Historical Cost Separated Accounts - Eir

For the year ended 30 June 2020

Financial Statements

Historical Cost Separated Accounts

Contents

Page Introduction 2 Statement of Directors’ Responsibilities for the Separated Accounts 4 Independent Auditor’s Report to ComReg and the Directors of eircom Limited 5 Consolidated Wholesale Income Statement 8 Consolidated Wholesale Statement of Mean Capital Employed 9 The Market Financial Statements:

• Income Statement Wholesale Access 10 • Income Statement Wholesale Other 11 • Statement of Mean Capital Employed Wholesale Access 12 • Statement of Mean Capital Employed Wholesale Other 13

The Statement of Average Cost and Revenue by Service for the following wholesale markets:

• Wholesale Fixed Narrowband & Unbundled Access 14 • Wholesale Broadband Access 15

Statement of Network Costs Wholesale Markets 16 Network Cost Market Summary Wholesale Markets 18 Notes to the Separated Accounts 20 Annex 1 Explanatory Reports 26

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Introduction

eircom Limited Historical Cost Separated Accounts The European Communities (Electronic Communications Networks

and Services) (Framework) Regulations 2011 (S.I. No. 333 of 2011),

the European Communities (Electronic Communications Networks and

Services) (Access) Regulations 2011 (S.I. No. 334 of 2011) and the

European Communities (Electronic Communications Networks and

Services) (Universal Service and Users Rights) Regulations 2011 (S.I.

No.337 of 2011) (respectively “the Framework Regulations”, “the

Access Regulations” and the “Universal Service Regulations”)

establish the framework for the regulation of the provision of

electronic communications networks and services in Ireland. Under

this framework, the Commission for Communications Regulation

(“ComReg”) may designate operators as having Significant Market

Power (“SMP”) in respect of specific markets, in which case ComReg

may impose on such operators a range of obligations including,

pursuant to Regulation 11 of the Access Regulations and Regulation

13 of the Universal Service Regulations, a requirement for accounting

separation and cost accounting. eircom Limited has been designated

with SMP in a number of markets and in each case is subject to

obligations of accounting separation and cost accounting.

The Historical Cost R e g u l a t o r y Separated Accounts

( “ S e p a r a t e d A c c o u n t s ” ) for the year ended 30 June 2020 were prepared in accordance with this requirement and the detailed

framework and financial statements requirements set out in the following ComReg Decision Notices (the 'Decision Notices’) insofar as

they apply to the year ended 30 June 2020:

• Decisions No. 6, 8.1, 8.2, 8.4, 8.6, 8.9 and 8.11 set out in Decision

Notice D7/01 'eircom’s Reference Interconnection Offer & Accounting Separation and Publication of Financial Information for Telecommunications Operators’, dated April 2001

• D3/03 'Review of the Price Cap on certain Telecommunications

Services’, dated February 2003

• D03/09 'Review of regulatory asset lives of eircom Limited’, dated August 2009

• D04/09 'Rental Price for shared access to the Unbundled Local Loop Decision', dated August 2009

• D08/10 'Accounting Separation and Cost Accounting Review of eircom Limited’, dated 31 August 2010

• D15/14 ‘Cost of Capital’, dated 18 December 2014 • D11/18 ‘Pricing of Wholesale Broadband Services in the WLA and

WCA Markets’ dated 19 November 2018 • D03/20 ‘Wholesale High Quality Access at a Fixed Location’ dated

24 January 2020

The Decision Notices require that Financial Statements are prepared

for the following Wholesale Market Groups and, where applicable, individual markets within these Wholesale Market Groups:

Market Group Markets

Wholesale Access Wholesale Fixed Narrowband & Unbundled Access

Wholesale Broadband Access Wholesale Leased Lines

Wholesale Other Wholesale Interconnect Call Conveyance Wholesale Residual (Regulated) Wholesale Residual (Unregulated)

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Introduction The full definition of these Wholesale Market Groups and individual

wholesale markets are set out in Section 2 of the Primary Accounting Documentation, dated 30 November 2020.

The Separated Accounts are prepared in accordance with the

Accounting Documentation, where the Accounting Documentation means the Primary and Secondary Accounting Documentation, as

appropriate. The Primary Accounting Documentation set out the framework under which the statements have been prepared.

The Primary Accounting Documentation is made up of the following:

• Regulatory Accounting Principles - which lay out the general rules by which the Separated Accounts should be prepared, for example that all balances should be attributed with reference to cost causality.

• Attribution Methods - which explain how revenue, costs including transfer charges, assets and liabilities are attributed to the Markets, Network Elements and Activities within those Market Groups, following the Regulatory Accounting Principles, on a fully allocated basis.

• Transfer Charges – which explain how charges are raised between the markets.

• Accounting Policies - which detail the accounting policies adopted in preparing the underlying financial information.

For clarification, the Primary Accounting Documentation contain the

high level principles of attribution.

The procedures describing how these principles are applied are

contained in the Secondary Accounting Documentation, which

identify these procedures in detail. The Secondary Accounting

Documentation is provided privately to ComReg, in accordance with

the requirements of D08/10.

This introduction does not form part of the Accounting Documentation.

Applicable Rate of Return

The applicable Rate of Return used in these Separated Accounts is

8.18%. The annual Rate of Return was mandated by ComReg in D15/14.

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Statement of Director’s Responsibilities for the Separated Accounts

The European Communities (Electronic Communications Networks and Services) (Framework) Regulations 2011 (S.I. No. 333 of 2011), the

European Communities (Electronic Communications Networks and Services) (Access) Regulations 2011 (S.I. No. 334 of 2011) and the

European Communities (Electronic Communications Networks and Services) (Universal Service and Users’ Rights) Regulations 2011 (S.I. No.

337 of 2011) (respectively “the Framework Regulations”, “the Access

Regulations” and the “Universal Service Regulations”) establish the framework for the regulation of the provision of electronic

communications networks and services in Ireland.

Under this framework, the Commission for Communications Regulation (“ComReg”) may designate operators as having Significant Market

Power (“SMP”) in respect of specific markets; in which case ComReg

may impose on such operators a range of obligations including, pursuant to Regulation 11 of the Access Regulations and Regulation 13 of

the Universal Service Regulations, a requirement for accounting separation and cost accounting. eircom Limited has been designated

with SMP in a number of markets and in each case is subject to

obligations of accounting separation and cost accounting. ComReg Decision D08/10 (the “Decision Instrument”) of 31 August 2010 specifies

the manner in which eircom Limited must meet its obligations of accounting separation and cost accounting. The directors are

responsible for preparing the Separated Accounts which present fairly,

in accordance with the Decision Instrument and all relevant ComReg Directions, the results, mean capital employed and costs incurred by

the company and for each of the relevant markets.

The Separated Accounts for the year ended 30 June 2020 were prepared in accordance with Decision Notice D08/10. Each Financial

Statement includes:

• an income statement;

• a statement of mean capital employed; • a statement of average costs and revenue (if applicable); • a statement of costs (if applicable); • a network cost market summary (if applicable).

Each Financial Statement is prepared in accordance with the

Accounting Documentation. Insofar as there is any inconsistency

between any or all of the Accounting Documentation, the company

ensures that each financial statement is prepared in accordance with

the Accounting Documentation in the following order of priority:

• the regulatory accounting principles; • the attribution methods; • the transfer charges; and • the accounting policies.

The Financial Statements are reconciled with the eircom Limited

Annual Report and that reconciliation is demonstrated and explained.

eircom Limited confirms that the Separated Accounts for the year ended 30 June 2020 fairly present, in accordance with the Primary Accounting Documentation dated 30 November 2020, the results, mean capital employed and costs incurred by eircom Limited and comply with the requirements of the Decision Instrument and the

governing legislation.

Stephen Tighe Chief Financial Officer On Behalf of the Board 30 November 2020

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INDEPENDENT AUDITOR’S REPORT TO THE COMMISSION FOR COMMUNICATIONS REGULATION (“COMREG”) AND THE DIRECTORS OF EIRCOM LIMITED

Opinion

We have audited the Separated Accounts of eircom Limited (the “Company”) for the year ended 30 June 2020, including the Market Financial Statements which comprise the following:

- the Consolidated Wholesale Income Statement and Consolidated Wholesale Statement of Mean Capital Employed;

- the Income Statements and Statements of Mean Capital Employed in respect of markets (the “Market Financial Statements”);

- the Statement of Average Costs and Revenue by Service for Wholesale Fixed Narrowband and Unbundled Access and Wholesale Broadband Access;

- the Statement of Network Costs Wholesale Markets; - the Network Cost Market Summary Wholesale Markets; and - the Notes to the financial statements.

