eircom today announced its results for the second quarter and six-month financial period ended 31 December 2008.

The deteriorating economic environment has impacted the half year performance of the Group, reflected in a fall in customer numbers and traffic volumes, lower prices and an erosion of EBITDA. While our overall financial performance has been relatively steady in challenging economic circumstances, pressures on revenues and profits are growing. The company does not anticipate these external factors improving in the short or medium term, and the targets of our cost cutting programme are being re-assessed in this context.

Our defined benefit pension scheme has fallen to a deficit of €433m, from a surplus of €20 million at 30 June 2008 and a surplus of €422m at 30 June 2007, reflecting the sharp declines in stock markets. We will be addressing necessary steps to remediate this position.

Reflecting the above factors, we have booked a goodwill impairment charge of €720 million in the current period. Group revenue for the six months was €1,030 million, in line with the corresponding six months for the previous year. Group EBITDA was €333 million, down 4%.

In the fixed line segment, the group added 46,000 DSL broadband customers during the first six months of the financial year, down 42% on the prior period. During the period we lost 41,000 Retail telephone customers, compared with 8,000 in the corresponding period last year.

Meteor mobile revenues, before intra-company eliminations, were €255 million in the half year, up 7% on the corresponding period. EBITDA was up 6% to €57 million. Although mobile subscriber growth was down 44% year on year at 49,000 in the period, our continued increases in market share reflect the compelling value to customers of Meteor’s products and services.

Cash capital expenditure for the first six months of the year was €197 million, reflecting our commitment to investing in advanced telecoms services for Ireland. eircom has invested approximately €900 million in capex in the past two and a half years.

We are well progressed in building the best 3G mobile data network in Ireland. We are launching Meteor’s commercial 3G services in the greater Dublin and Cork areas next week and in major towns across the country during 2009. Our DSL broadband services are now available on more than 1.4 million telephone lines. Following our speed upgrades 245,000 eircom Retail customers are already enjoying services of 3Mb/s or faster. Tetra’s radio network for Ireland’s emergency services is now ready for launch in the Dublin region and will extend across the country in the coming months.

Commenting, Cathal Magee, Acting CEO, said: "Despite the deepening economic crisis and the pressures that this will bring for our business, we are confident that eircom has the scale, resilience and depth of capabilities to offer our customers competitive products and services over the highest quality fixed and mobile networks. The investment we have made over the past few years will serve us well. We now need to focus on reducing our cost base to underpin our competitiveness going forward in these difficult economic conditions."

HIGHLIGHTS FOR THE QUARTER ENDED 31 DECEMBER 2008

• Group revenue of €517 million, down €3 million on the corresponding quarter ended 31 December 2007.
• Group EBITDA, before non-cash pension credit and net construction income, of €164 million, down 5% on the corresponding quarter of the prior year.
• Fixed line revenue, before intra-company eliminations, of €404 million, down 3% on the corresponding quarter ended 31 December 2007, reflecting reduced prices across key products and bundles, and lower traffic and PSTN volumes.
• Fixed Line EBITDA of €136 million, down 7% on the corresponding quarter ended 31 December 2007.
• DSL customer net adds of 25,000 for the quarter ended 31 December 2008, down from 44,000 in the quarter to 31 December 2007.
• Net Retail PSTN line losses of 24,000, offset by 9,000 WLR net gains. This compares to net Retail losses of 4,000 in the prior year, offset by 4,000 WLR net gains. Retail PSTN lines at 31 December 2008 were 1,264,000 while Wholesale lines were 317,000.
• Meteor revenue, before inter-company eliminations, of €129 million, up 6% on the corresponding quarter in the prior year, driven mainly by subscriber growth, but with lower ARPU.
• Meteor EBITDA of €28 million for the quarter ended 31 December 2008, 8% higher than in the corresponding quarter ended 31 December 2007.
• Total Mobile subscriber net adds of 30,000, compared with 53,000 in the corresponding prior year quarter.
• Defined Benefit pension scheme deficit of €433 million, arising from the decline in value of underlying investments.
• Goodwill impairment of €720 million, reflecting the pension deficit and a deterioration in the economic environment impacting on the outlook for the business.

HIGHLIGHTS FOR THE SIX-MONTH PERIOD ENDED 31 DECEMBER 2008

• Group revenue of €1,030 million, in line with the corresponding six months ended December 2007.
• Group EBITDA, before non-cash pension credit, net construction income and profit on disposal of property and investments, of _333 million, down 4% on the corresponding six-month period in the prior year.
• Fixed line revenue, before intra-company eliminations, of €806 million, down 3% on the six months ended December 2007, due mainly to lower traffic and interconnect revenue as well as higher discounts.
• Fixed line EBITDA of €276 million in the six months to 31 December 2008, down 5% on the corresponding prior year period.
• DSL customers increased by 46,000 to 639,000 in the six months to 31 December compared with net adds of 79,000 in the six months to December 2007. Retail DSL subscribers at 31 December 2008 stood at 457,000. Total DSL customers had increased to 655,000 by 12 February 2009, including 6,000 pendings.
• Meteor revenue, before intra-company eliminations, of €255 million, up 7% on the corresponding six months to 31 December 2007, due to subscriber growth, offset by a decline in ARPU.
• Meteor EBITDA of €57 million for the six months to 31 December 2008, up 6% from €54 million for the corresponding prior period.
• Total Meteor subscribers of 1,032,000 as of 31 December 2008, up 49,000 in the six-month period. Net adds in the corresponding prior year period were 87,000. Post paid subscribers stood at 131,000, up 13% on 31 December 2007.
• Average monthly blended ARPU of €38.54 for the six-month period to 31 December 2008, down 5% compared with prior year, due to increased promotions.
• Cash capex outflow of €197 million in the six-month period, as we continue to focus on increasing fixed and mobile network capacity, rolling out broadband, developing our Next Generation and 3G Networks, and the roll out of the Tetra Digital Radio Network.
• Strong cash generation continues. Net debt stood at €3,330 million at 31 December 2008, down €136 million since 30 June 2008. Cash on hand was €284 million.