Irish

Wednesday 20 August 2014

Rabbitte allays fears Eircom will be 'raided' in possible IPO

Minister says telecoms firm must invest

Adrian Weckler

Published 29/06/2014 | 02:30

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Pat Rabbitte. Photo: Tom Burke
Pat Rabbitte. Photo: Tom Burke

The Communications Minister, Pat Rabbitte, says that there is "apprehension" in government circles about a possible Eircom public flotation.

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"The company has been raided for quick profit in the past," he told the Sunday Independent. "The truth is that there is some apprehension about what the future holds now. Eircom is still the spine of the system here."

However, Mr Rabbitte said that he does not expect the company, which needed High Court intervention to write off €2bn in debts, to be "raided" in the same way it was by previous corporate financiers and conglomerates.

"On balance, I don't expect all that to happen again," he said. "Because in order to maintain its status as a major player, Eircom simply has to invest. I think there's a sensible acknowledgement within the company that in order for the company to be a pivotal player in this market, it has to continue to invest and modernise. I think that's a cardinal principle of strategic focus in the company and I can't really see that changing."

Eircom recently hired investment banks Goldman Sachs and Morgan Stanley to advise on financing options, including a possible IPO. A stock market flotation could value the group at around €2bn. If it happens, several senior Eircom executives could be in line for multi-million euro bonuses.

However, Mr Rabbitte said that there was "considerable relief" that the company had invested in new infrastructure throughout its financially distressed period of recent years.

"It was a great relief that Eircom continued to invest in things like eFibre rollout, even while in the ownership of the bondholders and their banks," he said.

"That's a very positive development. There was considerable relief in this department when that was maintained and enhanced."

Mr Rabbitte said that work on Ireland's National Broadband Plan, which promises fibre broadband to 1,100 rural towns and villages around the country at a cost of up to €512m, was continuing.

He said that a national mapping exercise to complete a list of towns and villages that will get the high-speed connectivity is expected to be completed in the autumn. Mr Rabbitte was unable to say when a tender document for the 'last mile' element of any such fibre broadband service might be offered to industry. He said that the Government is considering the structure and makeup of such a tender.

He said that he expects an announcement on a separate national fibre broadband service, jointly operated by the ESB and Vodafone, "very soon".

"As the ESB's shareholder, we think that this is a very positive development and I hope that it will be announced soon," he said.

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