Sunday 13 October 2019

Eir's French owner sees share price fall almost 60pc

 

Carolan Lennon, CEO of Eir has vowed to build ‘the best fixed and mobile network in Ireland.’ Photo: Steve Humphreys
Carolan Lennon, CEO of Eir has vowed to build ‘the best fixed and mobile network in Ireland.’ Photo: Steve Humphreys

Fearghal O'Connor

The key French shareholder of Ireland's biggest telecommunications company, Eir, has seen its share price fall sharply in recent weeks.

Iliad, the telecoms player led by French billionaire Xavier Niel, has experienced a share price fall of more than 25pc since the beginning of 2019.

But the fall has been even steeper -almost 60pc - since the giant French company took over Ireland's former state telecoms company in April 2018.

Niel is a major player in the French, Swiss and Italian markets, and his NJJ Telecom Europe and French telecommunications company Iliad jointly become the ninth owner of Eir in as many years. That deal, completed last April, placed a €3.5bn enterprise value on the Eir business.

At the time, Iliad's share price was flying high above the €200 mark on the back of its disruptive entry into several European telecoms markets. But by close of business on Friday the share price of the company had fallen to €87.90.

Much of that fall has come in the last number of weeks. Iliad began 2019 with a share price above €120.

But with the recovery expected by analysts in the company's overall performance proving slow to materialise, it is now at its lowest share price level since 2012.

The poor market performance has largely been driven by a contraction of domestic revenue in its home market of France as it lost mobile phone and broadband customers to competitors. Last year the company launched a major expansion into the Italian market where its performance has been stronger than at home.

In Ireland, the company was not slow to implement the changes at Eir, launching a major cost-cutting plan soon after its arrival that saw the departure of hundreds of staff and a reorganisation of its top management team. Soon after the acquisition, Eir's new chief executive, Carolan Lennon, pledged that the company would build the "best fixed and mobile network in Ireland".

That drive continued last week with the announcement by the company that it would cover 75pc of all Irish homes and businesses with fibre broadband directly into dwellings and offices as part of a new €500m plan to connect an extra 1.4 million homes over the next five years.

The company previously committed to delivering 335,000 fibre-to-the-home broadband connections that Lennon said last week would be complete by June.

That earlier intervention has reduced the number of homes available to the consortium who are the likely eventual winners of the Government's ongoing National Broadband Plan tendering process, and last week's announcement - along with one by Imagine Broadband - could take further homes out of the NBP pool.

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