Eircom Holdings (Ireland) Limited

eircom Holdings (Ireland) Limited

Third quarter and nine months Unaudited Results
                31 March 2018
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eircom Holdings (Ireland) Limited

Unaudited third quarter and nine months results to 31 March 2018


Table of contents                                                                     Page(s)


Trading highlights for the third quarter ended 31 March 2018                             8

KPIs for the third quarter ended 31 March 2018                                           9


Reconciliation of statutory financial statements to the results presented in the         10
management discussion and analysis section within this quarterly document

Reconciliation of EBITDA to operating profit for the quarter and nine months ended
31 March 2018                                                                            11

Consolidated income statement for the quarter ended 31 March 2018                        12

Consolidated income statement for the nine months ended 31 March 2018                    13

Group statement of comprehensive income for the nine months ended 31 March 2018          13

Consolidated balance sheet as at 31 March 2018                                           14

Consolidated cash flow statement for the quarter ended 31 March 2018                     15

Consolidated cash flow statement for the nine months ended 31 March 2018                 16

Consolidated statement of changes in shareholders’ equity for the nine months ended
31 March 2018                                                                            17

Selected notes to the condensed interim financial information for the period ended
31 March 2018                                                                          18-24

Commentary on results of operations for the quarter ended 31 March 2018                25-32

Commentary on results of operations for the nine months ended 31 March 2018            33-41




                                                                                              7
eircom Holdings (Ireland) Limited
    Trading highlights for the third quarter ended 31 March 2018*

     Revenue of €317 million decreased by €2 million or 1% compared to the corresponding prior year quarter; growth
      in mobile, bundling and TV revenues, was offset by a reduction in low margin eir business revenue and a decrease
      in retail voice traffic usage.
     Group adjusted EBITDA3of €137 million was €6 million or 4% higher than the corresponding prior year quarter
      driven by operating cost savings.
     Reported fixed line revenue, before intra-company eliminations, of €243 million decreased by 2% or €3 million
      compared to the corresponding prior year period. Bundling and TV growth was offset by lower retail traffic usage
      coupled with reductions in low margin eir business revenue.
     Fixed line adjusted EBITDA, of €109 million was €2 million or 2% lower when compared to the corresponding
      prior year quarter due to changes in the gross margin mix.
     The group broadband customer base4 at 31 March 2018 was 919,000, an increase of 29,000 compared to the
      corresponding prior year period. The retail customer base remained stable while the wholesale base increased by
      29,000 compared to the corresponding prior year period. At 31 March 2018, there were 620,000 customers availing
      of fibre based high speed broadband services, an increase of 90,000 compared to the corresponding prior year
      period.
     Group fixed access paths decreased by 22,000 compared to the prior year; growth in standalone broadband of
      10,000 was partially offset by a reduction in fixed line access net losses of 32,0005. The rate of fixed access line
      losses continues to reduce; fixed line access net losses for the twelve months ended 31 March 2017 were 38,000.
     Reported mobile revenue of €82 million increased by €1 million or 2% year on year and mobile EBITDA of €28
      million increased by €8 million when compared to the corresponding prior year quarter.
     Total mobile customers at the end of the quarter were 1,053,0006 including 534,000 postpay customers and 519,000
      prepay customers. The postpay customer base increased by 20,000 year on year bringing the number of customers
      on postpay contracts to 51%. The prepay base reduced by 32,000 year on year mainly due to continued migrations to
      postpay as well as increased competition in the market.
     Group operating costs7 of €118 million, reduced by €5 million or 4% compared to the corresponding prior year
      quarter.
     Total Full Time Equivalent (FTE) staff at the end of March were 3,145, a reduction of 151 FTE or 5% compared to
      the corresponding prior year quarter.
     Despite continued high levels of capital investment, the Group maintains strong liquidity with cash on hand of €128
      million at 31 March 2018.


*The figures presented above include amounts relating to the Groups 56% share in Tetra Ireland Communication Limited (“Tetra”). Following the
adoption of IFRS 11, Joint Arrangements, Tetra is reported in the financial statements under the equity method as opposed to proportionate
consolidation. The management discussion and analysis section of this quarterly report presents results on a management accounting basis and therefore
includes the results of the Group’s joint ventures on a proportionate basis, reflected in Group revenue, operating costs and EBITDA.




3
  Adjusted EBITDA is earnings before interest, taxation, amortisation, depreciation, non-cash lease fair value credits, and non-cash pension charges, profit on disposal of
   Property, Plant and Equipment and exceptional items.
4
  Combined retail and wholesale excluding LLU and line share, including SABB
5
  Combined retail and wholesale access line losses including LLU
6
  Mobile base is a combination of handset subscriptions, machine to machine and mobile broadband subscriptions
7
  Operating costs are pay and non-pay costs before non-cash pension charge and lease fair value credits

                                                                                                                                                                              8
eircom Holdings (Ireland) Limited
KPIs for the third quarter ended 31 March 2018 (unaudited)




                                              As at and for    As at and for
                                             quarter ended    quarter ended
                                                                                 Better/
                                                                                           N1
                                             31 Mar 2017      31 Mar 2018      (Worse) %

 Access Paths Base ('000)
 Retail Access Lines                              686              655             (5%)
 Retail SABB*                                      36               34             (4%)
 Wholesale Access lines                           497              501              1%
 Wholesale SABB*                                  143              155              8%
 Wholesale LLU**                                   9                4             (51%)
 Total                                           1,371            1,349           (2% )

 Retail Voice traffic (minutes in quarter)        367              328            (11%)

 Broadband Lines ('000)
 Retail                                           444             444               -
 Wholesale                                        446             475              7%
 Total                                            890             919              3%
 Net Growth in quarter                            10               9

 Mobile Customers ('000)
 Prepaid handsets                                 544              510            (6%)
 Prepaid MBB                                       7                9             33%
 Total prepaid base                               551              519            (6%)

 Postpaid handsets (including M2M)                476              498             4%
 Postpaid MBB                                     38               36             (4%)
 Total postpaid base                              514              534             4%

 Total                                           1,065            1,053           (1% )

 ARPU'S € N2 & N3
 Consumer Blended ARPU                            48.1            50.0             4%
 WLR PSTN ARPU                                    16.2            16.5             2%
 Bitstream ARPU (including SABB)                  15.7            15.8             1%

 Prepaid ARPU (including MBB)                     13.8            15.0             9%
 Postpaid ARPU (including MBB/M2M)                33.2            33.1             0%

 Closing Headcount                               3,296            3,145            5%


*SABB - Standalone Broadband
**LLU - Local Loop Unbundled




                                                                                                9
eircom Holdings (Ireland) Limited

Basis of preparation
This financial information has been prepared to make available certain unaudited condensed consolidated financial information to the
holders of the group's Senior Secured Notes. Accordingly, the group has not prepared this financial information in accordance with
IAS 34 – “Interim Financial Information” and has not carried out an impairment review of the carrying value of goodwill and other
non-current assets as at 31 March 2018.

This condensed interim financial information has been prepared on the going concern basis, which assumes that eircom Holdings
(Ireland) Limited will continue in operational existence for the foreseeable future.

The financial information, as at and for the period ended 31 March 2018, in respect of the group has been prepared using the same
accounting policies as applied for the year ended 30 June 2017. For a more complete discussion of our significant accounting policies
and other information, including our critical accounting judgements and estimates, this report should be read in conjunction with the
financial statements of EHIL for the year ended 30 June 2017.



