KPN/Telia, the consortium of Dutch and Swedish telecommunications companies which is favourite to form an alliance with Telecom Eireann, has said that it will enter the Irish market even if it does not succeed in its attempt to partner the state operator.
"It is not an option for us not to be in Ireland," a spokesman for the consortium told a press conference in Dublin yesterday.
Unusually, the conference was hosted not by the KPN/Telia alliance, but by Unisource, the European telecommunications alliance of which both companies are members.
"Unisource is a pan European company," the company's director of European partnership projects, Mr David O'Meara, said. "If we dose we will come to Ireland on our own and compete. In fact, we have been quietly serving 30 multinationals based in Ireland." Mr O'Meara stressed, however, that KPN/Telia was keen to partner Telecom.
He promised that if KPN/Telia succeeded it would invest heavily in Ireland, outside of its investment in Telecom. The investment would be concentrated on software facilities and call centres. "If we have deep roots here we have the potential to make a massive investment in Ireland," he said.
Mr O'Meara would not be drawn, however, on whether this promise reflected a definite commitment in the alliance's bid.
Incumbent telecommunications companies tend to lose between 4 per cent and 8 per cent of their market share when competition is introduced, Mr O'Meara said. It was therefore imperative that Telecom form an alliance with a strong partner such as the Unisource group.
Unisource has connections with T&T, one of the largest telecommunications companies in the world. An alliance with the Unisource companies would give Telecom Eireann access to the Unisource/AT&T partnership, Mr O'Meara said. He added that Telecom would also be in a position to co invest in any future Unisource projects worldwide.
Although all European Union members must open up their telecommunications markets to full competition by 1998, Ireland has won a derogation allowing it to postpone deregulation until 2003. It has been argued that Ireland should not take up this derogation. The Government has said it will liberalise the market in 2000.
Questioned on the issue of competition, Mr O'Meara said: "Competition is not one of our concern. We are not afraid of competition as of 1998."
It is generally accepted that Telecom will have to invest heavily to meet the challenge of competition. Most of its equipment is purchased from two companies, Nortel and Ericsons.
According to Mr O'Meara Unisource is the largest customer worldwide of both these companies. The economies of scale of an alliance with Unisource would enable Telecom to cut the cost of purchasing equipment by 25 per cent, he said.
