Eircom to offer Government a stake in national network?

3 Aug 2007

Almost a decade after Eircom went public and the national copper network fell into private hands, it is believed that Eircom is now considering offering the Irish Government a stake in the national copper network in return for access to the state-owned Metropolitan Area Networks (MANs).

Such a move, which is under consideration, would mark the fifth change of ownership of a national copper network that many feel has been blighted by underinvestment and as a result Ireland is lagging behind other European nations in terms of broadband availability.

The MANs represent the Government’s ambitions to ensure that state-of-the-art networks exist nationally for residential, local business and inward investment. So far 27 of these networks – effectively fibre rings circling towns – have been deployed under the first phase and under the management of E-net, and represent an investment of €120m.

However, the issue backhaul to support and link up the various networks and the ability of local residents and businesses to access these networks have yet to be resolved. That said, both IDA and E-net claim that the existence of MANs have led to increased levels of inward investment in the regions and a large number of fixed and mobile operators rely on the MANs.

A further €435m has been earmarked under the National Development Plan to deploy a further 90 MANs around Ireland.

Eircom’s present owners Babcock & Brown is understood to be aiming to separate Eircom’s telecoms network from its retail arm, and run the network as a wholesale business.

It is believed that Eircom is planning to integrate its national broadband network with the MANs.

And while a financial payment would be made, Eircom is believed to be examining the possibility of offering the State an equity stake in the national copper network, understood to be valued at €1.8bn.

Under Babcock & Brown’s ownership, Eircom has moved to make long-overdue investments in its national network, announcing plans to invest €1bn to upgrade the national network. These plans include a €60m investment to build a next-generation network and some €30m to upgrade 300 exchanges around the country.

The company has also committed to paying €114m for a 3G mobile licence from ComReg and yesterday revealed that an additional 19 exchanges were unbundled, giving potentially 12,000 people access to broadband.

According to the latest ComReg figures, 602,000 people now have access to broadband and Eircom says penetration stands at 16pc, close to the EU June average of 16.9pc. The present EU average stands at 18pc.

By John Kennedy