Reconciliation of statutory financial statements(1) to the results presented in the management
discussion and analysis section within this quarterly document

                                                      In the quarter ended                           In the quarter ended
                                                         31 March 2017                                  31 March 2018
                                                  Reported    Adjusted Statutory                 Reported    Adjusted Statutory
                                                       €m           €m       €m                       €m           €m       €m

Revenue                                                  319           (4)          315                317            (5)          312

Operating costs excluding non-cash pension
charge and fair value lease credits                    (188)             1        (187)               (180)            3         (177)

Adjusted EBITDA                                          131           (3)          128                137            (2)          135


Closing Cash                                             100           (4)           96                128            (8)          120


                                                    In the nine months ended                       In the nine months ended
                                                         31 March 2017                                  31 March 2018
                                                  Reported    Adjusted Statutory                 Reported    Adjusted Statutory
                                                        €m          €m       €m                        €m          €m       €m

Revenue                                                  976          (12)          964                955           (13)          942

Operating costs excluding non-cash pension
charge and fair value lease credits                    (602)             4        (598)               (571)            6         (565)

Adjusted EBITDA                                          374           (8)          366                384            (7)          377


Closing Cash                                             100           (4)           96                128            (8)          120



(1)
  The statutory financial statements are prepared in accordance with IFRS accounting principles and include the results of the group’s
joint ventures using the equity accounting basis rather than on a proportionate consolidation basis. The management discussion and
analysis section of this quarterly report presents results on a management accounting basis and therefore includes the results of the
group’s joint ventures on a proportionate basis, reflected in group revenue, operating costs and EBITDA.




                                                                                                                                   10
eircom Holdings (Ireland) Limited
Reconciliation of earnings before interest, taxation, amortisation, depreciation, non-cash lease fair
value credits, non-cash pension charges, exceptional items and profit on disposal of property,
plant and equipment to operating profit

                                                                                Third          Third            Nine            Nine
                                                                               quarter        quarter         months          months
                                                                                ended          ended           ended           ended
                                                                              March 2017     March 2018      March 2017      March 2018
                                                                                   €m             €m              €m              €m

Operating profit                                                                     12              27             23              58
Profit on disposal of property, plant and equipment ("PPE")                           -               -             (2)              -
Exceptional items                                                                    17               5             56              23
Non-cash pension charge                                                               4               4             13              11
Operating profit before non-cash pension charges, exceptional items
and profit on disposal of property, plant and equipment                              33              36             90              92
Depreciation                                                                         68              75            201             215
Amortisation                                                                         28              25             80              75
EBITDA before non-cash pension charges, exceptional items and profit
on disposal of property, plant and equipment                                        129             136            371             382
IFRS 3 unfavourable lease fair value adjustment                                     (1)             (1)            (5)             (5)
Adjusted EBITDA before non-cash lease fair value credits, non-cash
pension charges, exceptional items and profit on disposal of property,              128             135            366             377
plant and equipment
EBITDA of joint ventures using proportionate consolidation                             3              2               8                7
Reported EBITDA* before non-cash lease fair value credits, non-cash
pension charges, exceptional items and profit on disposal of property,              131             137            374             384
plant and equipment


Reported EBITDA* before non-cash lease fair value credits, non-cash
pension charges, exceptional items and profit on disposal of property,
plant and equipment is split as follows:
Fixed line                                                                          111             109            329             329
Mobile                                                                               20              28             45              55
                                                                                    131             137            374             384



* Reported EBITDA includes the results of the group’s joint ventures on a proportionate basis. The statutory basis includes the results of
the group’s joint ventures using the equity accounting basis rather than on a proportionate consolidation basis.




                                                                                                                                  11
eircom Holdings (Ireland) Limited
Consolidated Income Statement – unaudited
For the third quarter ended 31 March 2018

                                                                             31 March 2017   31 March 2018
                                                                                      €m              €m

Revenue                                                                              315             312

Operating costs excluding amortisation, depreciation and exceptional items          (190)           (180)
Amortisation                                                                         (28)            (25)
Depreciation                                                                         (68)            (75)
Exceptional items                                                                    (17)             (5)

Profit on disposal of property, plant and equipment                                    -               -
Operating profit                                                                      12              27

Finance costs – net                                                                  (34)            (25)
Share of profit of joint venture                                                        2               1

(Loss)/profit before tax                                                             (20)              3

Income tax credit/(charge)                                                             2              (1)

(Loss)/profit for the period                                                         (18)              2




                                                                                                       12
eircom Holdings (Ireland) Limited
Consolidated Income Statement – unaudited
For the nine-month period ended 31 March 2018

                                                                                Notes          31 March 2017   31 March 2018
                                                                                                        €m              €m

Revenue                                                                           3                    964             942

Operating costs excluding amortisation, depreciation and exceptional items                            (606)           (571)
Amortisation                                                                      3                    (80)            (75)
Depreciation                                                                      3                   (201)           (215)
Exceptional items                                                                3, 4                  (56)            (23)

Profit on disposal of property, plant and equipment                                                      2               -
Operating profit                                                                  3                     23              58

Finance costs – net                                                               5                   (132)            (75)
Share of profit of joint venture                                                                          9               4

Loss before tax                                                                                       (100)            (13)

Income tax credit/(charge)                                                        6                      5              (2)

Loss for the period                                                                                    (95)            (15)




Group statement of comprehensive income – unaudited
For the nine-month period ended 31 March 2018
                                                                                               31 March 2017   31 March 2018
                                                                                                        €m              €m

Loss for the financial period attributable to equity holders of the
parent                                                                                                 (95)            (15)

Other comprehensive income/(expense):
Items that will not be reclassified to profit or loss
Defined benefit pension scheme remeasurement gains:
- Remeasurement gain in period                                                                          58             154
- Tax on defined benefit pension scheme remeasurement gains                                             (7)            (19)
                                                                                                        51             135
Items that may be reclassified subsequently to profit or loss
Net changes in cash flow hedge reserve:
 - Fair value loss in period                                                                              -             (2)
 - Transfer to income statement                                                                         (1)             (1)
                                                                                                        (1)             (3)
Other comprehensive income, net of tax                                                                  50             132

Total comprehensive (expense)/income for the financial period                                          (45)            117



The accompanying notes form an integral part of the condensed interim financial information.




                                                                                                                         13
eircom Holdings (Ireland) Limited
Consolidated Balance Sheet – unaudited
As at 31 March 2018

                                                                                 Notes         30 June 2017   31 March 2018
                                                                                                        €m              €m
Assets
Non-current assets
Goodwill                                                                                                212             212
Other intangible assets                                                                                 355             320
Property, plant and equipment                                                                         1,434           1,428
Investment in joint venture                                                                               3               4
Deferred tax assets                                                                                       3               2
Other assets                                                                                             15              15
                                                                                                      2,022           1,981

Current assets
Inventories                                                                                              16              14
Trade and other receivables                                                        7                    196             211
Restricted cash                                                                                          18               5
Cash and cash equivalents                                                                               142             120
                                                                                                        372             350
Total assets                                                                                          2,394           2,331

Liabilities
Non-current liabilities
Borrowings                                                                         8                  2,236           2,242
Derivative financial instruments                                                                          -               1
Trade and other payables                                                                                128             110
Deferred tax liabilities                                                                                 44              53
Retirement benefit liability                                                       9                    258             127
Provisions for other liabilities and charges                                       10                   110              99
                                                                                                      2,776           2,632

Current liabilities
Derivative financial instruments                                                                          5               2
Trade and other payables                                                                                438             415
Current tax liabilities                                                                                  10              13
Provisions for other liabilities and charges                                       10                    67              49
                                                                                                        520             479
Total liabilities                                                                                     3,296           3,111

Equity
Equity share capital                                                                                      -               -
Capital contribution                                                                                     54              60
Cash flow hedging reserve                                                                                 2             (1)
Retained loss                                                                                         (958)           (839)
Total equity                                                                                          (902)           (780)

Total liabilities and equity                                                                          2,394           2,331



The accompanying notes form an integral part of the condensed interim financial information.




