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Irish Telco ESAT Unveils Good First Half, Slams Eircom

by Jason Gorringe,, London

17 November 2003

Irish telecoms company Esat, a BT subsidiary, yesterday announced strong growth in first half sales and profits, but said it was concerned over lack of progress in opening up residential and SME markets to full competition.

Mr. Bill Murphy, chief executive officer, Esat BT said, "Our position at half year is extremely positive, which is testament to the unrelenting focus we've adopted in winning and retaining customers. However, we continue to face significant obstacles in growing our residential and SME base, which ought to form the backbone of our business. We are still without Wholesale Line Rental 18 months after ComReg's direction to Eircom to make this available - they have singularly failed to deliver a fit-for-market product, which is an essential component for us in delivering a single bill to customers. When you factor in Eircom's anti-competitive behaviours that ComReg highlighted in a recent report on CPS, it's plain to see the difficulties alternative operators have in developing a sustainable business in this particular market."

According to a recent survey in Consumer Choice Magazine, Eircom is the second most expensive operator out of sixteen operators reviewed for a basket of voice calls. Despite this fact, Eircom retains a 90% market share, an issue over which ComReg has also recently expressed concern.

Mr Murphy added, "The challenges in the broadband space are of equal concern. Until we have a fair wholesale price from Eircom that does not force us into a margin squeeze, the growth story for Ireland will remain as underwhelming as the myriad of recent reports have highlighted. If we look across the water to the UK, we see a vibrant, thriving broadband market with more than 150 service providers competing aggressively against incumbent BT, who only hold 25% market share - a healthy wholesale price is singularly stimulating this market, as more and more entrants get on the broadband wagon. In Ireland, we effectively have two operators, with Eircom holding a 75% market share. Why ? Because there's no business case to be made given current wholesale prices. Minister Ahern and his department have to be applauded for their foresight in driving Ireland's broadband agenda. After all, broadband is a critical element of Ireland's competitive genetics. However, if we are truly intent on climbing out of the morass we're in, and we're as serious about broadband as so many say we need to be, then it's imperative that Minister Ahern calls on ComReg to review eircom's wholesale price as a matter of urgency".

On a more positive note, Esat BT has had a number of high-profile corporate wins over the last six months, and Mr. Murphy is more optimistic about further growth in this sector. He added, "We are finding the corporate base to be extremely well disposed to us, particularly as we are the clear market leader in providing European and Global connectivity solutions to multi-site corporates. Our credentials in that respect are impeccable".

One of the largest and most important consumers in the ICT environment is the government sector, estimated to be worth around € 475 million per annum. This was a specific area targeted by Esat BT since Mr. Murphy's arrival in Ireland 18 months ago. Mr Murphy said, "I'm pleased to say that we are finally making progress in this area, and we're now being given a chance to work on a number of government projects. We need to see government itself commit to a competitive market, which will in turn attract competition, delivering value and choice for Irish consumers. I hope the government will continue to lead by example by spreading their spend in a fashion that transparently underpins their stated belief in competition itself."

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