Madam, - I'm writing to correct a number of issues raised in Vincent Browne's article of July 30th regarding Eircom.
Mr Browne's statement that Valentia Telecommunications bought Eircom a year and a half ago for €1 billion is not correct. The actual price paid was €3.3 billion, following a competitive bidding process between Valentia and the E-Island consortium.
Mr Browne has also incorrectly stated that "the ownership of Eircom has transferred out of the State to a shelf company in Britain" and that "this is code for avoiding or diminishing the tax that would otherwise be payable here".
Eircom wishes to state categorically that the establishment of the UK holding company was not done for tax reasons and in no way diminishes the company's tax liability.
In fact, the UK holding company is registered for Irish tax and will continue to pay tax in Ireland.
Mr Browne says that there has been a massive decrease in capital expenditure by Eircom between 2001 and 2003. Mr Browne may not be aware that as a result of the downturn in the sector, telecoms companies throughout Europe have reduced their capital expenditure.
However, independent research shows that, at 12 per cent of turnover, Eircom's level of capital expenditure is above the European average among telecoms companies.
Today, Eircom is the only telecommunications company in Ireland which continues to invest significantly in this country's telecoms infrastructure.
Finally, in relation to prices, it should be noted that over the past five years Eircom's prices to consumers have reduced in real terms by over 40 per cent (and this has been achieved against a backdrop of rising prices in almost every other sector of the Irish economy).
Eircom's prices are now amongst the most competitive in Europe and a recent OECD report stated that the average residential telephone bill in Ireland is less than both the UK and the US (OECD Communications Outlook 2003). - Yours etc.,
JAMES G. RYAN, Company Secretary, Eircom Ltd., St Stephen's Green West, Dublin 2.