Eircom today reported profit of €327m before adjustments, for the six months to the end of 2009, down 3% on the same period a year earlier.

The former Irish State telco which is now controlled by ST Telemedia (STT) of Singapore, said today that the economic and competitive situation remains very challenging. Group revenue at €933 million for the half year was down 9% on the prior year. Group Adjusted EBITDA  (Earnings before Interest, Taxes, Depreciation, and Amortization and before non-cash pension charges/(credits), exceptional costs and net construction income) at €327 million was down 3% on last year, supported by ongoing cost reductions. The Group’s operating costs [operating costs are before amortisation, depreciation, goodwill impairment and exceptional costs, and non-cash pension charge/(credit)] were 13% lower than last year, reflecting significantly reduced labour costs and other operating expenses.

Capital expenditure cash-flows for the six month period were €166 million, reflecting continued investment in Ireland’s fixed and mobile broadband networks.

As of 11 February 2010, the company said it has now passed the milestone of 750,000 fixed and mobile broadband customers. The Group’s networks support more than 50% of all broadband connections in Ireland. 31% of fixed line broadband customers are served by retailers other than Eircom, through wholesale activities.

Since its launch last March, mobile broadband is said to have provided good growth, with more than 35,000 mobile broadband customers now supported on our 3G network as of 11 February 2010. Mobile data revenues grew 53% in the second quarter, relative to last year.

The company also announced agreement with its Trade Union Alliance (TUA) on a set of proposals to reduce its pension deficit. By imposing agreed limits on the future growth of pensionable pay, Eircom expects to eliminate the defined-benefit pension deficit as at 31 December 2009 and reduce significantly the risks within the scheme. Eircom’s annual contributions to the scheme will be contained at an affordable level, with a commitment to increase from 7.8% of pay to at least 8.5%, which will be subject to a floor for three years.

Eircom did not disclose the size of the deficit.

Commenting, Paul Donovan, CEO of Eircom said: “The operating environment in Ireland has not improved. The Group’s revenues remain under pressure and our profits have declined in the quarter despite continued good progress on costs. Further cost reduction will be required in the coming months.

 A number of very important corporate milestones have been reached, and key business issues addressed. In the past weeks, we have met two key objectives by achieving shareholder stability and agreeing a far-reaching remediation of our pension position with our unions. In addition, we now have more than 750,000 broadband customers on our networks."