The Market Financial Statements comprise: - The Income Statement Wholesale Access and Statement of Mean

Capital Employed Wholesale Access, including the Income Statements for the Wholesale Access Markets;

- The Income Statement Wholesale Other and Statement of Mean Capital Employed Wholesale Other, including the Income Statements for the Wholesale Other Markets.

The financial reporting framework that has been applied in their preparation is:

- Direction D08/10 (dated 31 August 2010), (“the Decision Instrument” or “the Regulations”); and

- The Primary Accounting Documentation for the year ended 30 June 2020 (“the Primary Accounting Documentation”).

In our opinion:

- the Separated Accounts of the Company for the year ended 30 June 2020 present fairly, in all material respects, in accordance with the Regulations (including the Decision Instrument) and the Primary Accounting Documentation, the results, mean capital employed and costs incurred by eircom Limited and comply with the Regulations.

- Each of the Market Financial Statements for the year ended 30 June 2020, present fairly in all material respects, in accordance with the Primary Accounting Documentation dated 30 November 2020, the results, mean capital employed and costs incurred by eircom Limited and comply with the Regulations.

Basis for Opinion

As explained in the “Basis of Preparation” in note 1a, the Company prepared the Separated Accounts by disaggregating balances recorded in the general ledgers and other accounting records of eircom Limited and its subsidiaries (together the “Group”), by directions published by ComReg.

We audited the Statutory Financial Statements of eircom Limited for the year ended 30 June 2020 on which we expressed an unqualified audit opinion. In conducting our subsequent examination of the Separated Accounts, and in providing the opinions above, we have not performed any additional tests of the transactions and balances which are recorded in the general ledgers and other accounting records beyond those already performed for the purpose of the audit of the Statutory Financial Statements.

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INDEPENDENT AUDITOR’S REPORT TO THE COMMISSION FOR COMMUNICATIONS REGULATION (“COMREG”) AND THE DIRECTORS OF EIRCOM LIMITED (CONTINUED) We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) including ‘ISA (UK) 800 (Revised) Special Considerations – Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks’ and having regard to the guidance contained in the ICAEW Technical Release 02/16AAF (Revised) Reporting to regulators on regulatory accounts. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Separated Accounts section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter - Basis of Accounting and Restriction on Distribution and Use

We draw attention to the fact that the Separated Accounts have been prepared in accordance with a special purpose framework, the Regulations (including the Decision Instrument) and the Primary Accounting Documentation issued by Comreg. The nature, form and content of the Separated Accounts are determined by ComReg. It is not appropriate for us to assess whether the nature of the information being reported upon is suitable or appropriate for ComReg’s purposes. Accordingly, we make no such assessment. The Separated Accounts are separate from the Statutory Financial Statements of the Company and have not been prepared under the basis of International Financial Reporting Standards as adopted by the European Union (“IFRS”). Financial information other than that prepared on the basis of IFRS does not necessarily represent a true and fair view of the financial performance or financial position of a company as shown in statutory financial statements prepared in accordance with the Companies (Jersey) Law 1991.

Our opinion is not modified in respect of this matter

Other matter

The Statutory Financial Statements of eircom Limited have been prepared on the going concern basis. As noted in the Primary Accounting Documentation, the Statutory Financial Statements were approved on 1 September 2020, and the directors’ assessment of the Company’s ability to continue as a going concern was performed as of that date. The assessment reflects the financial position of the Company at 1 September 2020 and the directors are not required to and have not performed an updated assessment for the purposes of the Separated Accounts. We have not performed an assessment in respect of going concern for the purposes of the Separated Accounts.

Other information

The directors are responsible for the other information. The other information comprises the information included in the Historical Cost Separated Accounts, other than the Separated Accounts and our auditor’s report thereon.

Our opinion on the Separated Accounts does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the Separated Accounts, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Separated Accounts or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the Separated Accounts or a material misstatement of the other information. If, based

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INDEPENDENT AUDITOR’S REPORT TO THE COMMISSION FOR COMMUNICATIONS REGULATION (“COMREG”) AND THE DIRECTORS OF EIRCOM LIMITED (CONTINUED) on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors

As explained more fully in the Statement of Directors’ Responsibilities (set out on page 4), the directors are responsible for the preparation of the Separated Accounts and for such internal control as management determines is necessary to enable the preparation of Separated Accounts that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibilities for the Audit of the Separated Accounts

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made, on terms that have been agreed solely by the Company and ComReg, in order to meet the requirements of the

Regulations (including the Decision Instrument) and the Primary Accounting Documentation. Our audit work has been undertaken so that we might state to the Company and ComReg those matters that we have agreed to state to them in our report, and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and ComReg, for our audit work, for this report or for the opinions we have formed.

Our opinion on the Separated Accounts is separate from our opinion on the Statutory Financial Statements of the Company for the year ended 30 June 2020 on which we reported on 1 September 2020, which are prepared for a different purpose. Our audit report in relation to the Statutory Financial Statements of the Company (our “Statutory audit”) was made solely to the Company’s members, as a body, in accordance with the Companies (Jersey) Law 1991. Our Statutory audit work was undertaken so that we might state to the Company’s members those matters we are required to state to them in a statutory audit report and for no other purpose. In these circumstances, to the fullest extent permitted by law, we do not accept or assume responsibility for any other purpose or to any other person to whom our Statutory audit report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Ernst & Young Chartered Accountants and Registered Auditor Dublin 30 November 2020

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https://www.frc.org.uk/auditorsresponsibilities

Consolidated

WHOLESALE INCOME STATEMENT Restated Restated Restated For the year ended 30 June 2020 30-Jun-20 30-Jun-20 30-Jun-20 30-Jun-19 30-Jun-19 30-Jun-19

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Revenue 664,810 482,064 182,746 685,375 483,145 202,230

Operating costs 495,379 315,839 179,540 510,930 318,462 192,468

Return 169,431 166,225 3,206 174,445 164,683 9,762

Mean capital employed 1,527,751 1,419,164 108,587 1,527,182 1,394,367 132,815

Return on capital employed (annualised) 11% 12% 3% 11% 12% 7%

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Consolidated

WHOLESALE STATEMENT OF MEAN CAPITAL EMPLOYED Restated Restated Restated as at 30 June 2020 30-Jun-20 30-Jun-20 30-Jun-20 30-Jun-19 30-Jun-19 30-Jun-19

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Non Current Assets

Property, Plant and Equipment 1,556,949 1,455,267 101,682 1,523,511 1,412,751 110,760 Intangible Assets 28,591 24,439 4,152 36,094 31,397 4,697 Right of Use Assets 54,099 40,451 13,648 - - - Other Non Current Assets 8,698 6,578 2,120 8,575 6,577 1,999 Total Non Current Assets 1,648,335 1,526,734 121,601 1,568,180 1,450,725 117,455

Current Assets

Inventories 7,476 6,378 1,098 4,737 4,056 681 Trade and other receivables 107,305 53,776 53,529 137,689 62,966 74,722 Cash and cash equivalents 132,277 100,264 32,013 118,178 90,635 27,543 Total Current Assets 247,057 160,417 86,640 260,603 157,657 102,946

Total Assets 1,895,393 1,687,151 208,242 1,828,783 1,608,382 220,401

Liabilities

Trade and other payables (236,228) (161,840) (74,388) (229,898) (154,233) (75,665) Provisions for liabilities and charges (131,413) (106,146) (25,267) (71,703) (59,782) (11,921) Total Liabilities (367,642) (267,986) (99,656) (301,601) (214,015) (87,586)

Mean Capital Employed for the year 1,527,751 1,419,164 108,587 1,527,182 1,394,367 132,815

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Market Financial Statements

INCOME STATEMENT WHOLESALE ACCESS Restated Restated Restated Restated For the year ended 30 June 2020 30-Jun-20 30-Jun-20 30-Jun-20 30-Jun-20 30-Jun-19 30-Jun-19 30-Jun-19 30-Jun-19

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€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000Revenue

External revenue 166,929 44,152 90,218 32,559 160,787 51,128 80,384 29,274 Internal revenue - Inter 11,361 188 - 11,173 10,629 35 - 10,594 Internal revenue - Intra 303,774 168,823 101,543 33,409 311,729 188,765 92,599 30,365 Total revenue 482,064 213,163 191,761 77,141 483,145 239,927 172,983 70,234

