Thursday 16 August 2018

Eir buyer set to refocus investment on urban areas

A consortium linked to French telecoms tycoon Xavier Niel last week announced it was buying a majority controlling stake in Eir, valuing the former state telecoms company at €3.5bn. Photo: Christophe Morin/Bloomberg
A consortium linked to French telecoms tycoon Xavier Niel last week announced it was buying a majority controlling stake in Eir, valuing the former state telecoms company at €3.5bn. Photo: Christophe Morin/Bloomberg

Fearghal O'Connor

Eir's new French billionaire owner will put a greater emphasis on developing state-of-the-art services in key urban locations, shifting the company's focus away from sparsely-populated rural locations, it is understood.

A consortium linked to French telecoms tycoon Xavier Niel last week announced it was buying a majority controlling stake in Eir, valuing the former state telecoms company at €3.5bn.

Niel is a major player in the French, Swiss and Italian markets. His NJJ Telecom Europe and French telecommunications company Iliad jointly become the ninth owner of Eir in as many years.

But despite the arrival of an industry player as the controlling interest in the company, annual capital investment in new services and improvements is unlikely to increase from the €250m to €300m Eir already spends, according to well-placed industry sources. Current investment is already towards the top end in an EU context compared to other incumbents, the sources say.

Previous commitments to bring better services to rural Ireland are likely to be honoured, it is understood, but improved services in both mobile and broadband in Dublin and other key urban locations will be a priority.

Eir is one of two companies, along with Enet, competing for the Government's massive but long-delayed National Broadband Plan, aimed at delivering state-subsidised high-speed broadband to hundreds of thousands of rural homes. The company also announced plans to bring broadband to 300,000 rural homes as a commercial venture ahead of the state-sponsored scheme.

But Eir's new French owners are understood to see the long-term rollout of much better services in Dublin and other cities as a key priority. The intense political focus on improving services in sparsely populated rural locations has meant that "urban Ireland has suffered and been at a disadvantage", said a source.

"A country is a social fabric amongst all its components, so you cannot neglect one for the other. But there needs to be a balanced approach between urban and rural," they said.

Eir's share of both the national mobile market and the retail broadband market in Dublin and other major urban areas is seen to be below the European average enjoyed by other big national players like KPN, Belgacom, France Telecom and Orange. Changing that will be a key goal of the new owners, it is understood.

Another priority for the new French entrant is likely to be an easing of the tension in Eir's relationship with regulator Comreg, said the industry source. The new owner's status as an industrial rather than financial player is understood to have been its key calling card when it came knocking, not least in how this could help improve the relationship Eir has with the regulator. It will be the first time the telco has been owned by an industry player for many years.

The new owners will need to "pacify this relationship and understand why it has been damaged" before improving transparency and governance at the company, said an industry source.

It is likely the new owners will seek to meet the regulator to discuss any grievances. Earlier this year it was reported that Comreg was seeking to impose multi-million-euro penalties on Eir over its alleged failure to comply with its obligation to allow other providers access its network.

Sunday Independent

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