The remarkable transformation achieved by Telecom Eireann in a relatively short period of time is confirmed by yesterday's annual results. The news is positive on almost all fronts: profits have surged to £223 million, turnover has reached £1.35 billion and a record 15 per cent increase in telephone traffic was recorded. A great deal has been achieved in a very short time. Only five years ago, Telecom appeared to be under siege on all fronts. It was apprehensive about the onset of competition, the morale of its staff was said to be low and it was saddled with a debt burden of £1 billion. Today, the debt burden has been reduced to £172 million and annual interest charges, once costing £100 million per year, have been reduced to £19 million. The company is no longer defensive about the advent of competition. Rather, it appears to relish the challenge. It was good to hear the company chairman, Mr Ron Bolger, extolling the virtues of competition yesterday - even if he is making something of a virtue of necessity. Few would disagree with his observation that increased competition was in the interests - not just of the customer and the economy - but also of Telecom itself and all who work in it.
In truth, Telecom has benefitted from the robust performance of the economy and the boom in telecom services like data communication services and the internet. The company has done a good job in cutting its cost base, but it still operates in a very sheltered environment. Telecom has reduced its long distance and international calls but some call charges remain very costly. Local calls, which are offered free or at a nominal rate elsewhere, remain expensive. And the service provided by its mobile phone division might best be described as uneven. But the commercial pressure on the company is set to intensify. The Government's recent decision to abolish Telecom's voice telephony monopoly and the company's exposure to fully-fledged European competition across all service areas, will erode Telecom's comfort zone in the Irish market. Indeed, one of the key tasks facing the company now is to identify fresh investment opportunities in new markets, notably in eastern Europe. There are also opportunities in the domestic market with data communications traffic increasing by some 12 per cent per year. In signalling the prospect of free local calls, the company is signalling a healthy determination to secure a good slice of this market. It has little alternative; in the recent past telephone calls accounted for over 80 per cent of revenue, within five years this will have been reduced to 30 per cent. Telecom Eireann is now very well placed to meet the challenges ahead. Given its strong performance in recent years, its seems likely that financial institutions and the public will welcome the opportunity to invest in Telecom when it is floated on the stock exchange next year.