Costs

Cost of Sales (293) (498) 33 172 910 864 38 8 Product development and management 1,526 733 437 355 1,564 587 678 300 Marketing and sales 1,787 764 719 304 2,918 1,407 1,048 463 Repair and maintenance 55,779 37,015 15,808 2,956 58,662 40,090 15,361 3,211 Finance 3,237 1,561 1,359 318 3,339 1,673 1,327 340 Installation/Provisioning 5,115 3,055 1,380 680 6,319 4,470 1,242 608 Network support 33,602 15,273 14,791 3,539 34,599 15,786 15,356 3,457 General management 14,052 7,202 5,439 1,412 8,168 4,093 3,222 853 Accomodation 15,558 4,068 9,277 2,213 21,367 6,416 11,905 3,046 Information Technology 7,813 3,844 3,208 760 7,330 3,700 2,866 765 Transport 5,733 3,448 1,922 363 6,563 3,988 2,144 432 Personnel and administration 1,753 900 663 191 1,768 958 637 172 Other operating expenses 513 377 125 10 365 130 236 (2) Credit management and billing 259 (52) (112) 423 175 (10) 18 167 Depreciation 169,673 67,265 83,425 18,982 164,529 68,821 75,958 19,750

Total HCA wholesale operating costs 316,107 144,955 138,474 32,678 318,576 152,973 132,033 33,570

Transfer charges from Retail - - - - - - - -

Exceptional (Gain) / Loss (268) (107) (131) (29) (115) (102) (18) 5

Total Operating costs 315,839 144,848 138,343 32,649 318,462 152,871 132,015 33,575 -

Return 166,225 68,315 53,418 44,492 164,683 87,056 40,968 36,659 -

Mean capital employed 1,419,164 633,546 643,107 142,511 1,394,367 660,106 586,129 148,132

Return on capital employed 12% 11% 8% 31% 12% 13% 7% 25%

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INCOME STATEMENT WHOLESALE OTHER Restated Restated Restated RestatedFor the year ended 30 June 2020 30-Jun-20 30-Jun-20 30-Jun-20 30-Jun-20 30-Jun-19 30-Jun-19 30-Jun-19 30-Jun-19

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€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000Revenue

External revenue 122,727 24,001 9,070 89,655 133,906 28,118 11,491 94,297 Internal revenue - Inter 14,351 8,209 1,207 4,935 15,509 7,096 1,361 7,052 Internal revenue - Intra 45,668 22,161 2,395 21,113 52,815 27,368 2,595 22,852 Total revenue 182,746 54,371 12,672 115,703 202,230 62,582 15,447 124,201

Costs

Cost of Sales 53,991 41,800 171 12,020 61,149 48,229 - 12,921 Product Development and management 456 112 194 150 500 86 213 201 Marketing and Sales 623 2 39 582 1,145 37 102 1,006 Repair and maintenance 5,925 4,156 736 1,034 5,992 4,388 624 980 Finance 616 234 47 334 704 236 55 413 Installation/Provisioning 3,478 2 230 3,246 4,486 1 248 4,237 Network support 5,835 2,569 476 2,790 5,445 2,553 452 2,440 General management 3,362 956 263 2,144 1,918 513 174 1,231 Accomodation 5,037 3,580 370 1,088 6,880 4,692 600 1,588 Information Technology 1,725 778 178 769 1,325 592 158 575 Transport 429 116 79 234 538 161 89 289 Personnel and administration 282 108 35 140 254 100 34 120 Other operating expenses 6,707 13 3 6,690 6,120 1 2 6,117 Credit management and billing 356 217 96 42 423 164 81 179 Depreciation 23,993 9,461 1,779 12,752 22,628 8,837 1,875 11,916

Total HCA wholesale operating costs 112,815 64,104 4,696 44,015 119,508 70,589 4,706 44,213

Transfer charges from Wholesale / Revenue transfer to Retail 66,785 1,316 4,062 61,406 72,931 1,207 5,650 66,074

Exceptional (Gain) / Loss (58) (38) (5) (15) 30 21 2 7

Total Operating costs 179,542 65,382 8,753 105,406 192,468 71,817 10,358 110,293

Return 3,206 (11,011) 3,919 10,297 9,762 (9,234) 5,089 13,908

Mean capital employed 108,587 70,066 18,102 20,420 132,815 88,338 21,586 22,891

Return on capital employed 3% -16% 22% 50% 7% -10% 24% 61%

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STATEMENT OF MEAN CAPITAL EMPLOYED WHOLESALE ACCESS Restated Restated Restated Restated as at 30 June 2020 30-Jun-20 30-Jun-20 30-Jun-20 30-Jun-20 30-Jun-19 30-Jun-19 30-Jun-19 30-Jun-19

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€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000Non Current Assets

Property, Plant and Equipment 1,455,266 674,792 657,901 122,573 1,412,751 697,218 591,574 123,959 Intangible Assets 24,439 10,163 12,305 1,972 31,397 13,744 15,215 2,439 Right of Use Assets 40,451 11,303 23,255 5,893 - - - - Other Non Current Assets 6,579 2,587 3,457 535 6,577 2,594 3,472 510 Total Non Current Assets 1,526,734 698,844 696,917 130,973 1,450,725 713,556 610,261 126,908

Current Assets

Inventories 6,378 2,332 3,421 625 4,056 1,366 2,475 215 Trade and other receivables 53,776 18,195 9,378 26,203 62,966 20,442 11,303 31,222 Cash and cash equivalents 100,264 38,762 52,279 9,223 90,635 35,756 47,847 7,033 Total Current Assets 160,417 59,288 65,077 36,052 157,657 57,564 61,625 38,469

Total Assets 1,687,151 758,132 761,994 167,024 1,608,382 771,120 671,885 165,377

Liabilities

Trade and other payables (161,839) (66,718) (79,490) (15,632) (154,233) (66,701) (72,625) (14,907) Provisions for liabilities and charges (106,147) (57,868) (39,397) (8,881) (59,782) (44,313) (13,131) (2,338) Total Liabilities (267,986) (124,586) (118,887) (24,513) (214,015) (111,013) (85,757) (17,245)

Mean Capital Employed for the year 1,419,164 633,546 643,107 142,511 1,394,367 660,106 586,129 148,132

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STATEMENT OF MEAN CAPITAL EMPLOYED WHOLESALE OTHER Restated Restated Restated Restated as at 30 June 2020 30-Jun-20 30-Jun-20 30-Jun-20 30-Jun-20 30-Jun-19 30-Jun-19 30-Jun-19 30-Jun-19

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€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000Non Current Assets

Property, Plant and Equipment 101,682 47,391 14,973 39,318 110,760 51,171 16,133 43,456 Intangible Assets 4,152 1,175 293 2,684 4,697 1,282 403 3,012 Right of Use Assets 13,648 9,594 976 3,078 - - - - Other Non Current Assets 2,121 1,212 83 826 1,999 1,244 82 673 Total Non Current Assets 121,602 59,372 16,326 45,905 117,455 53,697 16,618 47,140

Current Assets

Inventories 1,098 861 120 117 681 571 75 35 Trade and other receivables 53,529 27,388 3,853 22,288 74,722 42,791 6,339 25,593 Cash and cash equivalents 32,013 18,431 1,402 12,181 27,543 17,146 1,125 9,272 Total Current Assets 86,640 46,680 5,375 34,585 102,946 60,507 7,540 34,899

Total Assets 208,242 106,052 21,700 80,490 220,401 114,205 24,157 82,039

Liabilities

Trade and other payables (74,388) (22,836) (2,126) (49,425) (75,665) (23,442) (2,171) (50,052) Provisions for liabilities and charges (25,267) (13,149) (1,473) (10,646) (11,921) (2,425) (399) (9,097) Total Liabilities (99,656) (35,986) (3,599) (60,071) (87,586) (25,866) (2,571) (59,148)

Mean Capital Employed for the year 108,587 70,066 18,102 20,420 132,815 88,338 21,586 22,891

13

Statement of Average Cost and Revenue by Service

Wholesale Fixed Narrowband & Unbundled AccessFor the year ended 30 June 2020

NOTE SUBJECT TO FURTHER WORK

Market summary

External revenue

Internal revenue

Total revenue

Total operating

costs Return Return on

Turnover

Mean capital

employedROCE

€'000 €'000 €'000 €'000 €'000 €'000Jun-20 44,152 169,011 213,163 144,848 68,315 32.05% 633,546 10.78%

