Eight years after its controversial flotation, Eircom is poised to offer the Government a stake in its telecoms network in return for control over public broadband systems owned by the State, writes Arthur Beesley, Senior Business Correspondent
Such a move would represent a fifth change in the ownership of the national phone network nearly a decade after many thousands of private investors lost their money in the privatisation of the company.
But after years of underinvestment in the Eircom network, it would also return the Government to a position in which it would have some say over the level of investment in the system.
Now controlled by Australian investors Babcock & Brown, Eircom wants to separate its telecoms network from the retail arm, which sells phone and other services to 1.6 million consumers and business users. Staff and former staff control 35 per cent of Eircom through an Employee Share Ownership Trust (Esot). While the shareholder agreement between Babcock & Brown and the Esot anticipates a separation of the business, it is not clear how the two parties would divide their interests in the business after a separation.
However, Babcock & Brown would keep ownership of the core network and run it as a wholesale infrastructure business and sell off the retail arm, which has been speculated to be worth as much as €1.8 billion.
The Eircom board has authorised its executive chairman Pierre Danon to enter discussions on such a separation with the Government and the telecoms regulator.
One proposal under discussion in Eircom is to integrate publicly-owned broadband systems - known as Metropolitan Area Networks (MANs) - with the Eircom network. While a financial payment to the Government could be made, Eircom is also examining the possibility of offering the Government an equity stake in the network business. The Government's attitude to such a proposal is not known, but it has long been unhappy with the level of investment in the network.
Babcock & Brown has increased capital investment in the system since it took control of the business a year ago. It is likely to argue that the integration of the MANs system with Eircom will avoid duplication of expenditure.
In anticipation of a move to separate Eircom's retail arm from its network business, the company has prepared to create separate accounting systems for each unit.
However, the company's board was unable to adopt a resolution on such a move when it met last week because the directors who represent the Esot were not present.
Former trade union head Con Scanlon was unwell and stockbroker John Conroy was travelling.
Sources close to Eircom and to the Esot said there was no division between the two parties on the plans to separate the business.