Oireachtas Joint and Select Committees
Wednesday, 5 June 2019
Joint Oireachtas Committee on Communications, Climate Action and Environment
National Broadband Plan: Discussion
Mr. Donal Leavy:
The 50% does not include depreciation, for example, which is a very material number in a network business like telecommunications. After tax, Eir's net profit margins are quite considerably lower. Looking at Eir's separated accounts, it is quite profitable in its traditional narrow band business, which is its traditional retail line rental and calls. Looking at the accounts at face value, this is where we would see higher than the regulated rate of return. It is something we are looking at currently. The 8% refers to Eir's weighted average cost of capital, which is a blend of its estimated cost of equity, or a share and its cost of debt. We have just published in the past couple of days a proposal to cut that from approximately 8% to 6%. That is based on the latest information available to us as to what the number should be. That would be very much in line with European norms.