Eircom shares rose on the Irish Stock Exchange today after the company unveiled a restructuring plan which will lead to the closure of its multi-media business with the loss of at least 200 jobs.
Eircom shares gained 8 cents to euro 2.43 at 12.30 p.m. Investment analysts had expected an announcement on Eircom's divestment strategy from multimedia following the closure of Eircom's subsidiaries Ebeon and Rondomondo.
The closure of the multimedia business will result in the loss of 200 jobs from a current level of 530. Eircom will merge its two profitable Internet service providers EircomNet and Indigo under the eircomNet brand.
Eircom said it intends to concentrate on its core fixed-line business. The restructuring programme announced last year for the fixed-line business will continue and is expected to deliver euro 76 million in annual costs savings involving the reduction of the workforce by 3,500 employees when fully implemented in 2003.
The statement said Eircom's board intends to unanimously recommend approval of the Vodafone takeover of Eircell. An extraordinary general meeting (egm) of Eircom shareholders to approve the Vodafone deal is scheduled for 11.00 a.m. on Friday May 11th at the Point Theatre in Dublin.
Under the terms of the Vodafone offer a new company called Eircell 2000 will be established to allow a demerger from Eircom. Shareholders will then receive 0.9478 Vodafone shares for every two Eircell 2000 shares held.
Eircom has agreed with Vodafone it will not operate a mobile business in Ireland for up to three years from completion of the offer except in certain limited circumstances, the statement said.