Irish Government will not buy Eircom

23 May 2009

Ownership of Eircom by the Irish Government was ruled out last night by the Minister for Communications Eamon Ryan TD, who told a telecoms industry dinner that he favoured long-term ownership of the incumbent, where the owner was willing to invest in its infrastructure.

Minister Ryan told the assembly of Irish telecoms industry leaders at last night’s Telecoms and Internet Federation (TIF) annual ball that he was working on a policy framework that would provide the optimum regulatory environment for next-generation network (NGN) investment.

In tandem, another policy framework is also in the works for finally putting a mechanism in place for a one-stop shop to make use of state fibre assets such as dark fibre and ducting.

These policies would pave the way for strong investment in future platforms such as WiMAX, DOCSIS 3.0 and Long Term Evolution.

“It is my belief that frameworks will complement each other and promote investment in NGNs.”

Minister Ryan also took the opportunity to make it clear to the Irish telecoms industry that “state ownership of Eircom is not on my agenda.”

He outlined his conviction that the previous models of short-term ownership by investment groups who only cared about asset stripping a nation’s telecoms infrastructure will not be allowed to happen again.

He said Eircom has a vital role to play in the nation’s digital infrastructure and that it was a business capable of generating revenues of over €2bn and operating profits of over €700m.

“The short-term investment model has left a lot to be desired. I would not ponder a similar model ever again.

“In terms of investment in the future, Eircom has much to offer any investor interested in long-term strategic growth. It needs a long-term business model. Platform competition is critical to Ireland’s development. Open access and consumer protection will continue to be regulatory policy in this country.

“An Eircom that can offer open access for the telecoms industry and a strong commercial return would be an ideal long-term opportunity for investment,” Minister Ryan told the industry.

Eircom, which has debts of over €4bn, is currently the subject of a potential bidding war. A €97m bid led by Rob Topfer and former Babcock & Brown executives may have been rejected, but groups including Singapore Telecom, France Telecom and Irish telecoms veteran Sean Melly are due to make presentations to Eircom management in the coming weeks.

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years