Service External revenue

Internal revenue

Total revenue Volume Unit Average

revenue

FAC average

cost

Average revenue /

cost €'000 €'000 €'000 000's € €

SB WLR PSTN Rental & Connections 38,494 140,142 178,636 965 Lines 15.42 15.52 99%SB WLR ISDN BRA Rental & Connections 2,392 14,252 16,644 47 Lines 29.57 14.54 203% 16,644 SB WLR ISDN FRA/PRA Rental & Connections 1,700 14,380 16,080 5 Lines 276.03 116.07 238% 16,080 LLU & Line Share Connections 40 - 40 n.mLLU Rental 510 48 558 3 Lines 18.51 17.59 105%Line Share Rental 278 - 278 20 Lines 1.13 0.34 337%Physical Co-location 736 188 924 n.mWSL Infrastructure 2 - 2 n.m

External revenue

Internal revenue

Total revenue

Total operating


Turnover

Mean capital

employedROCE

€'000 €'000 €'000 €'000 €'000 €'000Jun-19 (Restated) 51,128 188,799 239,927 152,871 87,056 36.28% 660,106 13.19%


Internal revenue


revenue

FAC average

cost

Average revenue /

cost €'000 €'000 €'000 000's € €

SB WLR PSTN Rental & Connections 44,588 157,670 202,258 1,043 Lines 16.16 14.92 108%SB WLR ISDN BRA Rental & Connections 2,624 15,256 17,880 50 Lines 29.61 13.98 212%SB WLR ISDN FRA/PRA Rental & Connections 1,916 15,838 17,755 5 Lines 276.43 113.11 244%LLU & Line Share Connections 23 - 23 n.mLLU Rental 547 - 547 3 Lines 13.42 18.03 74%Line Share Rental 303 - 303 28 Lines 0.89 0.12 715%Physical Co-location 1,037 35 1,072 n.mWSL Infrastructure 90 - 90 n.m

14

Statement of Average Cost and Revenue by ServiceNOTE SUBJECT TO FURTHER WORK

Wholesale Broadband AccessFor the year ended 30 June 2020

Market summary

External revenue

Internal revenue

Total revenue

Total operating


TurnoverMean capital

employed ROCE

€'000 €'000 €'000 €'000 €'000 €'000Jun-20 90,218 101,543 191,761 138,343 53,418 27.86% 643,107 8.31%


Internal revenue


revenueFAC average

cost

Average revenue /

cost €'000 €'000 €'000 000's € €

WBA Connections 4,205 4,843 9,048 n.mCGA Rental 11,783 15,129 26,912 221 Lines 10.16 6.19 164%NGA Rental 72,090 76,446 148,536 731 Lines 16.93 14.86 114%CGA Usage 783 524 1,307 171 Lines 0.64 4.77 13%NGA Usage 1,357 4,600 5,957 498 Lines 1.00 4.07 24%

External revenue

Internal revenue

Total revenue

Total operating


TurnoverMean capital

employed ROCE

€'000 €'000 €'000 €'000 €'000 €'000Jun-19 (Restated) 80,384 92,599 172,983 132,015 40,968 23.68% 586,129 6.99%


Internal revenue


revenueFAC average

cost

Average revenue /

cost €'000 €'000 €'000 000's € €

WBA Connections 2,534 3,864 6,397 n.mCGA Rental 12,095 14,609 26,704 259 Lines 8.60 5.80 148%NGA Rental 55,306 48,035 103,341 670 Lines 12.85 14.83 87%CGA Usage 4,005 5,418 9,423 198 Lines 3.97 4.92 81%NGA Usage 6,445 20,673 27,118 461 Lines 4.91 4.73 104%

Average Rental revenue and costs are monthly averagesThe year on year fluctuations in average revenue are as a result of a pricing rebalance between usage and rental as part of D11/18. Rental volumes are average volumes n.m = not measurable

15

Statement of Network Costs Wholesale Markets For the year ended 30 June 2020

Full allocated cost (€'000)

Ope

ratin

g co

sts

Exc

eptio

nal

Ope

ratin

g C

osts

Mea

n ca

pita

l em

ploy

ed

App

licab

le ra

te

of re

turn

on

capi

tal %

Cap

ital c

osts

Tot

al o

f op

erat

ing

cost

s an

d ca

pita

l co

sts

Vol

ume

Ave

rage

cos

ts

per u

nit

Copper Access Network 87,194 (35) 616,005 8.18% 50,389 137,548 1,238,698 111.04

Fibre/High Speed Access Network 8,194 (6) 65,490 8.18% 5,355 13,543 11,280 1,200.57

NGA 74,189 (54) 488,635 8.18% 39,971 114,106 (a) (a)

DSL Equipment 7,706 (22) 15,723 8.18% 1,286 8,970 (a) (a)Other Access Equipment 1,009 - 2,864 8.18% 234 1,243 (a) (a)

Provisioning 8,485 (3) 12,279 8.18% 1,004 9,486 (a) (a)Repair 52,976 (49) 9,936 8.18% 813 53,740 (a) (a)

Line SensitiveSubscriber Unit 9,533 (26) 21,327 8.18% 1,745 11,252 1,017,438 11.06

- Call Sensitive 3,873 (8) 6,325 8.18% 517 4,382 (a) (a)- Traffic sensitive 4,625 (10) 7,879 8.18% 645 5,260 (a) (a)

Interconnect Equipment 322 (1) (816) 8.18% (67) 254 (a) (a)

Intelligent Network 520 - - 8.18% - 520 1,344,905 0.387

Other Switching Elements 43 - 237 8.18% 19 62 (a) (a)

Transmission networkTransmission: Non-length dependentPSTN link 8,406 (18) 11,526 8.18% 943 9,331 2,853,413 0.327 Interconnect link 698 (1) 1,347 8.18% 110 807 (a) (a)Data incl leased Lines link 2,598 (5) 3,753 8.18% 307 2,900 (a) (a)DSL transmission link 4,564 (9) 5,970 8.18% 488 5,043 (a) (a)Other data link 1,339 (3) 2,016 8.18% 165 1,501 (a) (a)NGN link 29,638 (37) 59,309 8.18% 4,851 34,452 (a) (a)Other transmission link 2,022 (4) 4,033 8.18% 330 2,348 (a) (a)

Transmission: Length dependentPSTN length 2,732 (1) 15,532 8.18% 1,271 4,002 928,718 0.431 Interconnect Length 74 - 349 8.18% 29 103 (a) (a)Data incl leased Lines length 786 - 4,488 8.18% 367 1,153 (a) (a)DSL transmission length 1,658 (1) 9,497 8.18% 777 2,434 (a) (a)Other data length 2,219 (1) 11,180 8.18% 915 3,133 (a) (a)Transmission: Optical 2,114 (1) 14,091 8.18% 1,153 3,266 (a) (a)NGN length 12,763 (6) 69,054 8.18% 5,649 18,406 (a) (a)Other transmission length 186 - 610 8.18% 50 236 (a) (a)

Data platformsLegacy Leased Lines 2,722 (4) 5,021 8.18% 411 3,129 (a) (a)Other Data 1,257 (3) 3,964 8.18% 324 1,578 (a) (a)IMS Platform 9,876 (2) 19,443 8.18% 1,590 11,464 (a) (a) Outpayments 53,696 - 6,405 8.18% 524 54,221 (a) (a)- Carrier Administration 8,701 (10) 8,268 8.18% 676 9,367 (a) (a)Carrier billing 3,353 (1) 58,451 8.18% 4,781 8,133 (a) (a) Other SMP elements 3,367 (1) 2,353 8.18% 192 3,558 (a) (a)

Non-SMP elements 15,341 (4) (34,557) 8.18% (2,827) 12,511 (a) (a)

Total 428,779 (326) 1,527,987 8.18% 124,989 553,442

(a) These components include a number of different elements which are used in different proportions for the delivery of services within this heading

16

Statement of Network Costs Wholesale Markets For the year ended 30 June 2019 (Restated)

Full allocated cost (€'000) Ope

ratin

g co

sts

Exc

eptio

nal

Ope

ratin

g C

osts

Mea

n ca

pita

l em

ploy

ed

App

licab

le ra

te

of re

turn

on

capi

tal %

Cap

ital c

osts

Tot

al o

f op

erat

ing

cost

s an

d ca

pita

l cos

ts

Vol

ume

Ave

rage

cos

ts

per u

nit

Copper Access Network 91,905 (46) 633,157 8.18% 51,792 143,651 1,298,393 110.64

Fibre/High Speed Access Network 7,257 (9) 62,014 8.18% 5,073 12,321 10,804 1,140.34

