Issued Friday 27 May 2005. eircom today announced its preliminary results outlining the financial and operational performance of the company for the period

1^st April 2004 to 31^st March 2005.

• Operating profit before restructuring programme costs and exceptional operating charges/credits up 73% from €142 million to €246 million.
• Operating margin profit before restructuring programme costs and exceptional operating charges/credits has improved to 15%.
• Headcount reduced by 668 employees to a year-end total of 7,275 - well on track to achieve target level of 7,000 employees by 2008.
• €209 million of capital investment in the financial year of which almost 60% is dedicated to increasing capacity, demand growth and DSL roll-out.

• Broadband DSL customers increased to 128,000 customers at 31 March 2005 (compared to 39,000 in March 2004). The figure today stands at over 140,000 customers.

• Proposed final dividend of 6 cents giving a total dividend of 11 cents per share for the full year.

1. EBITDA before restructuring programme costs, pension amortisation and exceptional operating charges/credits.

"We delivered on our strategy in our first year back as a public company. Profitability has improved at both Adjusted EBITDA and operating profit levels. In a highly competitive marketplace a revenue decline of 2% has been in line with our expectations. Nonetheless underlying profitability has increased due to lower operating costs, increased efficiency of service delivery, and improved gross margin. Our capital spend has been on plan at €209 million and the company’s cash generation remains strong.

A key strategic objective is to grow broadband and our performance in the past year means we are now well advanced towards our strategic goal to transition from a traditional telephone company into a digital converged business. We have increased our broadband base from 39,000 to 128,000 during the financial year and today the figure stands at over 140,000. The investment in customer acquisition will require greater price stimulation than previously assumed, and we are committed to further innovation in product, pricing and promotions to deliver our stated goal to achieve 500,000 users by December 2007.

We have also been seeking a re-entry to the mobile market. While we are committed to mobile re-entry progress has been slower than anticipated. We have consistently stated that our re-entry must be achieved on terms which are commercially sensible to us and we remain engaged on all aspects of potential re-entry routes.

As a component of our continuing efficiency agenda, year-end staff numbers have reduced by 668 to 7,275 and we are confident that our previously stated target of 7,000 employees by March 2008 will be reached before that date. We continue to focus on costs and in developing our under-utilised assets to their maximum value.

The company’s strong cash generation enabled us to pay an interim dividend of 5 cents per share to shareholders in December 2004. The Board are recommending a final dividend of 6 cents per share, subject to approval at the AGM in July, giving a total dividend of 11 cents per share for the full year."