Eircom suffers fall off in voice revenues

Falling voice revenues and acquisition costs affected full-year underlying earnings at Eircom, the dominant Irish telecoms group that is the subject of a takeover bid.

Revenue rose from òá.6bn to òá.69bn and pre-tax profits were òâ4m higher to òá12m, although this was boosted by òå2m from the sale of property and investment. Earnings per share were òà.08, up from òà.07 in 2005.

Voice and traditional data revenue, which make up the vast majority of sales, fell by 8 per cent during the year. This was only partially offset by rapid growth in the smaller mobile phone and broadband internet businesses. Also affecting profits was a rise in non-cash pension expenses to òå2m from òá5m.

Earnings before interest, tax, depreciation and amortisation (ebitda) and also excluding restructuring costs, the property sale and the non-cash pension charges were òæ01m, compared to òæ10m in 2005.

The company said Meteor, the mobile operator that Eircom bought in November had contributed to a rise in operating costs and capital expenditure, with the latter also boosted by the broadband rollout.

However Meteor contributed òäm to ebitda in the four months to March and the investment in broadband ðs now delivering consistent growth, with around 250,000 customers today,ðÐsaid Philip Nolan, chief executive.

The company announced a second interim dividend of òà.052, as it had previously forecast.

Eircom in April received a òâ.20 per share offer from Babcock & Brown Capital, a listed investment fund managed by the Australian financial services company that is already a 28.8 per cent shareholder. The offer values the company at òä.3bn after including òá.9bn of net debt and was recommended by Eircomð# board. Discussions between the two parties and the employee share trust, which owns 21.8 per cent of Eircom are under way.

Eircom said on Monday these discussions and due diligence were continuing and ð further announcement will be made if and when appropriate.ðì/p>

Swisscom was last year poised to buy Eircom before the Swiss government blocked it from completing any foreign takeovers.

The shares were òà.03 higher in mid-morning trade.

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