ANALYSIS:Pierre Danon leaves Eircom as its owners grapple with serious questions over its strategic direction
PIERRE DANON'S forthcoming departure from Eircom after two years as executive chairman is at odds with his stated intention of staying for five years with the Irish telecoms provider.
Headhunted for the prime role at the French telecoms company Numericable-Completel, Danon leaves Eircom as its owners grapple with serious questions over its strategic direction and the funding of its fibre-based broadband project.
These issues overshadow the solid day-to-day financial performance of the company, whose revenues rose 5 per cent in the most recent nine-month period and whose earnings before interest, tax, depreciation and amortisation rose 9 per cent.
Danon was handpicked for the job by Babcock Brown Capital, the Australian investment fund whose takeover of Eircom in 2006 was its fourth change of ownership in only seven years.
If the talk back then was of transformational change in the Irish telecoms market after a long period of underinvestment and relentless corporate activity, the story since has revolved around an unfulfilled plan to split Eircom's retail and network units. The overarching aim of this was to deliver a big one-off return to Babcock via a sale of the retail arm while it received rental cash from telcos using the network. But this never went beyond the planning stage.
Meanwhile, Babcock Brown Capital executed an outright strategic U-turn through its decision last February to avoid further investments and use its cash pile to buy back half its shares.
As an alternative to the split, the fund has raised the prospect of selling Eircom to a European incumbent telco. Given the state of credit and equity markets, that must be a medium-term prospect at best. Further questions surround Eircom's investment programme. Although Babcock has delivered increased investment in Eircom's network and higher broadband subscriptions, the Government is cool on its "Fibre Ireland" plan and ComReg, the sector regulator, recently cut the return on capital the firm can make on its regulated fixed-line business.
Such concerns will soon be a memory for Danon, a former chief of BT's retail arm, who came to Eircom via JP Morgan. He was sacked in 2005 as chief operating officer of IT services firm CapGemini after Le Figaroreported his pursuit of the top job at hotel group Accor. He was not appointed. Now he is poised, three years later, to become chief of another French company.
