UPDATE 1-Eircom says earnings fall, cuts forecasts

DUBLIN, Feb 20 (Reuters) - Irish telecoms group eircom

said there had been a "significant reduction" in earnings in the

second half of 2011, as expected, and it had lowered forecasts

for its future performance because of problems cutting costs

further.

"The results indicate declining trends caused by ...

continued reduced customer confidence and heightened industry

competition," eircom said on Monday, after presenting an updated

business plan to lenders.

"This is underlined by recently announced reductions in GNP

projections for Ireland," Ireland's largest fixed-line telephone

company said.

Eircom said the reduction in earnings was based around the

consumer and small business unit and, in the mobile segment, by

reduced market share.

The updated management plan included reduced capital

expenditure on its fibre rollout.

The group said it was continuing to consider and discuss

proposals from lenders about a restructuring of 3.8 billion

euros ($5.0 billion) debt.

Its independent directors are evaluating two proposals,

including one from the syndicate of first-lien senior lenders,

the most senior in any restructuring, owed 2.71 billion euros,

and another from a group of second-lien senior lenders owed

around 350 million.

The company said it hired Morgan Stanley to advise on a

possible sale at the start of the month, and prospective buyers

had until mid-March to signal their interest. .

Eircom owner Singapore Technologies Telemedia withdrew from

the board last month after lenders rejected its restructuring

proposal.

($1 = 0.7538 euro)

(Reporting by Lorraine Turner; Editing by Dan Lalor)