Analysis: Smart Telecom shareholder Phil Duggan feels it will take forever to get a return on his investment. He told its extraordinary general meeting (egm) yesterday that he would be waiting into "infinity" to get something back. He added ruefully: "It will be beyond my lifetime anyway."

He and his fellow stockholders will end up sharing 10 per cent of a new business, Calally Ltd, which will be 90 per cent owned by Kingspan founder Brendan Murtagh, who owns 20 per cent of Smart.

At this point, they have lost more than 90 per cent of their investment. They argued yesterday that the best way to get a return would be to write off the loss against capital gains taxes on profitable investments.

When Smart's financial controller, Brian Timmons, suggested this might still be possible but he was not sure, one shareholder declared that it would be better to "let the company go down the tubes - then there would be no doubt about my capital gains". While a row over an adjournment proposal temporarily stopped the meeting, that did not happen. Instead, all the motions needed to transfer the business to Calally went through easily.

Calally will inherit Smart's €40 million in debts and its brand, which is potentially tarnished by recent problems that saw its service to 40,000 voice customers cut off.

It plans to sell that operation along with Smart's other low-margin businesses, and focus instead on its 17,000 residential and 160 corporate broadband customers.

Since former stockbroker Oisín Fanning founded Smart in 2000, it has been adept at raising cash. But it's been equally good a losing it. Last year, it raised €40 million and it had revenues of €40 million, but it has also amassed debts of €40 million.

Murtagh is due about €4 million of this; the rest is due to suppliers. Its half-year loss was €19 million. In 2005, it lost €23 million. Acting chief executive Ciarán Casey said the board accepted the blame for this.

But he told the meeting that regulatory difficulties, which made it difficult to recruit customers, had dogged the company since it launched its broadband service in 2004. That is partly because the dominant fixed-line player, Eircom, was slow to open up its exchanges to competitors, a process with which it is now co-operating.

Eircom seems most likely to be offered the third-generation (3G) mobile licence that communications regulator ComReg originally offered to Smart but subsequently withdrew in a dispute over bonds. The High Court has now ruled in ComReg's favour and Smart seems unlikely to appeal.

So, as well as 80 per cent of the Republic's fixed lines, Eircom could have two mobile businesses (it already owns Meteor). That will be a defeat for the Government's seven-year effort to liberalise the market.

Murtagh could emerge as the other winner. Along with Calally, he owns 120km of broadband cable around Dublin through Broadband Communications Ltd.

This has cost him about €30 million, probably twice what he could sell it for. But if Eircom begins opening up its exchanges, and ComReg's hand is strengthened by new legislation due in 2007, it could look very valuable. It may not take him forever to realise a return.