Dr. Philip Nolan - Eircom Chief Executive

Irish telco Eircom reported today that its earnings fell in the nine months of its current financial year. Group revenue rose €27 million to €1,226 million.

HIGHLIGHTS FOR THE NINE-MONTH PERIOD UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS

• Revenue of €1,226 million (compared to €1,199 million last year).
• EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) before restructuring programme costs, non-cash pension charges and profit on disposal of property and investments, of €440 million, resulting in an EBITDA margin on the same basis of 36%.
• Significant pre taxation profits on disposal of property and investments in the nine months of c. €51 million, not included above, and c. €60 million of cash received.
• €171 million of capex cash outflow in the nine months, with a focus on increasing capacity, demand led growth and DSL roll-out.
• Increased sales & marketing spend and discounts to drive DSL and Talktime packages. DSL customers increased to 200,000 at 31 December 2005 and to 215,000 customers as of 9 February 2006.
• €103 million cash inflow in the nine months, after interest (net) and dividend payments of €179 million.
• Meteor results for one month included in this results announcement. Total mobile subscribers of 565,000 as at 31 December 2005.

• Revenue of €424 million (compared to €399 million last year).
• EBITDA before restructuring programme costs, non-cash pension charges and profit on disposal of property and investments, of €142 million, resulting in an EBITDA margin on the same basis of 33%.
• The acquisition by eircom Limited of Meteor Ireland Holdings, LLC, the holding company of Meteor Mobile Communications Limited, from Western Wireless International Holding Corporation was completed on 23 November 2005.
• The rights issue to fund the acquisition of Meteor was completed on 7 October with 313,349,862 ordinary shares being issued at a share price of €1.35 per share.

As we face the strategic challenges of positioning eircom for future growth, these results demonstrate solid progress towards our strategic goals of defending our fixed line base, growing broadband and re-entering the mobile market.

In summary the results show group revenue, up €27 million at €1,226 million for the nine months, but with EBITDA down €17 million (4%) to €440m over the period. The revenue growth is largely due to the inclusion of Meteor revenue for month of December.

There are two factors that explain the EBITDA reduction. Firstly, in common with other incumbents, eircom faces margin contraction due to increasing competition. Secondly, we are investing to drive increased DSL and line penetration to grow future revenue. These actions yield winback rates of 78% and a DSL customer base of 215,000 on 9 February 2006.

Meteor’s performance in the last quarter has been exceptionally strong. Subscriber numbers have grown to 565,000, up 66% year on year. We estimate Meteor’s market share by subscriber at close to 14%, well on its way to our 20% target. Post paid subscribers now make up 6% of the base and accounted for c.12% of the net adds in the last quarter. Meteor has thus established a strong position from which we can build a significant mobile presence.

These results illustrate how eircom is laying the foundations on which to create a growing business as a provider of the full range of telecommunications services. The acquisition and integration of Meteor is already demonstrating success and we are investing to grow new fixed line revenues in broadband.