                                                                                                                      14
eircom Holdings (Ireland) Limited
Consolidated cash flow statement – unaudited
For the third quarter ended 31 March 2018


                                                                        Notes   31 March 2017   31 March 2018
                                                                                          €m              €m

Cash flows from operating activities
Cash generated from operations                                           11                85              94
Interest paid                                                                            (13)            (15)
Income tax refund/(paid)                                                                    9             (4)
Net cash generated from operating activities                                               81              75

Cash flows from investing activities
Purchase of property, plant and equipment (PPE)                                          (60)            (70)
Purchase of intangible assets                                                            (13)            (17)
Proceeds from sale of PPE                                                                   2               -
Dividend received from joint arrangement                                                    5               -
Restricted cash                                                                          (12)               -
Net cash used in investing activities                                                    (78)            (87)

Cash flows from financing activities
Net cash used in financing activities                                                       -               -

Net increase/(decrease) in cash, cash equivalents and bank overdrafts                      3             (12)
Cash, cash equivalents and bank overdrafts at beginning of period                         93             132

Cash, cash equivalents and bank overdrafts at end of period                               96             120




                                                                                                                15
eircom Holdings (Ireland) Limited
Consolidated cash flow statement – unaudited
For the nine-month period ended 31 March 2018


                                                                                  Notes        31 March 2017    31 March 2018
                                                                                                         €m               €m

Cash flows from operating activities
Cash generated from operations                                                      11                  315              292
Interest paid                                                                                           (68)             (61)
Income tax refund/(paid)                                                                                   9              (8)
Net cash generated from operating activities                                                            256              223

Cash flows from investing activities
Purchase of property, plant and equipment (PPE)                                                        (201)            (209)
Purchase of intangible assets                                                                           (53)             (51)
Proceeds from sale of PPE                                                                                  8                -
Dividend received from joint arrangement                                                                   5                3
Restricted cash                                                                                         (11)               13
Net cash used in investing activities                                                                  (252)            (244)

Cash flows from financing activities
Dividends paid to equity shareholders                                                                     (1)             (1)
Repayment on borrowings                                                                                (252)                -
Proceeds from issuance of 4.5% Senior Secured Notes                                                      200                -
Premium on issuance of 4.5% Senior Secured Notes                                                            3               -
Debt issue costs                                                                                          (2)               -
Debt modification fees                                                                                    (4)               -
Net cash used in financing activities                                                                   (56)              (1)

Net decrease in cash, cash equivalents and bank overdrafts                                              (52)             (22)
Cash, cash equivalents and bank overdrafts at beginning of period                                       148              142

Cash, cash equivalents and bank overdrafts at end of period                                               96             120



The accompanying notes form an integral part of the condensed interim financial information.




                                                                                                                            16
eircom Holdings (Ireland) Limited
Consolidated statement of changes in shareholders’ equity – unaudited
For the nine-month period ended 31 March 2018

                                                              Equity                   Cash flow
                                                               share         Capital    hedging      Retained     Total
                                                              capital   contribution     reserve          loss   equity
                                                                 €m              €m           €m           €m       €m

Balance at 30 June 2016                                             -            52             2       (836)     (782)

Loss for the period                                                 -             -              -        (95)     (95)

Defined benefit pension scheme remeasurement gain                   -             -              -         58       58
Tax on defined benefit pension scheme remeasurement gain            -             -              -         (7)      (7)

Currency translation differences                                    -             -              -         (1)      (1)
Total comprehensive expense                                         -             -              -        (45)     (45)

Capital contribution in respect of MIP equity value event           -             6             -           -         6
Dividends relating to equity shareholders                           -             -             -         (1)       (1)
Balance at 31 March 2017                                            -            58             2       (882)     (822)


Balance at 30 June 2017                                             -            54             2       (958)     (902)

Loss for the period                                                 -             -              -        (15)     (15)

Defined benefit pension scheme remeasurement gain                   -             -              -        154      154
Tax on defined benefit pension scheme remeasurement gain            -             -              -        (19)     (19)

Cash flow hedges:
- Fair value loss in year                                           -             -            (2)          -       (2)
- Transfer to income statement                                      -             -            (1)          -       (1)
Total comprehensive (expense)/income                                -             -            (3)        120      117

Capital contribution in respect of MIP equity value event           -             6              -          -         6
Dividends relating to equity shareholders                           -             -              -        (1)       (1)
Balance at 31 March 2018                                            -            60            (1)      (839)     (780)




The accompanying notes form an integral part of the condensed interim financial information.




                                                                                                                    17
eircom Holdings (Ireland) Limited
Selected notes to the condensed interim financial information – unaudited


1. General information
eircom Holdings (Ireland) Limited ("the company’ or “EHIL") and its subsidiaries together (“the group” or “eircom Holdings (Ireland)
Limited group” or “EHIL Group”), provide fixed line and mobile telecommunications services in Ireland.

This condensed consolidated interim financial information was approved for issue on 11 May 2018.


2. Basis of preparation
This financial information has been prepared to make available certain unaudited condensed consolidated financial information to the
holders of the group's Senior Secured Notes. Accordingly, the group has not prepared this financial information in accordance with IAS
34 – “Interim Financial Information” and has not carried out an impairment review of the carrying value of goodwill and other non-
current assets as at 31 March 2018.

This condensed interim financial information has been prepared on the going concern basis, which assumes that eircom Holdings
(Ireland) Limited will continue in operational existence for the foreseeable future.

The financial information, as at and for the period ended 31 March 2018, in respect of the group has been prepared using the same
accounting policies as applied for the year ended 30 June 2017. For a more complete discussion of our significant accounting policies
and other information, including our critical accounting judgements and estimates, this report should be read in conjunction with the
financial statements of EHIL for the year ended 30 June 2017.


3. Segment information
The group provides communications services, principally in Ireland. The group is organised into two main operating segments: fixed line
and mobile.

The segment results for the nine-months period ended 31 March 2018 are as follows:
                                             Fixed line         Mobile    Inter-segment       Reported*        Adjusted      Statutory*
                                                    €m            €m                €m              €m              €m              €m

Revenue                                             724             256              (25)            955             (13)            942

EBITDA **                                           329              55                  -            384             (7)            377
Non-cash lease fair value credits                     5               -                  -              5               -              5
Non-cash pension charges                           (11)               -                  -           (11)               -           (11)
Amortisation                                       (59)            (16)                  -           (75)               -           (75)
Depreciation                                      (196)            (22)                  -          (218)               3          (215)
Exceptional items                                  (23)               -                  -           (23)               -           (23)
Operating profit                                     45              17                  -             62             (4)             58

The segment results for the nine-months period ended 31 March 2017 are as follows:
                                             Fixed line         Mobile    Inter-segment       Reported*        Adjusted      Statutory*
                                                    €m            €m                €m              €m              €m              €m

Revenue                                             746             257              (27)            976             (12)            964

EBITDA **                                           329              45                  -            374             (8)            366
Non-cash lease fair value credits                     5               -                  -              5               -              5
Non-cash pension charges                           (13)               -                  -           (13)               -           (13)
Amortisation                                       (62)            (18)                  -           (80)               -           (80)
Depreciation                                      (178)            (21)                  -          (199)             (2)          (201)
Exceptional items                                  (56)               -                  -           (56)               -           (56)
Profit on disposal of PPE                             2               -                  -              2               -              2
Operating profit/(loss)                              27               6                  -             33            (10)             23

* Reported EBITDA includes the results of the group’s joint ventures on a proportionate basis. The statutory basis includes the results of
the group’s joint ventures using the equity accounting basis rather than on a proportionate consolidation basis.

