Tuesday 17 September 2019

Adrian Weckler: 'Purported price tag would limit suitors for telco firm'

Adrian Weckler

Adrian Weckler

BT Ireland is the network formerly known as Esat that was originally built by businessman Denis O'Brien before it was sold to British Telecom for €2.4bn in 2000.

While it set out to be a fully-blown competitor to Eircom, it changed course soon after to focus on the business market. Instead of home broadband and phone packages, it concentrates on managed services, outsourcing and data hosting for corporate customers. As such, it also operates data centre facilities here. BT treats many of its operations on an island-wide basis, although it is not clear whether it is signalling a divestment of all its Irish assets or just in the Republic.

There are few potential suitors for the business here. Any interest from Eir would likely run into trouble with the Competition and Consumer Protection Commission.

A price tag north of €400m would also rule out smaller, ambitious firms such as Imagine. It is also too much for investment funds interested in telecoms, such as the Cardinal Capital Group.

Increasing competition in the Irish market has seen valuations for most telecos here fall in recent years.

The fixed line and mobile parts of Esat, which BT paid €2.4bn for two decades ago, are now valued at around half of that price. In 2013, Three agreed to pay €780m to buy the country's second largest mobile operator, O2 Ireland, previously Esat Digifone. However, one of the operators spawned from the Three-O2 deal failed to gain market traction. ID Ireland, run by Carphone Warehouse, went into liquidation in 2018. The potential National Broadband Plan state subsidy of €3bn could also affect the market. Last year, a consortium dominated by the French billionaire Xavier Niel bought the country's largest telecoms firm, Eir, in a deal valuing it at €3.5bn including debt.

But one industry insider said the quoted price for the Irish division of BT is too high. "The business isn't worth what they are trying to sell it for," one executive, who does not work for a competing firm, said.

Executives in BT Ireland have declined to clearly comment on the reports.

"We don't comment on rumour or speculation," a spokeswoman told me.

Irish Independent

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