SINCE TAKING the reins last September, Eircom chief executive Paul Donovan has spent much of his time fighting fires.

The collapse of the Irish economy has hit sales while its competitors – particularly UPC and Vodafone – have upped their games and poached customers.

Revenues for the first nine months of its financial year were down 9 per cent while its Ebitda was 3 per cent lower.

In addition, the regulator has slashed wholesale access prices and Eircom continues to service a €3.3 billion net debt, a legacy of some clever financial engineering by past owners.

Recently, the Communications Workers Union voiced its concern that the business would run out of cash. It worries that Eircom will breach covenants and trigger financial penalties with lenders.

Not so, says Eircom. “The company retains strong cash balances and positive headroom in servicing its debt,” it said yesterday.

But it is running a process to appoint financial advisers to help restructure its debt.

It also said yesterday that “further cost reductions will be required”, indicating that more redundancies are in the offing.

Donovan recently sent an note to staff encouraging them to apply for the current voluntary leaving scheme as the terms in future would no longer be as generous.

It seems to have struck a chord as I hear about 900 staff expressed an interest in the latest package, which was made available across the company.

Donovan can take credit for resolving the pension deficit and he appears to have a supportive new shareholder in STT.

He has also shaken up the senior management ranks and tried to change the culture.

But doubts about Eircom’s future prospects will linger until he can either reduce the debt burden or persuade the government/regulator to somehow join with the company on upgrading its network. Or, preferably, both.