** EBITDA is earnings before interest, taxation, amortisation, depreciation, non-cash lease fair value credits, non-cash pension charges,
exceptional items and profit on disposal of property, plant and equipment.


                                                                                                                                      18
eircom Holdings (Ireland) Limited

Selected notes to the condensed interim financial information – unaudited (continued)

4. Exceptional items
                                                                                                 31 March 2017           31 March 2018
                                                                                                           €m                      €m

Restructuring programme costs                                                                                  13                       4
Management incentive plan                                                                                       6                       6
Transaction related costs                                                                                       5                      12
Onerous lease contracts                                                                                        27                       -
Other exceptional items                                                                                         5                       1
                                                                                                               56                      23

The group has adopted an income statement format which seeks to highlight significant items within group results for the period. The
group believe that this presentation provides additional analysis as it highlights significant or one-off items. Judgement is used by the
group in assessing the particular items, which by virtue of their scale and nature are disclosed in the group income statement and related
notes as exceptional items.

Restructuring programme costs
The group included an exceptional charge of €4 million for restructuring programme costs in respect of staff exits in the period ended 31
March 2018 (31 March 2017: €13 million). The exceptional charge of €4 million at 31 March 2018 is an IAS 19 (Revised) defined
benefit pension charge in relation to past service costs.

Management incentive plan
During the period ended 31 March 2018, the group recognised a charge of €6 million (31 March 2017: €6 million) in its income
statement, with a corresponding increase in equity, in respect of contractual rights under the MIP awarded by the holding company,
eircom Holdco S.A., to the group's employees, for which the group has no obligation to make any payment.

Transaction related costs
The group recognised an exceptional charge of €12 million relating to costs incurred by the group, in connection with the acquisition by
NJJ Telecom Europe (“NJJ”), alongside Iliad SA (“Iliad”), to acquire a major stake in the eir group, and for strategic review and other
project related costs (31 March 2017: €5 million) incurred in the period ended 31 March 2018.

Onerous lease contracts
During the period ended 31 March 2017, the group recognised an exceptional charge of €27 million in respect of onerous contracts on
its leasehold properties. The group no longer requires these properties as a result of the rationalisation of the group’s accommodation
requirements and provision has been made in respect of the estimated cash flow required to meet the future lease payments net of any
sub-lease income for these leases.

Other exceptional items
During the period ended 31 March 2018, the group recognised an exceptional charge of €1 million for the deferred consideration
arrangement following the acquisition of a subsidiary undertaking in April 2016.

During the period ended 31 March 2017, the group included an exceptional charge of €4 million in respect of certain legal matters
arising in the period and €1 million for the deferred consideration arrangement following the acquisition of a subsidiary undertaking in
the prior year.




                                                                                                                                      19
eircom Holdings (Ireland) Limited
Selected notes to the condensed interim financial information – unaudited (continued)

5.   Finance costs – net
                                                                                                 31 March 2017           31 March 2018
                                                                                                           €m                      €m
(a) Finance costs:
Interest payable on bank loans and other debts                                                                83                      69
Interest amortisation on non-current borrowings                                                               18                        4
Net interest cost on net pension liability                                                                      5                       4
Amortisation of debt issue costs and debt modification fees                                                     3                       2
Other unwinding of discount                                                                                     1                       1
Amortisation of ‘Cash Flow Hedge Reserve’ derivatives                                                           1                     (1)
Fair value movements on derivatives not qualifying for hedge accounting                                       (7)                     (4)
                                                                                                             104                      75
Loss on extinguishment of debt                                                                                26                        -
Write off of debt issue costs and debt modification fees                                                        2                       -
                                                                                                             132                      75
(b) Finance income:
Interest income                                                                                                -                       -
                                                                                                               -                       -
Finance costs – net                                                                                          132                      75



6. Income tax (credit)/charge
The tax on the group’s loss before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable
to the loss of the group as follows: -
                                                                                                  31 March 2017          31 March 2018
                                                                                                              €m                      €m

Loss before tax                                                                                             (100)                    (13)

Tax calculated at Irish standard tax rate of 12.5%                                                           (12)                     (2)

Effects of:-
Non-deductible expenses                                                                                         8                       5
Income taxable at higher rate                                                                                   -                       1
Utilisation of losses carried forward                                                                         (1)                     (1)
Adjustments in respect of prior periods                                                                         -                     (1)
Tax (credit)/charge for the period                                                                            (5)                       2




7. Trade and other receivables
During the period ended 31 March 2018, the group recognised a provision for impaired receivables of €6 million (31 March 2017: €6
million), reversed provisions for impaired receivables of €Nil (31 March 2017: €Nil) and utilised provisions for impaired receivables of
€7 million (31 March 2017: €6 million). The creation and reversal of provisions for impaired receivables have been included in
“operating costs” in the income statement.




                                                                                                                                      20
eircom Holdings (Ireland) Limited
Selected notes to the condensed interim financial information – unaudited (continued)

8. Borrowings
The maturity profile of the carrying amount of the group’s borrowings is set out below.
                                                          Within           Between          Between           After
                                                          1 Year        1 & 2 Years      2 & 5 Years        5 Years             Total
                                                              €m               €m               €m               €m              €m

As at 31 March 2018
Bank borrowings (Facility B)                                       -                -                -           1,600            1,600
Unamortised fair value difference on borrowings                    -                -                -            (40)             (40)
Debt modification fees                                             -                -                -            (11)             (11)
                                                                   -                -                -           1,549            1,549

4.5% Senior Secured Notes due 2022                                 -                -             700                 -             700
Debt issue costs                                                   -                -              (7)                -              (7)
                                                                   -                -             693                 -             693

                                                                   -                -             693            1,549            2,242

As at 30 June 2017
Bank borrowings (Facility B)                                       -                -                -           1,600            1,600
Unamortised fair value difference on borrowings                    -                -                -            (44)             (44)
Debt modification fees                                             -                -                -            (13)             (13)
                                                                   -                -                -           1,543            1,543

4.5% Senior Secured Notes due 2022                                 -                -             700                 -             700
Debt issue costs                                                   -                -              (7)                -              (7)
                                                                   -                -             693                 -             693

                                                                   -                -             693            1,543            2,236


At 31 March 2018, the group has Senior Bank borrowings of €1,600 million with a maturity date of 19 April 2024 and 4.5% Senior
Secured Notes of €700 million with a maturity date of 31 May 2022.

The borrowings under the Senior Facilities Agreement were recognised initially in accordance with IAS 39 at their fair value on the date
of recognition, 11 June 2012, which was estimated to be 77% of the par value of the liability. The difference between the fair value on
initial recognition and the amount that was payable on the maturity date is being amortised over the expected life of the borrowings
through finance costs in the income statement using the effective interest method under IAS 39. The remaining unamortised amount at
31 March 2018 was €40 million.