NGA 65,544 (23) 417,733 8.18% 34,171 99,691 (a) (a)

DSL Equipment 7,628 8 20,096 8.18% 1,644 9,280 (a) (a)Other Access Equipment 957 - 3,284 8.18% 269 1,225 (a) (a)

Provisioning 9,945 (4) 8,753 8.18% 716 10,657 (a) (a)Repair 52,189 (84) 11,857 8.18% 970 53,075 (a) (a)

Line SensitiveSubscriber Unit 8,660 11 22,901 8.18% 1,873 10,544 1,096,179 9.62

- Call Sensitive 3,819 3 7,004 8.18% 573 4,395 (a) (a)- Traffic sensitive 4,384 4 8,420 8.18% 689 5,077 (a) (a)

Interconnect Equipment 325 - (847) 8.18% 69- 255 (a) (a)

Intelligent Network 531 - 230 8.18% 19 550 1,623,087 0.34

Other Switching Elements (37) - 255 8.18% 21 16- (a) (a)

Transmission networkTransmission: Non-length dependentPSTN link 8,993 12 13,971 8.18% 1,143 10,148 3,088,719 3.29 Interconnect link 773 2 1,570 8.18% 128 903 (a) (a)Data incl leased Lines link 2,965 5 4,823 8.18% 395 3,364 (a) (a)DSL transmission link 4,932 5 6,890 8.18% 564 5,500 (a) (a)Other data link 1,462 2 2,453 8.18% 201 1,665 (a) (a)NGN link 33,124 13 68,950 8.18% 5,640 38,777 (a) (a)Other transmission link 2,379 4 5,138 8.18% 420 2,804 (a) (a)

Transmission: Length dependentPSTN link 2,849 - 16,034 8.18% 1,312 4,161 1,005,305 4.14 Interconnect Length 63 - 280 8.18% 23 86 (a) (a)Data incl leased Lines length 1,002 - 5,644 8.18% 462 1,464 (a) (a)DSL transmission length 2,090 - 12,124 8.18% 992 3,082 (a) (a)Other data length 2,180 - 10,639 8.18% 870 3,050 (a) (a)Transmission: Optical 1,805 0 11,581 8.18% 947 2,753 (a) (a)NGN length 13,241 0 70,254 8.18% 5,747 18,988 (a) (a)Other transmission length 198 0 655 8.18% 54 252 (a) (a)

Data platformsLegacy Leased Lines 3,019 3 6,200 8.18% 507 3,529 (a) (a)Other Data 1,456 1 3,819 8.18% 312 1,769 (a) (a)IMS Platform 9,556 1 22,521 8.18% 1,842 11,398 (a) (a) Outpayments 62,058 - 5,155 8.18% 422 62,480 (a) (a)- Carrier Administration 11,290 10 8,654 8.18% 708 12,009 (a) (a)Carrier billing 2,282 - 84,797 8.18% 6,936 9,218 (a) (a) Other SMP elements 2,375 1 7,952 8.18% 650 3,026 (a) (a)- Non-SMP elements 14,740 (3) (37,864) 8.18% 3,097- 11,640 (a) (a)

Total 437,940 (84) 1,527,098 8.18% 124,917 562,773

(a) These components include a number of different elements which are used in different proportions for the delivery of services within this heading

17

Network Cost Market Summary Wholesale Markets For the year ended 30 June 2020

Full allocated Cost (€'000)

Tot

al

Ope

ratin

g an

d C

apita

l Cos

ts

Who

lesa

le

Fixe

d N

arro

wba

nd &

U

nbun

dled

A

cces

s

Who

lesa

le

Leas

ed L

ines

Who

lesa

le

Bro

adba

nd

Acc

ess

Who

lesa

le

Inte

rcon

nect

C

all

Con

veya

nce

Who

lesa

le

Res

idua

l (R

egul

ated

)

Who

lesa

le

Res

idua

l (U

nreg

ulat

ed)

Copper access network 137,549 128,960 506 8,083 - - -

Fibre/High Speed Access Network 13,544 1,221 10,158 27 - 1,899 239

NGA 114,106 - - 114,106 - - -

DSL equipment 8,970 - - 8,970 - - - Other access equipment 1,243 740 404 97 - - 2 Provisioning wholesale networks 9,487 6,005 939 2,069 - 335 139 Repair wholesale networks 53,740 41,012 660 11,389 104 562 13 Line SensitiveSubscriber unit - line sensitive 11,252 11,236 - - - - 16 - Call Sensitive 4,382 - - - 4,382 - -

Traffic sensitive 5,260 - - - 5,260 - -

Interconnect equipment 255 - - - (36) 291 -

Intelligent Network 520 - - - 520 - - Other switching elements 62 - - - 5 57 - - Transmission networkTransmission: Non-length dependentPSTN link 9,330 - - - 9,330 - - Interconnect link 807 - - - - 807 - Data incl leased lines link 2,900 262 2,477 7 150 - 4 DSL transmission link 5,043 - - 5,043 - - - Other data link 1,500 - 850 487 - 5 158 NGN Link 34,453 - 12,651 20,685 - - 1,117 Other transmission link 2,348 1,229 364 4 104 465 182 - Transmission: Length dependentPSTN length 4,001 - - - 4,001 - - Interconnect length 104 - - - 2 102 - Data incl leased lines length 1,153 81 1,018 2 46 - 6 DSL transmission length 2,434 - - 2,434 - - - Other data length 3,131 - 2,414 347 - 17 353 Transmission: Optical 3,265 - 2,296 - - - 969 NGN length 18,405 - 3,625 14,745 - - 35 Other transmission length 235 68 70 13 11 10 63 Data platformsLegacy leased lines 3,130 1,325 1,619 9 158 19 - Other data platforms 1,576 - 334 493 - 2 747 IMS Platform 11,465 - - - - - 11,465

Outpayments 54,220 (512) 176 34 41,989 175 12,358

Carrier administration 9,369 2,926 1,286 1,745 141 346 2,925 Carrier billing 8,133 1,558 2,056 (741) 3,320 431 1,509 Other SMP elements 3,558 462 431 891 318 503 953 Non-SMP elements 12,512 98 (30) 13 - - 12,431 Total Wholesale Costs 553,442 196,671 44,304 190,952 69,805 6,026 45,684

18

Network Cost Market Summary Wholesale Markets For the year ended 30 June 2019 (Restated)

Full allocated Cost (€'000) Tot

al

Ope

ratin

g an

d C

apita

l Cos

ts

Who

lesa

le

Fixe

d N

arro

wba

nd &

U

nbun

dled

A

cces

s

Who

lesa

le

Leas

ed L

ines

Who

lesa

le

Bro

adba

nd

Acc

ess

Who

lesa

le

Inte

rcon

nect

C

all

Con

veya

nce

Who

lesa

le

Res

idua

l (R

egul

ated

)

Who

lesa

le

Res

idua

l (U

nreg

ulat

ed)

Copper access network 143,651 135,813 556 7,282 - - -

Fibre/High Speed Access Network 12,321 1,149 9,064 29 - 1,861 219 -

NGA 99,691 - - 99,691 - - - -

DSL equipment 9,280 - - 9,280 - - - Other access equipment 1,225 750 383 91 - - 2 Provisioning wholesale networks 10,657 7,687 789 1,594 - 379 208 Repair wholesale networks 53,075 41,336 658 10,495 113 455 18 Line Sensitive - Subscriber unit - line sensitive 10,544 10,544 - - - - - - Call Sensitive 4,395 - - - 4,395 - -

- Traffic sensitive 5,077 - - - 5,077 - - - Interconnect equipment 256 - - - (40) 295 -

- Intelligent Network 550 - - - 550 - - Other switching elements (16) - - - 5 (20) - - Transmission network - Transmission: Non-length dependent - PSTN link 10,148 - - - 10,148 - - Interconnect link 903 - - - - 903 - Data incl leased lines link 3,364 265 2,941 7 147 - 4 DSL transmission link 5,500 - - 5,500 - - - Other data link 1,665 - 963 535 - 5 162 NGN Link 38,777 - 14,338 23,280 - - 1,159 Other transmission link 2,804 1,409 440 6 141 593 214 - Transmission: Length dependent - PSTN length 4,161 - - - 4,161 - - Interconnect length 85 - - - - 85 - Data incl leased lines length 1,464 74 1,329 2 41 - 18 DSL transmission length 3,082 - - 3,082 - - - Other data length 3,051 - 2,383 344 - 15 309 Transmission: Optical 2,753 - 1,913 - - - 840 NGN length 18,988 - 3,592 15,355 - - 41 Other transmission length 252 71 77 14 31 7 53 Data platforms - Legacy leased lines 3,529 1,467 1,870 9 165 20 - Other data platforms 1,766 - 407 645 - 2 711 IMS Platform 11,398 - - - - - 11,398 Outpayments 62,480 885 7 39 48,323 - 13,226 Carrier administration 12,014 3,820 1,470 2,667 173 544 3,339 Carrier billing 9,219 1,078 2,269 (581) 4,149 606 1,698 Other SMP elements 3,026 490 289 586 256 612 793 Non-SMP elements 11,639 31 (48) 10 - - 11,646 Total Wholesale Costs 562,773 206,868 45,690 179,961 77,834 6,361 46,060

19

Notes to the Separated Accounts

Note 1a: Basis of preparation of the Separated Accounts

The financial information for the year ended 30 June 2020 in these

Separated Accounts is prepared by attributing the balances in eircom

Limited’s general ledgers and other accounting records to the Markets

and disaggregated Activities.

