Irish incumbent Eircom risks breaching financial covenants within the coming 12 months if no action is taken to lower net debt, CEO Paul Donovan has said.
Gleacher Shacklock and JPMorgan are continuing to advise the fixed and mobile operator on a range…
Irish incumbent Eircom risks breaching financial covenants within the coming 12 months if no action is taken to lower net debt, CEO Paul Donovan has said.
Gleacher Shacklock and JPMorgan are continuing to advise the fixed and mobile operator on a range of options, which include a restructuring, debt swap or rights issue.
The group, which is seeking to refinance E3.8bn of net debt, has axed a further 117 staff since the previous quarter. Labour sources – excluding agency – have fallen by 1,675 from March 2009.
However, while announcing a 5.6% fall in Q1 2010 revenue to E468m compared with the corresponding period last year, Donovan said Eircom “continues to manage its business in a difficult and uncertain economic environment”.
Adjusted EBITDA for the three months to 30 September 2010 remained steady year-on-year at E168m.
Eircom, which is majority owned by Singapore-based telecoms holding company STT, first warned about the possibility of breaching covenants when it unveiled full-year results in August this year.
Although the company is confident it will be able to avoid defaulting, Donovan cautioned there are “no signs of growth or increased spending by customers. We do not anticipate this situation to change in the near to medium term”.
The situation is likely to be exacerbated by austerity measures to be announced in the Irish government’s budget on 7 December.
A spokesman for Eircom told TelecomFinance that it was too early to tell how the company will be impacted by the budget, which comes as European ministers agree a E85bn bailout for the Irish Republic to keep its banking system from collapsing.
“What we are seeing is customers who are aware how to optimise their usage within bundles and we are seeing SME’s rationalise the number of lines they have at their business,” he said.
However, the spokesman also insisted the company could benefit in a wider context, adding: “If customers are spending more time at home because consumer spending is down, then they are likely to be using our services more and valuing them more.”
