BRIAN COWEN was advised when he was tánaiste to adopt a "neutral" stance on plans by Eircom's Australian owners to separate its infrastructure and retail units, Government records show.
Although such plans are no longer on the immediate agenda of Babcock Brown Capital, files newly-released under the Freedom of Information Act show that the issue was raised by the company in meetings last February and October when Mr Cowen was minister for finance.
Many parts of the files released to The Irish Times were blacked out on grounds of commercial sensitivity and because the material disclosed positions taken by public bodies. However, notes prepared for Mr Cowen in advance of meetings with Eircom executive chairman Pierre Danon and Babcock director Rob Topfer make it clear that the separation strategy loomed large in the discussions. "Eircom are seeking to separate their retail arms into two companies. This will allow a sell-off of its retail 'book' while retaining the infrastructure," said a note prepared in advance of a meeting with Mr Danon last October.
"This is a huge challenge for Eircom's management and it is not clear how the unions will respond to any break-up. He may also pitch the idea of the benefits from the country's point of view.
"You should take a neutral approach in this area. The Programme for Government contains a commitment to encourage the separation of the company, but it is a matter in the first instance for the company and the regulator.
"Eircom has also been in regular contact with the Minister and Department of Communications, Energy and Natural Resources who have responsibility in this area. We should avoid becoming involved in arranging this."
However, a separate note for Mr Cowen prepared by a different official in advance of a meeting with Mr Topfer and others in February said Babcock "may disagree" that the proposal was a matter for the regulator.
"Eircom's proposals are unprecedented and they raise a number of complex public policy issues that require careful examination. Structural separation has never been attempted before in the EU and, if it was not successful, it might be difficult or impossible to reverse. The European Commission will follow developments with great interest," the note said.
The files also dealt with Eircom's request for up to €150 million public support for its "Fibre Ireland" high-speed broadband scheme but most of the details were blacked out.