Interest accrued on borrowings at 31 March 2018 is €14 million (30 June 2017: €6 million). This is included in trade and other payables.




                                                                                                                                     21
eircom Holdings (Ireland) Limited
Selected notes to the condensed interim financial information – unaudited (continued)

9. Pensions
The group's pension commitments are funded through separately administered Superannuation Schemes and are principally of a defined
benefit nature. The group undertakes a full review of the retirement benefit liability at each quarter end in accordance with IAS 19
(Revised). The balance sheet presented as at 31 March 2018 reflects the IAS 19 (Revised) deficit of €127 million as at 31 March 2018.

Pension scheme obligation
The status of the principal scheme at 31 March 2018 is as follows:
                                                                                                      30 June 2017      31 March 2018
                                                                                                               €m                 €m

Present value of funded obligations                                                                            4,455               4,460
Fair value of scheme assets                                                                                  (4,197)             (4,333)
Liability recognised in the Balance Sheet                                                                        258                 127



Assumptions of actuarial calculations
The main financial assumptions used in the valuations were:
                                                                                                              At 30             At 31
                                                                                                          June 2017        March 2018

Rate of increase in salaries                                                                                  1.55%               1.55%
Rate of increase in pensions in payment                                                                       1.55%               1.55%
Discount rate                                                                                                 2.10%               2.10%
Inflation assumption                                                                                          1.65%               1.75%

Mortality assumptions – Pensions in payment – Implied life expectancy for
          65 year old male                                                                                  88 years            88 years
Mortality assumptions – Pensions in payment – Implied life expectancy for
          65 year old female                                                                                90 years            90 years
Mortality assumptions – Future retirements – Implied life expectancy for 65
          year old male                                                                                     91 years            91 years
Mortality assumptions – Future retirements – Implied life expectancy for 65
          year old female                                                                                   93 years            93 years

 The above assumptions reflect the imposition of a cap on the increases in pensionable pay to the lower of CPI, salary inflation or agreed
fixed annual rates.




                                                                                                                                      22
eircom Holdings (Ireland) Limited
Selected notes to the condensed interim financial information – unaudited (continued)

10. Provisions for other liabilities and charges
                                                TIS                                    Asset
                                              Annuity Restructuring Onerous          Retirement    Deferred
                                              Scheme      Costs     Contracts        Obligations consideration    Other   Total
                                                  €m            €m       €m                 €m            €m       €m       €m

At 30 June 2017                                    14                34        43            50               4     32     177

Charged to consolidated income statement:
- Additional provisions                              -                -          -            -               1      2        3
- Unused amounts reversed                            -                -          -            -               -    (1)      (1)

Transfer to receivables                              -                -          -            -               -      2        2
Increase in provision capitalised as asset
retirement obligation                                -                -          -            1               -      -        1

Utilised in the financial period                   (3)             (21)        (7)            -               -    (3)     (34)
At 31 March 2018                                   11                13        36            51               5    32      148

Provisions have been analysed between non-current and current as follows:
                                                                                              30 June 2017        31 March 2018
                                                                                                        €m                   €m

Non-current                                                                                             110                  99
Current                                                                                                  67                  49
                                                                                                        177                 148




11. Cash generated from operations
                                                                                             31 March 2017        31 March 2018
                                                                                                       €m                   €m

Loss after tax                                                                                         (95)                 (15)

Add back:
Income tax (credit)/charge                                                                              (5)                    2
Share of profit of joint venture                                                                        (9)                  (4)
Finance costs – net                                                                                    132                   75
Operating profit                                                                                        23                   58

Adjustments for:
- Profit on disposal of property, plant and equipment                                                   (2)                    -
- Depreciation and amortisation                                                                        281                  290
- Non-cash lease fair value credits                                                                     (5)                  (5)
- Non cash retirement benefit charges                                                                   13                   11
- Restructuring programme costs                                                                         13                     4
- Non cash exceptional items                                                                            38                   11
- Other non cash movements in provisions                                                                  1                    2

Cash flows relating to restructuring, onerous contracts and other provisions                           (35)                 (38)
Cash flows relating to construction contracts                                                           (1)                  (1)

Changes in working capital
 Inventories                                                                                            (1)                    2
 Trade and other receivables                                                                            (5)                 (24)
 Trade and other payables                                                                               (5)                 (18)
Cash generated from operations                                                                         315                  292




                                                                                                                                  23
eircom Holdings (Ireland) Limited
Selected notes to the condensed interim financial information – unaudited (continued)
12. Post Balance Sheet Events

Acquisition led by NJJ consortium
On 19 December 2017, the majority shareholders of the company, Eircom Holdco S.A. (“EHSA”), entered into a definitive agreement
with Toohil Telecom Holdings Limited (“Toohil”) to acquire 100% of EHSA. Toohil is majority owned and controlled by NJJ Telecom
Europe (“NJJ”) and Iliad SA. Current EHSA shareholders, Anchorage Capital Group, LLC and Davidson Kempner Capital Management
LP, will hold a minority investment interest in Toohil. The transaction was conditional upon the satisfaction of certain conditions,
including obtaining EU Commission Competition clearance from the European Commission, Media Merger consent from the Minister
for Communication, Climate Action and Environment in Ireland and Broadcasting Authority of Ireland consent, all of which were
received by March 2018. The transaction subsequently completed on 9 April 2018.

As of 31 March 2018, the acquisition had not been completed and therefore has no impact on the financial statements as of and for the
period ending 31 March 2018.
Restructuring (VL)
In April 2018, the group launched a voluntary leaving scheme, which is designed to facilitate employees to leave the organisation on a
voluntary basis. The group plans to reduce its workforce by approximately 750 employees. The cost of the scheme, including the cash
cost and any related pension curtailment cost, will directly affect the income statement after the period end.

There have been no other significant events affecting the group since the period ended 31 March 2018.

13. Contingent liabilities
There have been no material changes in our contingent liabilities since the publication of the financial statements of EHIL in the
bondholder’s report for the year ended 30 June 2017.


14. Guarantees
There have been no material changes in our credit guarantees and in derivatives since the publication of the financial statements of EHIL
in the bondholder’s report for the year ended 30 June 2017.

15. Seasonality
Fixed line
The group does not believe that seasonality has a material impact on our fixed line business.

Mobile
The group’s mobile business tends to experience an increase in sales volumes in the weeks approaching Christmas due to the seasonal
nature of its retail business. The group’s mobile business experiences significant postpay and prepay subscriber growth and related costs
of handset subsidies and commissions in November and December. Visitor roaming revenues are also seasonally significant because
Ireland is a popular tourist destination during the summer months.

16. Commitments
Operating lease commitments
The group’s operating lease contractual obligations and commitment payments were €304 million at 31 March 2018 (30 June 2017: €327
million). The payments due on operating leases are in respect of lease agreements in respect of properties, vehicles, plant and equipment
for which the payments extend over a number of years.

Capital commitments
The group’s capital contractual obligations and commitment payments were €30 million at 31 March 2018 (30 June 2017: €53 million).

17. Related party transactions
Management incentive plan
The management incentive plan ("MIP") was introduced in the year ended 30 June 2013 by the group’s parent company, eircom Holdco
SA, for certain directors and senior executives in the group. During the period ended 31 March 2018, the group recognised a charge of €6
million (31 March 2017: €6 million) in its income statement, with a corresponding increase in equity, in respect of contractual rights
under the MIP awarded by the parent company, eircom Holdco S.A., to the group's employees, for which the group has no obligation to
make any payment.

