Privatisation escapades show capitalism's quirky side
Published 06/03/2014 | 02:30
IN retrospect, the privatisation of Eircom was one of the high points of the early Celtic Tiger years.
After the last few years of grim austerity, it is difficult to conjure up the innocent enthusiasm of the late 1990s when we waltzed happily into the eurozone and bought shares in what was then known as Telecom Eireann but later renamed Eircom so American investors would not think the phone company had anything to do with Iran.
There was a sort of collective delusion on both counts that led to disillusion. The really strange thing was that so many of us, around 400,000, bought shares in a company we knew to be incompetent. Back then there was only one fixed line company – everybody was a customer of Telecom Eireann so we all knew it took weeks to install or repair a simple phone while the operators invariably connected you to the wrong number and charged you a fortune.
Most people buy shares in companies without ever experiencing the services first hand. We all knew Telecom Eireann was rubbish but still bought in. Quite why remains a mystery but the mass hysteria surrounding the flotation was real enough.
Curiously, and unlike in Britain where Margaret Thatcher had sold off assets cheaply, there was no track record of easy money from privatisations. The previous sale of shares in state-owned Irish Sugar back in 1991 has not been a particularly good punt but served to highlight the difficulty of getting public sector workers to change their work practices.
The flotation of Aer Lingus in 2006 fared no better and the share price today is still a long way below the €2.20 price of the shares on the first day of trading.
Back in 1999, few of those buying shares in Telecom Eireann understood that it was the small mobile phone unit Eircell that was valuable while the landline company was worth next to nothing. Certainly, few could have predicted that Eircom would end up in the record books as the biggest insolvency in Irish history, a record it held until the liquidation of Anglo Irish.
Only the Government of the day and a select few – those who sold their shares in Telecom Eireann in the months immediately after the IPO – made any money from the deal.
For everybody else, it has been an expensive lesson in the vagaries of capitalism and a reminder that there are no sure bets.