By Andrew Bushe
DUBLIN — Exceptional once-off costs in the soon to be privatized Telecom Eireann has seen its after-tax profits drop from £155 million in 1997-98 to £66 million in the year to April 1.
The company says telephone call volumes grew by a record 16 percent and revenue grew by 6 percent to £1.44 billion.
"This increase in revenue was achieved even as the company introduced the biggest-ever price reduction package of £130 million," a spokesman said.
Telecom said a number of exceptional costs hit the group’s profit performance.
Following an agreement between the government and Telecom Eireann employees, there was a once-off cost of £100 million to buy out certain employee benefits.
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The money went to the Employee Share Ownership Trust. The 11,500 workers will end up owning 14.9 percent of the company when it is floated. The government is planning to sell at least 20 percent.
Other exceptional costs related to the public floatation — expected in early July — and dealing with Y2K issues.
Telecom also reduced net debt by £23.8 million, invested a record £361 million on capital expenditure, pay tax of £83 million and dividends of £46 million to the shareholders — the State and strategic partners KPN/Telia.
The Dutch/Swedish KPN/Telia partners bought a 20 percent share of Telecom in 1996 and is expected to exercise an option to buy another 15 percent when it is floated.
Chief Executive Alfie Kane said TE’s debt was down to £148 from £1 billion five years ago.
Telecom, who have faced competition since last year, reported telephone traffic was up a record 16 percent to 9.6 billion minutes, connections grew by 6 percent to 216,035, and mobile phones grew by 55 percent to 644,000.
Over a quarter of the population have already registered to buy shares in the flotation in New York, London and Dublin.
May 26-June 1, 1999