The structure of the Separated Accounts required under the Decision

Notices does not correspond to the way in which the group is organised

and hence the way the statutory accounting records are structured. The

Separated Accounts are therefore produced by overlaying the

requirements of the Decision Notices on the statutory accounting record

structure of eircom Limited.

These Separated Accounts are prepared by attributing the balances in

eircom Limited’s general ledgers and other accounting records (as

amended by Directions published by ComReg) to the Markets and

disaggregated Activities. As required by the Decision Notices, wherever

possible, revenue, costs, assets and liabilities are directly associated

with either a Market or Network element using information recorded

within eircom Limited’s accounting records and are directly attributed to

that item. Where no such direct attribution is possible, the revenue,

costs, assets and liabilities are apportioned between two or more

Activities, Network Elements or Markets on a basis that reflects the

causality of the revenue, cost, asset or liability. Residual costs for which

no direct or indirect method of apportionment can be identified are

allocated using an equal proportionate mark-up method. Details of this

process are given in the Attribution Methods sections within the

Accounting Documentation.

Typically, in a fully allocated accounting system, a number of

attribution methods are available. In selecting financial attribution

methods and appropriate non-financial data for use within the

attribution models employed in the production of the Separated

Accounts, eircom Limited has had to make certain estimates and

exercise its judgement, having regard to the regulatory principles,

including cost causality and objectivity, in order to comply with the

requirements of the relevant directions.

Certain non-financial data used in the preparation of these Separated

Accounts has been derived using sampling techniques appropriate to

that data. eircom Limited will continue to review and update attribution

methods on an on-going basis and, where deemed appropriate, make

necessary improvements.

Market Group Markets Wholesale Access

Wholesale Fixed Narrowband and Unbundled Access Wholesale Broadband Access Wholesale Leased Lines

Wholesale Other

Wholesale Interconnect Call Conveyance Wholesale Residual (Regulated) Wholesale Residual (Unregulated)

20


The financial data included in these Separated Accounts are presented

in thousands, and has been subject to rounding adjustments. As a result,

the totals of the data in this document may vary slightly from the actual

arithmetic totals.

The Separated Accounts are required to be prepared for the wholesale

market groups and for individual markets within these wholesale market groups, as set out in the Decision Notices, and as agreed

annually with ComReg. The table above shows the specific Separated Accounts requirements for the year ending 30 June 2020.

Note 1b: Comparative Figures and Methodology Changes ComReg requires that where data for the previous financial year is not comparable, as a result of a material change in accounting policy, cost attribution or material error, the figures for the preceding year must be adjusted to the extent that it is reasonable to do so

IFRS 16 “Leases” was adopted by Eircom with effect from 1 July 2019. The

standard requires lessees to recognise right-of-use assets and lease

liabilities for all leases that meet the lease definition set out in the

standard, subject to certain exemptions that are available. Accounting for

lessors is largely unchanged. Eircom chose to adopt IFRS16 on a modified

retrospective basis. Eircom have recognised the cumulative effect of

initially applying the standard as an adjustment to the opening balance

of retained earnings at 1 July 2019, i.e. the date of initial adoption. Prior

year comparatives have not been restated for the effect of IFRS16 and

continue to be reported under IAS17. For this reason, certain measures

may not be directly comparable. A summary of the impact of this change

is included in the table below:

2020

Return (Pre

IFSRS 16) €’000

2020 Return

(Post IFSRS 16)

€’000

2020 MCE (Pre

IFSRS 16) €’000

2020 MCE (Post

IFSRS 16) €’000

2020 ROCE % (Pre IFRS

16)

2020 ROCE %

(Post IFRS 16)

Wholesale Narrowband & Unbundled Access 69,702 68,315 634,372 633,546 11% 11% Wholesale Broadband Access 57,071 53,418 644,872 643,107 9% 8% Wholesale Leased Lines 45,212

44,492

143,021

142,511 32% 31%

Total Wholesale Access

171,985 166,225 1,422,265 1,419,164 12% 12%

Total Wholesale Other

4,732 3,206 110,126 108,587 4% 3%

Total Wholesale 176,717 169,431 1,532,391 1,527,751 12% 11%

The preparation of these Separated Accounts requires estimation of the appropriate utilisation of network equipment by pre-defined product and service offerings. The principles under which the Separated Accounts are prepared require that the network cost components are aligned as closely as possible with the external and IBU revenues arising in respect of these specific products. The determination of the appropriate usage of network components requires a level of estimation and certain assessments have been revised in this respect in the current year to more closely align the revenues and costs at the product level.

21


Eircom has identified an improved methodology for the splitting of Access Duct across Fibre & Copper Access networks. Actual duct length containing fibre is now used as opposed to fibre length to evaluate the length of access duct containing access fibre. This change has resulted in the number of access fibre per duct increasing from 1 to 1.5. The impact of this change on a market level is €17M MCE, €0.9M Opex & Depn moving, primarily from Broadband (€12M & €0.6M), Ethernet (€4M & €0.2M) to Narrowband. Revenue is predominantly attributed directly to individual markets. However, following a review of revenues impacted by D11/18 price changes, it is clear that another factor to be considered in the attribution of billed revenue to markets is the impact of pricing decisions. In the case of D11/18, it is not possible, due to operational constraints, to bill SB WLR PSTN at the proposed prices so the bundled price reduction is applied to the Bitstream FTTC service instead. To incorporate the intended effect of D11/18 on revenues disclosed in the published Separated Accounts, Eircom is amending its revenue methodology to adjust the billed revenues in the Narrowband and Broadband statements. Therefore, Eircom has restated the FY1819 revenues and returns in these markets. The amended methodology reclassifies €5m Revenue (External €2m, Internal Intra €3m) from SB WLR PSTN Rental to Connections NGA Rental.

The overall impact of these changes is summarised below. 2019

Original Return

€’000

2019 Restated

Return €’000

2019 Original

MCE €’000

2019 Restated

MCE €’000

2019 Original

ROCE %

2019 Restated ROCE %

Wholesale Narrowband & Unbundled Access

92,655 87,056 642,702 660,106 14% 13%

Wholesale Broadband Access

35,600 40,968 597,382 582,129 6% 7%

Wholesale Leased Lines 36,459 36,659 153,121 148,132 24% 25%

Total Wholesale Access 164,724 164,683 1,393,204 1,394,367 12% 12%

Wholesale Interconnect Voice

(9,302) (9,234) 88,338 88,338 (11)% (10)%

Wholesale Regulated Other

5,121 5,089 22,627 21,586 22% 24%

Wholesale Unregulated Other

13,901 13,908 23,013 22,891 60% 61%

Total Wholesale Other 9,721 9,762 133,978 132,815 7% 7%

Total Wholesale 174,445 174,445 1,527,182 1,527,182 11% 11%

There have been no other material changes in accounting policy or cost attribution, nor have there been any other material errors noted which require restatement.

