Business Irish

Saturday 25 November 2017

Eircom IPO will depend on market conditions, says Moat

Eircom Group Headquarters
Eircom Group Headquarters
John Mulligan

John Mulligan

The timing of a possible stock market return for Eircom "is not fixed" and will depend on market conditions as they evolve, according to the group's chief financial officer Richard Moat.

Speaking to the Irish Independent as Eircom unveiled third-quarter results, Mr Moat said that a debt repayment extension secured by the telecoms group earlier this year meant it's not under any immediate pressure to pursue an initial public offering (IPO).

Eircom hired investment banks Goldman Sachs and Morgan Stanley this year to explore strategic financing options for the company, including a potential IPO. It's likely that a stock market flotation could value the group at around €2bn. If it happens, Mr Moat, along with Eircom chief executive Herb Hribar, could be in line for multi-million euro bonuses.

There was a spike in IPO activity this year, but there are signs that the appetite for flotations has been flagging.

Mr Moat declined to say whether that might either accelerate or delay a possible Eircom IPO.

He conceded that the IPO market had become a bit softer recently, but said decisions couldn't be made based on sentiment on a week-to-week basis.

"You can't second guess the markets from week to week," he said.

Eircom's biggest shareholder is US investment giant Blackstone, which, following the telecom group's examinership in 2012 now owns 25pc of the Irish company. Other shareholders include Anchorage Capital, Bank of New York Mellon-owned Alcentra, and Silver Point Capital. Eircom's debt levels are currently around €2.3bn, the maturity of the debt has been extended to 2019 from 2017.

Proceeds from an IPO would be used to further reduce the debt level, Mr Moat confirmed.

Mr Hribar said Eircom had positioned itself well amongst European telecoms firms, having focused on a so-called quad-play offering that allows consumers to take up mobile, broadband, fixed-line and TV services from the operator.

A flotation by Eircom would be one of the biggest by an Irish firm in years. Paul Coulson's Ardagh glass group is also eyeing up a major stock market flotation next year.

Mr Moat also welcomed the decision by the European Commission yesterday to approve the €780m takeover of Telefonica's Irish O2 arm by rival Three.

Eircom reported underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of €119m in the third quarter, flat compared to the corresponding quarter in the previous financial year. It incurred €10m in network repair costs due to winter storms. Revenue fell 5pc to €315m.

The company has also made a provision of €7m after telecoms watchdog Comreg said this month that it had made it too difficult for consumers to end contracts.

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