There have been no material changes in our related party transactions since the publication of the financial statements of EHIL in the
bondholder’s report for the year ended 30 June 2017.

                                                                                                                                     24
Management discussion and analysis on results of operations for the quarter ended 31 March 2018
The amounts and commentary presented in the management discussion below include the results of the group’s joint
venture in Tetra Ireland Communications Limited (“Tetra”) on a proportionate consolidation basis. In accordance with
IFRS 11 ‘Joint Arrangements’ the EHIL consolidated financial statements for the quarter ended 31 March 2018 applies the
equity method of accounting for the investment in Tetra.
Certain comparative figures have been re-grouped and re-stated where necessary on the same basis as those for the current
financial quarter.


Revenue

The following table shows a segmental split of revenues for the period from our fixed line and mobile businesses:


                                                                                        For the quarter ended
                                                                                        Mar 31,      Mar 31,     % Change
                                                                                         2017          2018      2017/2018
                                                                                      (unaudited) (unaudited)
                                                                                             €m           €m
Fixed line services and other revenue                                                        246          243           (2)
Mobile services revenue                                                                       81           82             2
Total segmental revenue                                                                      327          325           (1)
Intracompany eliminations                                                                     (8)          (8)          (2)
Total revenue                                                                                319          317           (1)

Fixed line services and other revenue

The following table shows revenue from the fixed line segment, analysed by major products and services, and the
percentage change for each category, for the periods indicated:



                                                                                        For the quarter ended
                                                                                        Mar 31,      Mar 31,   % Change
                                                                                         2017          2018    2017/2018
                                                                                      (unaudited) (unaudited)
                                                                                              €m           €m
Access (Rental and Connections)                                                                120         118        (2)
Voice Traffic (including Foreign Inpayments)                                                    55          57          1
Data Services                                                                                   25          25        (3)
Other Products and Services                                                                     46          43        (5)
Total fixed line services and other revenue                                                    246         243        (2)

Total fixed line services and other revenues for the quarter ended to 31 March 2018, before intra company eliminations,
decreased by 2% compared to the corresponding prior year period. The decrease was driven by traditional access revenue
declines as well as a decrease in low margin ICT/managed services revenues within eir business.




                                                                                                                        25
eircom Holdings (Ireland) Limited

Access (rental and connections)

The following table shows rental, connection and other charges and the percentage changes for the periods indicated:


                                                                                       For the quarter ended
                                                                                       Mar 31,      Mar 31,   % Change
                                                                                        2017          2018    2017/2018
                                                                                     (unaudited) (unaudited)
                                                                                              €m           €m
Total access revenue
Retail PSTN/ISDN rental and connection                                                        50           48           (4)
Wholesale PSTN/ISDN/LLU rental and connection                                                 27           28             1
Broadband rental and connection                                                               43           42           (2)
Total access revenue                                                                         120          118           (2)

Access paths (in thousands at period end, except percentages)
Retail Access Lines                                                                         686            655          (5)
Wholesale Access Lines                                                                      497            501            1
Wholesale LLU                                                                                 9              4         (51)
SABB                                                                                        179            189            6
Total PSTN/ISDN/LLU/SABB                                                                  1,371          1,349          (2)

Broadband and Bitstream (in thousands at period end, except percentages)
Retail Broadband                                                                            444           444            -
Wholesale Broadband                                                                         446           475            7
Total Broadband (including SABB)                                                            890           919            3

Access revenues for the quarter ended 31 March 2018 of €118 million decreased by 2% compared to the corresponding
prior year quarter.

Retail line rental and connection revenues decreased by 4% in the quarter ended 31 March 2018, compared to the
corresponding prior year quarter, mainly due to continuing declines in PSTN and ISDN lines. Retail access lines at 31
March 2018 were 655,000, a reduction of 5% compared to 31 March 2017.

Wholesale access lines and revenue increased by 1% year on year when compared to the prior year quarter ended 31 March
2017.

Broadband revenue for the quarter of €42 million was down 2% compared to the corresponding prior year quarter.
Revenue gains in wholesale were offset by increased promotional offerings in the consumer division. The wholesale
broadband base of 475,000 at 31 March 2018, increased by 29,000 compared to the corresponding prior year period while
the retail broadband customer base remained stable for the same period at 444,000.

We continue to address retail fixed line losses and broadband churn with a number of programmes, including rolling out
high speed broadband and offering bundled telecommunications services including broadband, TV, mobile, telephony and
eir sport content. As at 31 March 2018, the rollout of our high speed fibre network had passed 75% of Irish premises and
620,000 retail and wholesale customers were connected to high speed broadband services, up 90,000 customers when
compared to the corresponding prior year period. In the same period, 75,000 customers were availing of TV, up 8,000
subscriptions year on year and over 50% of the consumer broadband base was availing of exclusive eir sport content. As of
31 March 2018, 28% of eir’s consumer households were taking 3 or more services, an increase of 4 percentage points
compared to the corresponding prior year period.




                                                                                                                        26
eircom Holdings (Ireland) Limited
Traffic

The following table shows total traffic revenue and volumes and the percentage changes for the periods indicated:


                                                                                     For the quarter ended
                                                                                     Mar 31,       Mar 31,    % Change
                                                                                      2017           2018     2017/2018
                                                                                   (unaudited)   (unaudited)
                                                                                            €m             €m
Revenue
Retail traffic                                                                               40                41           2
Wholesale traffic (including Foreign Inpayments)                                             15                16         N.M
Total traffic revenue                                                                        55                57           1
Traffic                                                                              (in millions of minutes,
                                                                                       except percentages)
Retail                                                                                       367             328           (11)
Wholesale (including Foreign Terminating Minutes)                                         1,071              956           (11)
Total traffic minutes                                                                     1,438            1,284           (11)



Overall Group traffic revenue was broadly flat in the quarter ended 31 March 2018 compared to the corresponding prior
year period. Reduction in traffic usage was offset by price increases implemented in quarters two and three of financial
year 2018.


Data communications

The following table shows information relating to revenue from data communications products and services and the
percentage change for the periods indicated:


                                                                                     For the quarter ended
                                                                                     Mar 31,      Mar 31,           % Change
                                                                                      2017          2018            2017/2018
                                                                                   (unaudited) (unaudited)
                                                                                           €m            €m
Data services revenue
Leased lines                                                                                13            12                (5)
Switched data services                                                                       5             4               (14)
Next generation data services                                                                7             9                 10
Total data services revenue                                                                 25            25                (3)


Revenue from data communications remained broadly stable compared to the corresponding prior year period. Revenue
increases from next generation services were offset by a decrease in leased lines and switched data services.




                                                                                                                            27
eircom Holdings (Ireland) Limited
Other products and services

Other products and services revenue includes our 56% share of revenue from Tetra, eir sports, our operations in UK/NI,
operator services, managed services, data centres and other revenue.

