Figures released yesterday show Eircom made €40 million in operating profits from its retail customers in the year to March 31st 2003.
Accounts filed with the communications regulator, Comreg, yesterday show that Eircom earned €357.24 million in profits from its operations on the back of a €2.78 billion turnover in the year to end March.
In July it reported that it had operating profits for the year of €180 million. However, yesterday's figures include a more detailed breakdown of how the company performed during its financial year. They show an exceptional €174 million gain from the sale of the Golden Pages during the year.
Eircom is required to file accounts with the regulator that give a breakdown of earnings from each business division. It must also comply with accounting standards laid down in a series of EU directives, rather than the generally accepted standards used in its financial reports. Consequently it had to include the exceptional gain as operating profit.
The figures show its retail business, which includes telephone services to domestic customers and leased-lines to independent operators, generated almost half its sales, contributing €1.3 billion in turnover. Operating profits from this division were €40 million. Turnover in 2002 was €1.29 billion while the division made a loss of €10 million that year.
Its local access network, which connects users to their local exchanges, generated operating profit of €107.6 million on the back of a €554.75 million turnover, compared with a €529 million turnover and a €102 million operating profit last year. Its core or "backbone" network business, earned €52.5 million on a €720 million turnover, virtually unchanged on last year.
Other business had turned over €186.7 million and generated operating profits of €156.6 million, compared with €357 million in sales and a loss of €154 million in 2002. This division covers rental maintenance of customer equipment, internet provider Indigo and the now demerged mobile subsidiary Eircell.
Figures show that call charges are essentially carrying its retail business. Local, national, international and fixed-to-mobile calls generated operating returns of almost €322.33 million. Barring calls to the internet, all other areas of its retail business lost money.
Access, which includes providing its customers with lines, lost €159 million, compared with €197 million last year. A spokeswoman said the reduced loss was partly attributable to an increase in line rental charges during the period.
And the figures show that supplying lines to its competitors has started to cost Eircom money. The leased line business, which is made up of the lines leased to independent operators, slipped from €12.8 million profit in 2002 to a €6 million loss in 2003. The data show that rental turnover in this area dropped by €21 million to €117 million, while new connections slipped from €8 million to €7 million. A reduction in costs allowed it to claw back almost €2 million. A spokeswoman said the business continued to be highly competitive. "Many of the operators have been rationalising their operations," she said.
Last month, Eircom paid €512 million to its owner, the Valentia Consortium, after raising €1 billion through a bond issue. Sir Anthony O'Reilly, who controls 5 per cent of the consortium gained €20 million from the deal, while the employee share option trust (ESOT) earned €230 million. The other consortium members are Soros Private Equity Partners and Providence Private Equity Partners.
The payout comprised a €446 million dividend payment and the redemption of €66 million of preference shares. Critics of the payout suggest that it indicates that Valentia acquired the former public company at a bargain price when it took over in 2001.
