EIRCOM SAYS IN DANGER OF BREACHING FINANCIAL OBLIGATIONS - Eircom published results this morning which cover the first three months of the year. They show revenues down 11% to €407m on the same three months in 2010. Profits were down 6% to €160m though the company did manage to reduce costs by 11%. Total mobile customers stood at 1,044,000 at 31 March 2011, 2% lower than the prior year though Eircom says it did grow the number of post pay customers.
The company is also facing a looming debt crisis, with Eircom in danger of defaulting on its corporate debts. Eircom's chief executive Paul Donovan says the figures are evidence, amongst other things of the ruthless competition, the impact of charging decisions by the telecoms regulator while they also demonstrated the impact of additional personal taxation changes on its customers.
Mr Donovan says the difficult economic environment shows no sign of easing and says today's figures are the first since the Budget tax changes. He says that consumers have much less money to spend and they are becoming increasingly cautious. This has led to some cancelled subscriptions and or smaller bills. He also says that competition continues to increase, especially in the broadband market.
The Eircom boss says there is no liquidity issue with the company and says it has almost €400m of cash on its balance sheet. While it had meet its financial covenants up to March, he said it could breach them over the next three months. He said it was imperative that Eircom accelerated its discussions with its lenders and shareholders about how it manages a potential breach. 'We will need to put the company on a sustainable footing with regard to a future financial structure and that includes the amount of debt that we have on our balance sheet and the terms of that debt,' he added. He also denied the company was the 'Greece' of Irish corporate life.
Mr Donovan says the company is seeing a big increase in the sale of smartphones and will soon start selling the iPhone 4 to its Meteor and eMobile customers.
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MORNING BRIEFS - The Quinn Group is expected to report an operating loss of €888m for 2010. This was the last year the group, which includes cement, insurance and glass, was fully controlled by the Sean Quinn. The full results are due out later today. The bulk of the losses (€644m) relate to underwriting losses mainly associated with Quinn Insurance's entry to the UK market. Quinn Insurance is no longer part of the group.
*** The International Monetary Fund could withhold the next slice of aid to Greece due next month, the head of euro zone finance ministers said yesterday, spooking markets with the possibility of default. European stocks fell after Jean-Claude Juncker said the IMF expected the European Union to step in if it were unable to release the June aid tranche, but that would be impossible. Juncker's spokesman later clarified that if European and IMF inspectors were convinced by new Greek austerity measures, there would be no problem with the June aid tranche. Greece's finance minister said this week that if the next €12 billion payment, of which €3.3 billion is from the IMF, was not forthcoming, the country would be unable to meet its obligations and would default.
*** On the currency markets, the euro is worth $1.42 44 US cents and 86.7 pence sterling.
