EIRCOM CHIEF executive Paul Donovan told staff yesterday that he plans to “instigate a far-reaching set of measures to reduce operating costs and capital expenditures in the short term” across both Eircom and its mobile arm Meteor.
Eircom reported a 9 per cent decline in its revenues in the first quarter of its financial year – July 1st to the end of September – while profits fell by 1 per cent.
Operating costs declined by 13 per cent but Mr Donovan appears determined to bring them down further in what he described as a “difficult time for the company”.
In a note issued to all staff yesterday, Mr Donovan said there would be “headcount reductions” in the coming months as “we accelerate our efforts” to reduce its workforce by 1,200. About 700 have already left the business.
He said the “technology organisations” across the group would be combined into a single unit. This will be led by Brendan Lynch, the chief operating officer of Meteor, who becomes managing director of group technology.
Mr Donovan said “management layers and the spans of control” will also be reviewed. “This will result in better decision-making and reduced costs,” he added.
In addition, “further price cuts” will be sought from suppliers and all business area managers will have their budgets cuts. “These budgets will be reduced and the changes are non-negotiable.”
Capital expenditure will also be “scaled back”.
Staff were also told that overtime will be reduced and only used in “exceptional circumstances”.
Eircom also plans to eliminate annual leave being carried forward and time in lieu balances. “Any exceptions require executive approval,” Mr Donovan said.
All spending on external consultants has to be agreed either by Mr Donovan or the company’s chief financial officer.
Travel costs are to be cut while Mr Donovan has instructed that lunches and refreshment should not be provided in meeting rooms, “except where external customers are involved”. Staff entertainment costs are also to be eliminated.
All marketing and sponsorship spends “will be reviewed for value for money”, Mr Donovan added. It is not clear if this will include Eircom’s sponsorship of the Irish soccer team, which is due for renewal in late 2010.
