Eir may increase dividends to its controlling shareholder, French telecoms billionaire Xavier Niel, and its joint venture fibre network partner to as much as €225 million per year, as it largely completes investment in high-speed broadband roll-out, according to Fitch.
The group paid an average of €181 million of dividends to shareholders and its fibre network partner, Paris-based private-equity firm InfraVia Capital, over the past two years.
Eir’s wholesale broadband business is facing mounting competitive pressure resulting from “overbuild” of fibre by industry players in recent times, including Siro, a joint venture between ESB and Vodafone, and Virgin Media, Fitch said as it withdrew its coverage of the company.
A spokeswoman for Eir confirmed that the company has moved from being covered by three ratings agencies to two from now on, Moody’s and S&P Global.
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The group saw its wholesale broadband base fall by 34,000 subscriptions to 429,000 in the 12 months to the end of June. However, its retail broadband and mobile customers grew.
While Eir reported that its €2.89 billion net debt at the end of June equated to 4.7 times its earnings before interest, tax, depreciation and amortisation (ebitda), Fitch’s methodology put the leverage ratio at 5.2. This gives Eir limited headroom compared with the 5.5 level where Fitch would ordinarily consider downgrading the group’s creditworthiness.
“Leverage headroom has been constrained by peak network investment and competitive pressure in the wholesale segment. However, we expect faster deleveraging once the fibre roll-out is completed,” Fitch said. “Nevertheless, we anticipate headroom generated by lower capital intensity to be offset by increased shareholder distributions and dividends paid to minorities.”
Eir, the former State monopoly which has been through seven changes in control in the past 27 years, has distributed about €2.29 billion in dividends to its owners since Niel led the takeover in April 2018.
A Niel investment vehicle now owns more than 70 per cent of the business, following the exit of hedge fund Davidson Kempner as a shareholder in 2024 and fellow US minority investor Anchorage selling back some of its stock months later.
However, Niel, whose family is invested telecoms businesses in 20 countries across Europe and Latin America that are currently generating about €24 billion of annual revenue, told The Irish Times in an interview two years ago that he and co-investors “always invest as much as we [take] in dividends”.
“We share what we do between three. First, the company and the people working in the company. Second, the customers. And third, the shareholder. It’s always what we do in all our countries and it’s one of our big secrets,” he said.
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Shareholder payouts have decreased in recent years, after several large dividend payments under Niel’s control, including €800 million in dividends in 2022.
The large payout was underpinned as Eir sold off a 49.9 per cent stake in its wholesale broadband subsidiary, Fibre Networks Ireland (FNI), to InfraVia. Net proceeds from the stake sale and FNI subsequently raising debt, totalled €1.2 billion.
Eir-controlled FNI began paying dividends to InfraVia relating to its minority stake in the joint venture in 2023.
“We expect FNI to pay dividends to minority shareholders of €35 million-€45 million annually in 2026-2029,” said Fitch, adding that it sees normal Eir shareholder dividends amount to €150 million to €180 million annually over the same period.
The Eir spokeswoman said the group has no current plans in relation to debt or refinancing, but keeps its position under ongoing review “as part of its normal financial management”.