22

Note 2: Intra/Inter Business Turnover Reconciliation

FROM / TO Wholesale Access

Wholesale Other Retail Total Wholesale

AccessWholesale

Other Retail Total

30-Jun-20 30-Jun-20 30-Jun-20 30-Jun-20 30-Jun-20 30-Jun-20 30-Jun-20 30-Jun-20Intra Intra Intra Intra Inter Inter Inter Inter

€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000

Wholesale Access: Wholesale Fixed Narrowband Access - 50,446 118,329 168,775 - - - - Wholesale Unbundled Access - 48 - 48 - - 188 188 Wholesale Broadband Access - 4,951 96,592 101,543 - - - - Wholesale Leased Lines - 1,316 32,092 33,409 - - 11,173 11,173 Total - 56,761 247,013 303,774 - - 11,361 11,361

Wholesale Other: Wholesale Interconnect Call Conveyance - 3,204 18,957 22,159 - - 8,209 8,209 Wholesale Residual (Regulated) - 1,107 1,288 2,395 - - 1,207 1,207 Wholesale Residual (Unregulated) - - 21,113 21,113 - - 4,935 4,935 Total - 4,310 41,358 45,668 - - 14,351 14,351

Retail Total - 3,795 - 3,795 254 13,040 31,133 44,427

TOTAL - 64,866 288,371 353,237 254 13,040 56,845 70,139

23

Note 3: Income Statement Reconciliation

Consolidated Wholesale Market Groups

Income Statement Reconciliation For the year ended 30 June 2020

Revenue Operating costs Return Revenue Operating

costs Return

Jun-20 Jun-20 Jun-20 Jun-19 Jun-19 Jun-19€'000 €'000 €'000 €'000 €'000 €'000

Wholesale Access 482,064 315,839 166,225 483,145 318,462 164,683 Wholesale Other 182,746 179,540 3,206 202,230 192,468 9,762

Total Wholesale Market Groups 664,810 495,379 169,431 685,375 510,930 174,445

Other Markets - Retail 919,699 801,472 118,228 939,912 859,065 80,846 Total Market Groups 1,584,509 1,296,851 287,659 1,625,287 1,369,995 255,291

AdjustmentsElimination of Inter Business turnover and costs between wholesale and retail (36,244) (36,244) - (38,598) (38,598) - Transfer charges between Retail and Wholesale (353,237) (354,629) 1,392 (369,884) (373,362) 3,478 Interest payable and similar charges disallowed (109,224) (101,681) Share of profit of associates 7,615 10,742 Tax on profits on ordinary activities (6,567) (1,807) Impact of change to asset lives 25,532 (25,532) 30,634 (30,634) Brand Amortisation disallowed 25,400 (25,400) 25,400 (25,400) Fair Value Adj 31,157 (31,157) 37,977 (37,977) IFRS 16 impairment adjustment (4,263) 4,263 IFRS pension finance cost disallowed (2,758) (371) Fair Value Lease Adjustment (1,326) 1,326 (5,562) 5,562 Non relevant eircom operating costs 79,991 (79,991) 47,806 (47,806)

As in the Annual Report 1,195,028 1,062,468 21,627 1,216,805 1,094,290 29,397

Restated

24

Note 4: Statement of Mean Capital Employed Reconciliation

Consolidated Wholesale Market GroupsStatement of Mean Capital Employed Reconciliation

For the year ended 30 June 2020 Restated

Capital employed Capital employedJun-20 Jun-19

€'000 €'000

Shareholders' funds as in the Annual Report (1,145,317) (1,338,434)

Reconciling itemsFinance Income Payable / (Receivable) Net 5,541 3,496Taxation 8,833 (6,034)Deferred Taxation provision (net) 110,546 84,654Restructuring Provision 29,024 0Pension Benefit (Asset)/Liability (468,341) (199,742)Capitalised interest 398 175Liabilities for non relevant eircom operating costs 56,062 128,681IFRS 3 Purchase Price Allocation Adjustment (63,622) (97,639)IFRS 16 Impairment adjustment 48,686Deferred connections (10,257) (8,866)Intangible assets (9,519) (34,919)Goodwill (209,497) (209,497)Elimination of financing balances (29,765) (22,098)Elimination of intercompany financing balances 3,001,623 3,104,179

Closing capital employed 1,324,396 1,403,957Opening capital employed 1,403,957 1,368,837Total adjusted mean capital employed before determined adjustments 1,364,177 1,386,397

Impact of changes to asset lives 487,517 462,862Total mean capital employed 1,851,694 1,849,259

Wholesale Access 1,419,164 1,394,367Wholesale Other 108,587 132,815Retail 323,943 322,077

Total mean capital employed 1,851,694 1,849,259

25

Annex 1: Explanatory Report

26

Explanatory Report – HCA Separated Accounts

This explanatory report sets out, and clarifies, trends relating to

relevant wholesale markets including any significant future impact on

eir’s business of Regulatory Decisions, which have been published by

ComReg. The report includes commentary in respect of:

• Trends relating to revenue, by Relevant Wholesale Market;

• Trends relating to volumes, by Relevant Wholesale Market;

• Significant period on period movements in the reported

performance and balances;

• One-off or exceptional events in the period; and

• The impact of material changes in accounting policies,

methodologies and estimation techniques (if any) and the extent

to which they impact on eir’s Separated Accounts.

Revenue in the wholesale market reported a decrease in FY1920 of

€20m (3%). Operating costs in these markets decreased by 3%. The

material decreases in operating costs are accommodation and

repairs and maintenance. Repairs and maintenance decrease is a

result of decrease in fixed line staff numbers. Accommodation costs

are reduced mainly due to the adoption of IFRS 16. IFRS 16 has the

effect of capitalising operating leases as right of use assets with a

corresponding lease liability. In terms of operating costs, IFRS 16

results in costs previously reflected in accommodation and transport

costs, now shown as depreciation. The full impact of IFRS 16 is

outlined in Note 1b Comparative Figures and Methodology Changes

on pages 21-22. The main operating cost increase relates to general

management due to significant increases in insurance and related

compensation costs as stated in our bond document published on the

eir Investors Relations website. The FY1920 return on wholesale

markets was 25%, consistent with the prior year.

In terms of the fixed line business, the group continues to significantly

invest in access network infrastructure, as we roll out the Irish Fibre

Network (IFN). The IFN is being expanded to approximately 1.8 million

premises across urban and suburban Ireland. As of 30 June 2020,

approximately 576,000 premises have been passed.

Each of relevant wholesale market is considered in more detail in the

following sections.

Note 1 - Wholesale Network Input (WNI): As described in the Primary

Accounting Documentation, the WNI has not been applied to the

transfer charges. If the WNI were to be applied, we would expect

wholesale transfer charges to be lower.

Note 2 – Volumes: References to volumes in this report relate to

average volumes in FY1920 and growth trends refer to year on year

movements in such average volumes compared to the prior year. Such

movements may differ considerably from changes between opening

and closing volumes in the financial year, and in particular from

growth measures in ComReg Report 20/82R, which contains Key Data

for the market for the period to 30 June 2020.

27

Explanatory Report - Wholesale Access Business - Wholesale Fixed Narrowband & Unbundled Access Market Definition The Wholesale Fixed Narrowband Access market consists of links

between end users and concentrators, including analogue and ISDN

technologies.

The market for Wholesale Unbundled Access consists of the provision

of direct access to open eir copper connections between customer

premises and Main Distribution Frames (MDFs). This market provides

services wholly to other OAOs, as eir Retail acquires copper

connections through more consolidated products (Wholesale Line

Rental & Wholesale Bitstream Access).

Key Market Products The Wholesale Fixed Narrowband Access market largely consists of

products providing wholesale access to PSTN and ISDN lines, known

as Single Billing Wholesale Line Rental (‘SB-WLR’). Open eir’s

Reference Interconnect Offer (RIO) includes a number of principal SB-

WLR products within this market:

• PSTN and ISDN Connections;

• PSTN Rentals;

• ISDN Basic Rate Access (BRA) Rentals;

• ISDN Primary Rate Access (PRA) Rentals; and

• ISDN Fractional Rate Access (FRA) Rentals.

Open eir provides these wholesale services both externally to Other

Authorised Operators ('OAOs') and internally to eir Retail.

Open eir’s Access Reference Offer (ARO) includes two principal

products:

• Unbundled Local Metallic Path (ULMP) – LLU; and

• Line Share (LS).

In addition a number of ancillary services exist in support of these

principal services, including:

• Connection charges;

• Co-Location fees;

• Disconnection charges; and

• Site preparation charges.

Regulatory Decisions in the Year There were no new Regulatory Decisions during the year.