The following table shows information relating to revenue from other products and services, and the percentage change for
the periods indicated:


                                                                                     For the quarter ended
                                                                                     Mar 31,       Mar 31,     %
                                                                                      2017           2018    Change
                                                                                   (unaudited) (unaudited) 2017/2018
                                                                                           €m             €m

 Operator services                                                                           2             2        (13)
 Managed services and solutions                                                             16            12        (21)
 Tetra                                                                                       5             5          16
 UK                                                                                          9             8        (12)
 Data centre                                                                                 2             2        (12)
 Other revenue                                                                              12            14          16
 Other products and services revenue                                                        46            43         (5)

Revenue from other products and services for the quarter ended 31 March 2018, decreased by 5% compared to the
corresponding prior year quarter. Operator Services revenue decreased by 13% as a result of reduced calls to our 11811
directory enquiries service. Managed services revenue decreased by 21% due to a reduction in low margin revenue related
to eir Business. Other revenue increased by 16% driven in part by TV growth. Tetra, UK/NI revenue and Datacentre
revenues remained broadly stable when compared to the prior year quarter.




                                                                                                                      28
eircom Holdings (Ireland) Limited

Mobile services revenue

The following table shows revenue from Mobile services, analysed by major products and services:



                                                                                   For the quarter ended
                                                                                   Mar 31,       Mar 31,
                                                                                    2017           2018      % Change
                                                                                 (unaudited)   (unaudited) 2017/2018
                                                                                          €m             €m
Prepay handset                                                                             23             24         2
Postpay handset (incl. M2M)                                                                49             50         3
Mobile broadband                                                                            3              2     N.M
Roaming                                                                                     1              1      (44)
Other                                                                                       5              5         5
Total mobile services revenue                                                              81             82         2


Total subscribers (‘000)
Prepay handset customers                                                                  544         510          (6)
Postpay handset customers (incl. M2M)                                                     476         498            4
Mobile broadband customers                                                                 45          45            1
   Of which are prepay customers                                                            7           9          33
   Of which are postpay customers                                                          38          36          (4)
Total subscribers                                                                       1,065       1,053          (1)


Mobile services revenue comprises prepay and postpay revenues including interconnect, mobile broadband and machine to
machine. Other revenue is derived mainly from device sales and wholesale foreign roaming revenue.

Reported mobile revenue of €82 million for the quarter ended 31 March 2018 increased by 2% compared to the
corresponding prior year quarter.

Postpay handset revenue increased by 3% compared to the corresponding prior year period mainly due to a year on year
increase in postpay subscribers of 4%. Reported prepay handset revenue increased by 2% when compared to the
corresponding prior year period due to changes in pricing propositions at the beginning of the financial year 2018.

At 31 March 2018 there were 1,053,000 total mobile subscribers. While the overall base reduced by 12,000 compared to
the prior year due to increased competition in the prepaid market, the mix of customers continues to improve. The
proportion of postpay customers (including mobile broadband and M2M) within the base has increased from 48% at 31
March 2017 to 51% at 31 March 2018, representing an increase of 20,000 net additional postpay subscribers (including
mobile broadband and M2M).




                                                                                                                   29
eircom Holdings (Ireland) Limited

Operating costs before amortisation, depreciation and exceptional items

The following table shows information relating to our operating costs before amortisation, depreciation, and exceptional
items, and the percentage change for the periods indicated.


                                                                                     For the quarter ended
                                                                                    Mar 31,         Mar 31,
                                                                                     2017             2018     % Change
                                                                                  (unaudited)     (unaudited)  2017/2018
                                                                                            €m              €m
Cost of sales
Foreign outpayments                                                                         4              4           14
Interconnect                                                                               19             16         (14)
Equipment cost of sales                                                                    14             14          (3)
Other including subsidiaries and new business                                              28             28          (3)
Total cost of sales                                                                        65             62          (5)
Pay costs
Wages and salaries and other staff costs                                                    57            56          (3)
Social welfare costs                                                                         3             3            2
Pension cash costs—defined contribution plans                                                1             1            7
Pension cash costs—defined benefit plans                                                     4             4         (10)
Pay costs before non-cash pension charge and capitalisation                                 65            64          (3)
Capitalised labour                                                                        (17)          (18)            -
Total pay costs before non-cash pension charge                                              48            46          (4)
Non pay costs
Materials and services                                                                      4              5           43
Other network costs                                                                         5              4          (8)
Accommodation                                                                              23             21          (8)
Sales and marketing                                                                        17             17          (3)
Bad debts                                                                                   2              2            -
Transport and travel                                                                        3              2         (15)
Customer services                                                                           9              9            2
Insurance and compensation                                                                  0              1            1
Professional and regulatory fees                                                            3              2         (23)
IT costs                                                                                    5              7           27
Other non-pay costs                                                                         4              2         (53)
Total non-pay costs                                                                        75             72          (4)
Operating costs before non-cash pension charge, amortisation, depreciation, and
exceptional items                                                                         188            180          (4)
Non cash pension charge/(credit)                                                            4              4            -
Non cash fair value lease credits                                                          (1)           (1)            -
Operating costs before, amortisation, depreciation, and exceptional items                 191            183          (4)



Total operating costs for the quarter ended 31 March 2018 before non-cash pension charge, non-cash lease fair value
credits, amortisation, depreciation and exceptional items, decreased by 4% compared with the corresponding quarter of the
prior year.

Cost of Sales

Cost of sales decreased by 5% or €3 million in the quarter ended 31 March 2018 compared to the corresponding prior year
quarter driven by a decrease in Interconnect payments of €3 million or 14% related in part to changes to EU roaming rates
and a reduction in traffic usage.




                                                                                                                      30
eircom Holdings (Ireland) Limited
Pay costs

Total pay costs, before non-cash pension charges, decreased by 4% or €2 million in the quarter ended 31 March 2018
compared to the corresponding prior year quarter. The decrease is mainly due to a combination of lower FTE headcount,
lower contractor costs and savings from outsourcing of activities in the group which was partially offset by overtime
required as part of adverse winter conditions. FTE headcount at 31 March 2018 was 3,145 FTE, representing a net
reduction of 151 FTE compared to 31 March 2017.

Total non-pay costs

Non-pay costs decreased by 4% or €3 million in the quarter ended 31 March 2018 compared to the corresponding prior
year quarter. Key movements included the following:

    Accommodation costs decreased by 8% or €2 million compared to the corresponding prior year quarter primarily due
     to lower rent costs through optimisation of our property portfolio.
    Materials and service costs increased €1 million when compared to the prior year quarter due to timing of network
     activity.
    Professional and regulatory fees were €1 million lower due to lower consultancy costs.
    IT costs were €2 million higher driven mainly by upgrades to IT systems.
    Other non-pay costs decreased by €2 million due to organisational simplification and restructuring.

The remaining costs in the quarter ended 31 March 2018 were broadly in line with the corresponding prior year period.

Non-cash pension charge/ (credit)

The non-cash pension charge represents the difference between the amount of cash contributions that the company has
agreed to make to the fund during the period, on an accruals basis, and the accounting charges recognised in operating
profit in accordance with IAS 19 (Revised). The IAS 19 (Revised) accounting charge is not aligned with the principles that
the company applies in measuring its EBITDA. Therefore the non-cash pension charge is included as an adjustment in the
reconciliation of EBITDA to operating profit.

Non-cash lease fair value credits

The non-cash lease fair value credit included in the income statement during the period is in respect of the unfavourable
lease fair value adjustment which arose on acquisition of eircom Limited. At the date of acquisition, the group was required
to recognise a liability for the difference between the amount of future rental payments that had been contractually
committed to and the market rent that would have been payable if those contracts had been entered into at that date. The
liability is released as a credit to the income statement over the period of the relevant leases. The IFRS accounting
treatment is not aligned with the principles that the company applies in measuring its EBITDA. Therefore an adjustment
for the non-cash fair value credit is included in the reconciliation of EBITDA to operating profit.

