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Eircom profits tumble; sale prospect news due

February 16, 2011

By Staff Reporter

By Andrew Bushe

DUBLIN — Negotiations on the sale of Eircom’s mobile phone arm, Eircell, to the British-based giant Vodafone are expected to be concluded within two weeks, a statement from the company said on Monday.

Eircom said a number of issues remain to be finalized, including clarification on the regulatory framework for third-generation mobile licenses. A statement outlining the regulatory framework is due to be published shortly by the Office of the Director of Telecommunications Regulation.

Eircom’s results for the half-year to September showed turnover rising 14 percent to 1.062 billion euros (£836m).

Costs were up 66 percent and pretax profit before exceptionals fell 30 percent to 131 million euros.

The shares have been falling in recent weeks in the absence of positive news about the Vodafone talks or progress on an offer for the fixed-line phone business from a consortium led by former East boss Denis O’Brien.

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They dropped again after the interim results statement.

Mobile phone revenue was up 49 percent and it accounted for 27 percent of the group’s income. To the end of September, 54 percent of Irish people had mobile phones, up from 33 percent last year.

Fixed-line retail call traffic rose 5 percent to euro 5.1 billion minutes, while wholesale call traffic increased 117 percent.

Eircom said prospects in the second half of the year for the mobile business is likely to exceed expectations.

It said increasing competition is likely to hit revenue growth and operating margins in the fixed-line business.

The fixed-line business continues to face the challenge of reducing its high cost base and the restructuring program initiated earlier this year will continue.

The new businesses, including Internet and multimedia, almost tripled revenue in the first six months.

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