesy of his wife’s roots and sees them buying a property out west and spending at least some of the year there when he eventually retires.
“We plan to live here, at least part-time. We really like the lifestyle. I’m delighted to be back.”