Amortisation

Amortisation charges for the quarter ended 31 March 2018 were €25 million, €3 million lower than the prior year quarter,
due to lower amortisation on computer software.

Depreciation of property, plant and equipment

The depreciation charges for the quarter ended 31 March 2018 were €76 million, €7 million higher than the prior year
quarter, due to higher depreciation on Next Generation Assets (fibre) and IT assets.

Exceptional costs

The exceptional charges in the quarter ended 31 March 2018 of €5 million includes €3 million for the management
incentive plan (“MIP”), €1 million for restructuring programme costs and €1 million for the deferred consideration
arrangement following the acquisition of a subsidiary undertaking in April 2016. The restructuring programme costs of €1
million are in relation to the IAS 19 (Revised) defined benefit pension past service costs on staff exits.




                                                                                                                         31
eircom Holdings (Ireland) Limited

Exceptional costs (continued)

The exceptional charges in the quarter ended 31 March 2017 of €17 million includes €8 million for restructuring
programme staff exits, €5 million for strategic review costs, €2 million for the management incentive plan (“MIP”) and €2
million for certain legal matters arising in the quarter ended 31 March 2017.

Finance costs (net)

The group’s net finance costs for the quarter ended 31 March 2018 of €25 million were €9 million lower than the prior year
corresponding quarter, due to lower finance costs on amortisation on the fair value debt adjustment of €5 million and lower
interest costs on bank borrowings and other debt of €4 million as a result of the various refinancing of Facility B
borrowings in the year ended 30 June 2017.

Taxation

The tax charge for the quarter ended 31 March 2018 was €1 million, compared to the prior year corresponding quarter tax
credit of €2 million. The increase in tax reflects the reduction in operating charges, finance costs and deductible
exceptional items coupled with a reduction in the deferred tax credit year on year.

Liquidity

Net cash generated from operating activities

Our primary source of liquidity is cash generated from operations, which represents operating profit adjusted for non-cash
items which are principally depreciation, amortisation, impairment, non-cash pension charge, non-cash lease fair value
credits and certain non-cash exceptional items. Cash flows from operating activities are also impacted by working capital
movements and restructuring and other provision payments.

During the quarter ended 31 March 2018, net cash generated from operating activities was €81 million compared with
€78 million in the prior year corresponding quarter, an increase of €3 million. The increase is mainly due to improvements
in net working capital offset by tax payments of €4 million in the quarter compared to tax refunds of €9 million in the prior
year quarter.

Cash flows from investing activities

Total cash used in investing activities was €88 million for the quarter ended 31 March 2018, compared with €83 million for
the prior year corresponding quarter, an increase of €5 million, due to higher capital expenditure payments.

Cash flows from financing activities

There were no financing activities in the quarter.




                                                                                                                         32
Management discussion and analysis on results of operations for the nine months ended 31
March 2018
The amounts and commentary presented in the management discussion below include the results of the group’s joint
venture in Tetra Ireland Communications Limited (“Tetra”) on a proportionate consolidation basis. In accordance with
IFRS 11 ‘Joint Arrangements’ the EHIL consolidated financial statements for the nine months ended 31 March 2018
applies the equity method of accounting for the investment in Tetra.
Certain comparative figures have been re-grouped and re-stated where necessary on the same basis as those for the current
financial quarter.


Revenue

The following table shows a segmental split of revenues for the period from our fixed line and mobile businesses:


                                                                                        For the nine months
                                                                                               ended
                                                                                        Mar 31,      Mar 31,     % Change
                                                                                         2017         2018       2017/2018
                                                                                      (unaudited) (unaudited)
                                                                                              €m           €m
Fixed line services and other revenue                                                         746         724           (3)
Mobile services revenue                                                                       257         256             -
Total segmental revenue                                                                     1,003         980           (2)
Intracompany eliminations                                                                    (27)         (25)          (6)
Total revenue                                                                                 976         955           (2)



Reported group revenue of €955 million for the nine months decreased by 2% when compared to the corresponding prior
year period. Excluding the impact of reductions in Mobile Termination Rates (“MTRs”), underlying revenue decreased by
€17 million or 2% year on year driven mainly by a reduction in low margin revenues within the eir business division
coupled with a reduction in voice traffic which was partially offset by an increase in broadband, mobile and TV revenues.

Fixed line services and other revenue

The following table shows revenue from the fixed line segment, analysed by major products and services, and the
percentage change for each category, for the periods indicated:



                                                                                        For the nine months
                                                                                               ended
                                                                                        Mar 31,      Mar 31,   % Change
                                                                                         2017         2018     2017/2018
                                                                                      (unaudited) (unaudited)
                                                                                             €m           €m
Access (Rental and Connections)                                                               359         360           1
Voice Traffic (including Foreign Inpayments)                                                  173         164         (6)
Data Services                                                                                  74           73        (2)
Other Products and Services                                                                   140         127         (9)
Total fixed line services and other revenue                                                   746         724         (3)

Total fixed line services and other revenues for the nine months ended to 31 March 2018, before intra company
eliminations, decreased by 3% compared to the corresponding prior year period. The decrease was driven by traditional
voice revenue declines of 6% as well as a decrease in other products and services revenue of 9% when compared to the
corresponding prior year period. The decrease in other product and services related mainly to a reduction in low margin
ICT/managed services revenues. This was partly offset by an increase in access rental and connections of 1% driven by
growth in broadband.




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eircom Holdings (Ireland) Limited

Access (rental and connections)

The following table shows rental, connection and other charges and the percentage changes for the periods indicated:


                                                                                       For the nine months
                                                                                              ended
                                                                                       Mar 31,      Mar 31,  % Change
                                                                                        2017         2018    2017/2018
                                                                                     (unaudited) (unaudited)
                                                                                             €m           €m
Total access revenue
Retail PSTN/ISDN rental and connection                                                       153          146           (4)
Wholesale PSTN/ISDN/LLU rental and connection                                                 81           82             1
Broadband rental and connection                                                              125          132             6
Total access revenue                                                                         359          360             1

Access paths (in thousands at period end, except percentages)
Retail Access Lines                                                                         686            655          (5)
Wholesale Access Lines                                                                      497            501            1
Wholesale LLU                                                                                 9              4         (51)
SABB                                                                                        179            189            6
Total PSTN/ISDN/LLU/SABB                                                                  1,371          1,349          (2)

Broadband and Bitstream (in thousands at period end, except percentages)
Retail Broadband                                                                            444           444            -
Wholesale Broadband                                                                         446           475            7
Total Broadband (including SABB)                                                            890           919            3

Access revenues for the nine months ended 31 March 2018 of €360 million remained broadly stable compared to the
corresponding prior year period. Growth in broadband revenues offset a decline in retail line rental and connection
revenues.

Retail line rental and connection revenues decreased by 4% in the nine months ended 31 March 2018, compared to the
corresponding prior year period, mainly due to continuing declines in PSTN and ISDN lines. Retail access lines at 31
March 2018 were 655,000, a reduction of 5% compared to the corresponding prior year period.

Wholesale access lines and revenue remained broadly flat year on year when compared to the corresponding prior year
period.

Broadband revenue for the nine months to 31 March 2018 of €132 million increased by 6% compared to the corresponding
prior year period. The wholesale broadband base of 475,000, increased by 29,000 while the retail broadband customer
remained stable at 444,000 when compared to the corresponding prior year period.




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