Trends in Reported Balances

Revenues/Volumes eir’s share of the voice subscription market continues to decline due to

the impact of competition and alternative technologies and stood at

39.7% at June 2020 (per ComReg 20/82R). Revenues in the

narrowband market have decreased by 11% year on year. As outlined

in Note 1b, the full year impact of the price reduction for POTs based

WLR in D11/18 is evident as revenue transfers from narrowband to

broadband (€-10M). The impact of the increase in PSTN price from

16.41 to 16.59 had a minimal impact on revenues reported (€2m).

28

Explanatory Report - Wholesale Access Business - Wholesale Fixed Narrowband & Unbundled Access

Operating Costs We experienced an increase in several weather events which has led

to an increase in storm costs compared to previous years. However

operating costs have decreased by 5%. The impact of the increased

storm costs was mitigated by decreased accommodation costs as a

result of IFRS 16 which moves operating costs to depreciation. Further,

we had decreased repairs and maintenance costs during the year as

a result of decreased staff numbers.

Return on Capital Employed (ROCE) Lower volumes and impact of D11/18 leading to reduced revenues

offset by lower operating costs resulted in Wholesale Narrowband

and Unbundled Access returns decreasing by €19m (22%), while

ROCE decreased from 13% to 11%. Mean Capital Employed dropped

due to focus on fibre technologies and higher share of common assets

to fibre.

Exceptional Events/Methodology Changes Exceptional losses arise from the disposal of assets which are no

longer required.

In relation to changes to the prior year figures, D11/18 has impacted

this market, as has the change to the Duct methodology and these

changes are detailed in Note 1b Comparative Figures and

Methodology Changes on pages 21-22.

29

Explanatory Report - Wholesale Access Business - Wholesale Broadband Access

Market Definition The market is defined by ComReg as consisting of:

• WBA provided over xDSL/copper network infrastructure; and

• WBA provided over fibre network infrastructure.

Key Market Products Open eir’s Wholesale Bitstream Access Reference Offer (WBARO)

currently includes the following principal product types:

• ADSL Legacy Bitstream access, which is regarded as Current

Generation Access (CGA);

• ADSL Bitstream Managed Backhaul (BMB) access, including port

rental and traffic (also regarded as CGA);

• Bitstream Plus Next Generation Access (NGA) products, provided

by a combination of:

o fibre to the premises or home (FttP/FttH)

o VDSL, launched from exchange buildings (EVDSL) or

cabinet (FTTC)

• Multicast Bitstream service, which supports delivery of linear TV

services (regarded as NGA).

These products are segmented by service characteristic, primary line

speed and contention ratio. The products are offered both externally

to OAOs and internally to eir Retail operations.

Regulatory Decisions in the Year There were no new Regulatory Decisions during the year.

Trends in Reported Balances

Revenues/Volumes The rate of decline in the CGA base continued in FY1920 following the

continued expansion of NGA. The rate of decline in average CGA port

rental base continued in FY 1920 (15%).

Revenues in the WBA market increased 11% year on year due to

growth in NGA revenue volume (9%) offset by decreased revenue

from CGA. The trend towards Standalone Broadband (SABB) remains

a contributing factor to revenue growth in the WBA NGA market

particularly with regards to FTTH. SABB has the effect of transferring

duct, poles and cable across from narrowband access. The impact of

D11/18 resulted in revenues moving to broadband from narrowband

(€10m).

Operating Costs Overall operating costs increased by 5% due primarily to the increase

in depreciation associated with the continued expansion of NGA and

increased SABB volumes. General management costs also increased

as a result of increased insurance and compensation costs.

30

Explanatory Report - Wholesale Access Business - Wholesale Broadband Access

Return on Capital Employed (ROCE) MCE has increased by 10%, due to continued increased investment in

NGA. As the rate of increase in operating profit was greater, the

ROCE improved to 8%.

Exceptional Events/Methodology Changes Exceptional gains arise from the disposal of assets which are no

longer required.

In relation to changes to the prior year figures, D11/18 has impacted

this market, as has the change to the Duct methodology and these

changes are detailed in Note 1b Comparative Figures and


31

Explanatory Report - Wholesale Access Business - Wholesale Leased Lines

Market Definition This market consists of the supply of all leased line connectivity to

OAOs and eir Retail. This market consists of three broad leased lines

categories:

• Wholesale Ethernet Services;

• Wholesale Leased Lines; and

• Partial Private Circuits (PPC).

Key Market Products These products are segmented by service characteristic, primary

capacity/bandwidth and distance.

Regulatory Decisions in the Year During the year Comreg issued the market review “Wholesale High

Quality Access at a Fixed Location”. ComReg has defined six separate

WHQA Markets having regard to an assessment of demand-side and

supply-side conditions, as well as the effectiveness of indirect

constraints emanating from the Relevant Retail LL Markets. As part of

this decision notice, Zone A and Zone B’s were defined. Each zone

corresponded to a specific geographic area distinguishable

according to a grouping of ‘Small Areas’, where ComReg considered

that the conditions of competition in Zone A are similar or sufficiently

homogeneous and which can be distinguished from the Zone B area in

which the prevailing conditions of competition are appreciably

different. The impact of the change in regulation will not be reflected

until the FY2021 accounts.

Trends in Reported Balances Revenues/Volumes Overall revenue increased by 10% due to continued growth in

Ethernet revenue (8%). Legacy PPC and Leased Line rental revenue

fell by 5% - as volumes continue to decline due to migration to

Ethernet services and increased competition from alternative

infrastructure, including self-supply by OAOs.

Operating Costs Overall costs decreased by 3% in comparison with the prior year

largely impacted by decreased depreciation.

Return on Capital Employed (ROCE) The ROCE increased to 31%, impacted primarily by increasing

revenues. Mean capital employed decreased by 4%.

Exceptional Events/Methodology Changes The exceptional losses arise from the disposal of assets which are no

longer required.

A change in the Duct Methodology has impacted the returns in this

market. This change is detailed in Note 1b Comparative Figures and


32

Explanatory Report - Wholesale Other Business - Wholesale Call Conveyance

Market Definition This market consists of:

• Wholesale Call Origination – the conveyance and routing of calls, originating at a fixed location, through any switching stages up to a point of handover. The point of handover can be the primary, tandem, or double tandem exchange associated with the access path on which the call was originated;

• Wholesale Call Transit - wholesale national call transit services on the public telephone network at a fixed location, including inter alia all elements of call routing that take place between Call Origination and Call Termination, and as further defined in Section 6 of ComReg Decision D05/15; and

• Wholesale Call Termination – the conveyance of calls terminating on geographic numbers on eir exchange lines from relevant parent exchanges to the subscriber unit.

Key Market Products Open eir’s Reference Interconnect Offer (RIO) includes a number of

products that utilise call origination and call termination:

• Primary Call Origination or Termination;

• Single Tandem Call Origination or Termination; and

• Double Tandem Call Origination or Termination

For single tandem and double tandem call types, there may be a

transit component in addition to the call origination and/or call

termination components. Open eir’s Commercial Interconnection

Services Price List (CISPL) includes the national call transit product. In

relation to transit calls to mobile or Number Translation Codes (for

example premium rate calls), the price must recover the relevant

outpayments.

Regulatory Decisions in the Year There were no Regulatory Decisions in the year.

Trends in Reported Balances Revenues/Volumes Overall, call origination and call termination revenue and volumes

continue to decline due to the impact of fixed mobile substitution,

alternative technologies, and competition on both the total number of

call minutes supplied and the proportion of those minutes originating

on fixed lines. Overall revenues fell by 13% to €54m.

Operating Costs Operating costs have decreased by 9%, primarily related to

decreased accommodation costs related to adoption of IFRS 16.

Operating Loss The operating loss increased by 19%, due mainly to the continuing

decline in call transit revenue and losses on call termination and call

origination services. Whilst revenues on call termination reflect pure

LRIC pricing, cost allocation remains on a fully allocated cost basis.

As per Section 7.177 of Decision 12/12, ComReg indicated that fixed

and common costs no longer recovered from call termination revenue

could be recovered from other regulated wholesale services as

appropriate.

33

Explanatory Report - Wholesale Other Business - Wholesale Call Conveyance

Return on Capital Employed (ROCE) The total MCE decreased by 21%. The ROCE of (16)% is reflective of

the continued decline in revenues in this wholesale market and the

relatively fixed nature of the costs. Exceptional Events/Methodology Changes The exceptional losses arise from the disposal of assets which are no

longer required.

A number of corrections are required which involve a restatement of

the prior year. These changes are detailed in Note 1b Comparative

Figures and Methodology Changes on pages 21-22.

34

Historical Cost Separated Accounts - Eir

Documents