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Sunday 21 September 2014

Owners of Eircom to net €1.8bn in break-up

Company has spoken to several potential buyers about sell-off

Ailish O'Hora

Published 20/07/2007 | 00:00

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EIRCOM is to sell off a major chunk of the company in a deal that could net owners Babcock & Brown up to €1.8bn.

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The firm wants to dispose of the retail division, which sells basic phone services and broadband, as well as selling off its mobile phone arm Meteor.

But Babcock is planning to retain the valuable wholesale division which includes the company's highly lucrative phone network.

It is understood Eircom has spoken to a number of potential buyers in the past few months although the company is likely to be sold to a private equity firm.

Eircom has already changed hands five times since 1999.

The sell off of the retail businesses will be a sensitive issue for the Government although it will have no say in the move.

Eircom is to be split into two divisions ahead of the sale, sources close to the company told the Irish Independent.

Babcock bought Eircom for €2.4bn less than two years ago.

It is not yet clear whether Meteor is to be sold as a separate entity or as part of the retail arm.

Divisions

While Babcock has never denied it would split the company into two separate divisions, the plan had not been expected so soon.

It is understood that one of the reasons that the company was so keen to settle with Eircom union members over the recent pay dispute was the fact that the sale was scheduled to be finalised by the end of the year.

The company agreed this week to pay a 2pc increase due under the national agreement, Towards 2016, while the unions have agreed to enter into structured talks on the management's plans for reform of Eircom at an operational level.

A spokesperson for Eircom said yesterday that the company did not comment on speculation.

The retail division comprises mainly of basic phone services with one million landline customers as well as other arms including the company's broadband business.

The wholesale arm, which is considered to be the most valuable aspect of the firm, is made up of 1.6m phone lines as well as the local loop which links all networks into people's homes.

Telecoms sources said Meteor is worth up to €800m as a standalone mobile operator while the retail arm is worth more than over €1bn. Meteor has over 800,000 subscribers.

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