90 jobs set for axe as Easynet tightens belt

The company, which is 72%-owned by struggling communications group Marconi, announced substantial full year losses, forcing it to look at making savings.

Costcutting will be primarily directed at its wholesale business, and as a result of scaling-back of this division, Easynet CEO Neil Rafferty is stepping down, with chairman David Rowe taking the helm.

The company's operating performance has matched market expectations, with group sales weighing in at 78.7m, an improvement of nearly 90% on the previous year, and more than 204m in cash retained with no bank debt. However, the company reported negative EBIDTA of nearly 32m and wrote-down the value of its network and assets by 369m, taking its full-year net loss to 281m.

Easynet has identified ways in which to improve its business and will focus on its DSL offering throughout the coming year, while shifting away from its wholesale activities that currently account for 23% of total revenues.

Rowe said: “The more cautious operating in the wholesale capacity market has emerged during 2001 and into the current year has led the company to re-evaluate its cost base in the carrier division. The outlook for this market is very challenging.”

The company said it will reduce capital expenditure in this division and 90 staff will be axed, with redundancy and rationalisation costs estimated at 7m. This action will reduce annualised costs by around 10m.

Easynet said it had generated much-improved monthly DSL revenues of 9.6m in December 2001, compared with 3.3m for the first month of 2001, as a result of attracting more than 9,000 new customers during the year.

The company is on track in terms of the initial estimated costs of its DSL programme and in customer acquisition. It intends to continue the roll-out of local exchanges to provide further coverage to key cities such as London, Manchester, Leeds, Newcastle and Edinburgh.

“Progress in providing Broadband Internet access to businesses has been excellent both in terms of revenue growth and in accessing the BT's local exchanges to provide the Unbundled Local Loop DSL products for which we currently have a leading position in the U.K," said Rowe.

He described the process of accessing BT's exchanges as “difficult” but said ongoing issues would be resolved over time.

Easynet's European business reported “encouraging” growth and accounted for 17.5m of total revenues, a 92% increase on last year's contribution. In line with its strategy of running European operations “prudently” it will withdraw from its start-up businesses in Italy and Switzerland.

Shares are up 5.4% at 147.5p, valuing the company at just 163, a discount to its 204 cash pile and net assets of 299m.