Issued Thursday 27 August 2009: eircom today announced its results for the fourth quarter and twelve-month financial period ended 30 June 2009.

 Commenting, Paul Donovan, CEO of eircom said: "the group has delivered a robust set of results against the background of a challenging operating environment.

"Adjusted EBITDA* for the group was €173 million in the quarter, down 2% compared to last year, against a 6% drop in revenues. Group EBITDA for the full year was €692 million, down 1% on last year, against a drop of 3% in revenues.

"The Group’s EBITDA was supported by a continued increase in contribution from Meteor, which grew EBITDA by 11% for the year to €124 million, while EBITDA in the Fixed Line business was €568 million for the year, down 3%.

"We have made good progress in reducing costs to offset steep revenue declines. In the quarter to June 2009 the Group’s operating costs, before exceptional items and non-cash pension credit, were 9% better than last year.

"Our ‘Stage 1 Accord’ with the unions, announced in May, marked an important first step in an essential transformation of the cost base of the Group. We have implemented a pay freeze until June 2011 and are rolling out voluntary pay cuts of between 5% and 10%. Having made significant progress in headcount reduction in the past two years, we are working now to reduce our labour resources – including contractors – by 1,200 in the coming two years to June 2011; over 270 people had already left by 30 June.

"Looking forward, we are on track to remove €130m from our annual operating costs by FY 2010/11.

"The economic environment is challenging, with the continuing slowdown in activity impacting both volumes and revenues. Customer growth and retention will remain key objectives for the business, which we expect to achieve through increased value and service.

"We continue to see growth in broadband, albeit at a slower rate. Fixed Line DSL customers increased by 72,000 in the year, to 665,000. Over 61% of our retail DSL customers are now on speeds of 3Mbs or greater, up from 12% a year ago, and we are planning to increase our basic product speed to 8Mbs during the current year. Our successful launch of Meteor mobile broadband in March had won 9,000 new customers by the end of June.

"Cash investment in fixed assets was €335 million in the year, delivering on our commitment to spend to over €1 billion in the past three years. We continue to invest in rolling out faster broadband and 3G, in increasing capacity by rolling out fibre in our fixed and mobile transmission networks, and in building the new nationwide Tetra network for the country’s emergency services.

"Cash generation remains strong. Our cash balance stood at €333 million at the end of June. We have made good progress on de-leveraging, reducing our net debt by €182 million during the year and by €387 million in the past two years."

27 August 2009

* Group adjusted EBITDA is before non-cash pension credits, restructuring and exceptional costs, net construction income and profit on disposal of property and investments.

 HIGHLIGHTS FOR THE FOURTH QUARTER ENDED 30 JUNE 2009

• Group revenue of €479 million, down 6% on the corresponding quarter ended 30 June 2008.

•  Group operating costs of €306 million, before exceptional items and non-cash pension credit, down 9%, reflecting lower pay and non-pay costs, including lower management fees.
• Group adjusted EBITDA* of €173 million, down 2%.
• Fixed line revenue, before intra-company eliminations, of €372 million, down 8%, reflecting lower voice traffic and PSTN volumes, as well as higher discounts resulting in lower net prices across key product bundles.
• Fixed Line adjusted EBITDA* of €138 million, down 5%.
• DSL customer net adds of 7,000 for the quarter ended 30 June 2009, down from 19,000 in the quarter to March 2009, and from 22,000 in the quarter to 30 June 2008.
• Net PSTN line losses of 24,000 for the quarter ended 30 June 2009. This compares to net PSTN line losses of 20,000 in the quarter to 31 March 2009, and net PSTN line losses of 8,000 in the quarter to 30 June 2008.
• Mobile revenue, before intra-company eliminations, of €121 million, down 2% on the corresponding prior year quarter, due to lower ARPU partially offset by customer growth and the launch of Mobile broadband during the quarter.
• Mobile EBITDA of €35 million for the quarter ended 30 June 2009, an increase of 13% over the corresponding quarter ended 30 June 2008.
• Mobile customer net losses of 7,000 in the quarter, compared with net losses of 7,000 in the quarter to 31 March 2009 and net adds of 10,000 in the corresponding quarter of the prior year.

 HIGHLIGHTS FOR THE TWELVE-MONTH PERIOD ENDED 30 June 2009

• Group revenue of €1,997 million, down 3% on the twelve months ended 30 June 2008.
• Group operating costs* of €1,305 million, before non-cash pension credit, down 4%, reflecting lower pay and non-pay costs, including lower management fees. Employee headcount down 933 (12%) since June 2007
• Group adjusted EBITDA* of €692 million, down 1%.
• Fixed line revenue, before intra-company eliminations, of €1,558 million, down 6%, as a result of lower PSTN volumes and voice traffic, as well as higher discounts resulting in lower net prices across key product bundles.
• Fixed line adjusted EBITDA* of €568 million, down 3%.
• DSL customers increased to 665,000 at 30 June 2009, up 72,000 compared with 30 June 2008. Retail DSL customers at 30 June 2009 stood at 477,000, up 54,000.
• Total PSTN lines at 30 June 2009 were 1,542,000, down 67,000 in the year.
• Mobile revenue, before intra-company eliminations, of €496 million, up 3% on the corresponding twelve months to 30 June 2008, due to customer growth offset by a decline in ARPU.
• Mobile EBITDA of €124 million for the twelve months to 30 June 2009, up 11% on the prior year.
• Total Mobile customers of 1,026,000 as of 30 June 2009, up 38,000 in the year. Post-paid customers stood at 138,000, 13.5% of the total. Mobile broadband customers were 9,000 at 30 June 2009, following our launch of the new 3G service in March 2009.
• Average monthly blended Mobile ARPU of €37.30 for the twelve-month period, down 6% compared with the prior year, mainly due to increased promotions in the year.
• Capex cash outflow of €335 million in the twelve-month period, as we continue to focus on increasing fixed and mobile network capacity, rolling out faster broadband, developing our Next Generation and 3G Networks, and rolling out the Tetra Digital Radio Network.
• Goodwill impairment of €720 million in the year, reflecting the deterioration in the Irish economic environment and the outlook for the business, and the pension scheme deficit of €435 million.
• Net exceptional items and restructuring charges of €60 million in the year, mainly relating to our property and a new headcount reduction programme.
• Cashflow before financing activities of €182 million in the year, compared with €205 million in the prior year. Net debt stood at €3,316 million at 30 June 2009 and cash on hand was €333 million.