The new chairman of Telecom Eireann, Mr Brian Thompson, has predicted that the stockmarket offering of the company's shares will receive a strong response from US investors. He thought it likely that the shares would be quoted in New York, as well as Dublin and London, as an attraction to the US investment community.
It is understood that the Government - which is expected to give the go ahead to float 35 per cent of the company initially - has still to decide on the listing issue. But a primary listing in Dublin, a listing in London and some type of US listing will be agreed.
In the US, the Government has the option of seeking a main SEC listing - a full listing on the main board of the New York exchange - or a listing under special stock exchange rules which requires less information to be filed, but offers less prominence. A full listing is seen as the more likely option.
The next six months "would be the most critical in Telecom's history", according to Mr Thompson, and the new board would have to evolve to being a true business enterprise board with the higher standards of governance and shareholder responsiveness. Potential US investors would look at the projections of company finance and closely at the Telecom board and management.
The "roadshows" - presentations to potential investors by management and board members in advance of the flotation - would be crucial. Investors "take an awful lot out of a road show - they look in peoples' eyes, its tough but required". A leading international telecommunications figure, Mr Thompson said that he had "spent his entire working life in the competitive world of telecommunications", into which Telecom was now moving. He retired as vice chairman of Qwest in December, following its takeover last year of LCI, where he was chairman and chief executive. Before he joined LCI in 1991, he was executive vice president of MCI Corporate Communications and has wide experience in the deregulation of the US market.
How is Telecom equipped to deal with competition?
"The problem is that Telecom has not really experienced competition yet, it has only just begun." Agressive and competent competitors would emerge. For the public operators facing competititon "it is a very difficult change to make", he said. "The biggest challenge is efficiency - how to become efficient in a competitive world and improve responsiveness to the consumer" in all areas of service.
However, he expressed optimism that Telecom can make the transition and said the experience of the telephone industry in the US does not necessarily suggest that further big reductions in its workforce will be necessary. The local telephone companies in the US have prospered after the break up of AT&T, he points out, despite predictions that they would face difficulties.
"Properly managed the incumbent telephone company should be the leader in generating profits and bringing value" after the introduction of competition
Mr Thompson said that his work on the special advisory committee on telecommunications appointed by the Minister for Public Enterprse, Mrs O'Rourke, had given him "some insights to the marketplace". "Ireland is in the right position at the right time" to become an international e-commerce centre, he said, though it will require a lot of energy and effort to achieve such a position. Following recommendations by the committee designed to achieve this, Mrs O'Rourke's request to him to chair the Telecom board was "her way of saying put your money where your mouth is", he added. "She was most persuasive." Eireann have been very aggressively pursuing technological developments," according to Mr Thompson, but competition would put pressure on the company to roll such services.
The future business for telecommunications companies was boosted by the advent of e-commerce and electronic data movements, leading to a huge expansion in the size of the market. Since competition was introduced in the US, AT&T lost 60 per cent of its market share, but such was the growth in the size of the market that each quarter it has reported higher earnings. Competition was thus an opportunity and a challenge, rather than a threat.
