Eircom divisions to let go up to 300

Eircom is expected to make up to 300 of its 600 multimedia staff redundant in a new strategic plan which it will publish today…

Eircom is expected to make up to 300 of its 600 multimedia staff redundant in a new strategic plan which it will publish today.

Workers at the former State monopoly's four multimedia subsidiaries will be briefed this morning about the plan to reorganise the group after its mobile division, Eircell, is sold to Vodafone.

The group is expected to confirm the closure of its digital publishing division, Rondomondo, and merge its two Internet service companies, Eircom.net and Indigo.

It is now likely that the e.g.m. at which shareholders will be asked to sanction Vodafone's purchase of Eircell will take place in the second week of May.

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About 35 people will lose their jobs when Rondomondo closes. In addition, 265 more redundancies will affect staff at Eircom.net, Indigo and Local Ireland, a company that develops content for websites. No decision has been taken to close Local Ireland, though that has not been ruled out.

Eircom owns 90 per cent of the company and the remaining 10 per cent is held by Nua, an Internet publishing firm now in receivership. Eircom holds 20 per cent of Nua, where 35 people lost their jobs when the company folded last month.

Rondomondo thus becomes the fourth tech company owned or part-owned by Eircom to close in recent months.

Ebeon, an e-business consultancy 51 per cent owned by Eircom, closed in January with the loss of 170 jobs. About 50 jobs were lost when Viasec, a Donegal-based company in which Eircom had a 20 per cent stake, went into liquidation in March. Eircom said last year that it would float its multimedia division as an independent entity, but that plan was been abandoned as Eircom suffered badly in the general fall in technology, media and tech stocks seen since March last year. The flotation proposal was introduced as part of a plan to reduce Eircom's staff of about 12,000 by 3,500 over three years.

The job cuts expected today come as the company attempts to defend itself against a likely bid by the e-Island consortium, controlled by Esat's founder, Mr Denis O'Brien, for its non-mobile units.

Mr O'Brien has received documentation from Eircom but he has yet to lodge a formal bid. His latest approach to Eircom values the non-mobile business at #1.10 per share. Eircom is understood to believe that amount fundamentally undervalues the business.

Arthur Beesley

Arthur Beesley

Arthur Beesley is Current Affairs Editor of The Irish Times