EIRCOM

'eircom Group plc' is the largest telecommunications operator in the Republic of Ireland.
As Bord Telecom Éireann plc, the company was (until 1999) a state monopoly; as a private company it continues to dominate many telecommunications areas, its main competitors being ntl: Ireland which operates its own network, and BT Ireland (formerly Esat BT), accessed via eircom's network. eircom currently operates the fixed-line telephone network, a GSM (2.5G) mobile telephone network Meteor (acquired from AllTel (Western Wireless) in 2005) and act as an internet service provider (ISP) ''eircom.net''. eircom also operate a property alarm installation and monitoring unit called ''eircom Phonewatch''. eircom now has a 44% share of the Irish telecoms market.

Contents

Services

History

Privatisation

Disposal of Eircell, going private and refloatation

Return to Mobile - Acuqisition of Meteor

Swisscom approach

Babcock & Brown

Possible Disposal of Meteor and eircom Retail Arm?

Competition

Criticisms of eircom

Broadband Roll-out

See also

References

External Links

Services

eircom operate the largest fixed-line telecommunications network in the Republic of Ireland, under licence from the Commission for Communications Regulation. Most homes and businesses in the state are connected by this network. A full range of telecommunications services is provided on the network including Business IP, its MPLS platform. Their ISP division, eircom net, provides dial-up services, as well as broadband (see broadband roll-out, below) services. eircom Phonewatch provides burglar alarm and home monitoring services.
eircom's mobile arm, Meteor, provides a full range of GSM-based mobile communication services throughout the Republic of Ireland. Its GSM network operates at 900mhz and 1800mhz. GPRS data services are also available. Meteor provides both bill-pay (contract) and pre-pay (non-contract) plans and has approximately 17% of the Irish mobile market, with 819,000 cellular subscribers on the Meteor Network. The company currently uses EDGE technology on its network and has received a 3G (UMTS) licence recently removed from eircom's competitor, Smart Telecom. (This requires 33% of the population to be covered by 3G by September 2008.)
As an operator with significant market power, eircom is required to provide a number of wholesale products to other operators and to switch calls onto other phone networks. Many broadband products offered by other operators are resales of the eircom product.
eircom has been subject to much criticism in the performance of its activities. See the criticism section below for more details.

History

The company was formed in 1984 as Bord Telecom Éireann, under the Posts and Telecommunications Act 1983. This article deals mainly with the post-privatisation eircom. For details of the company during its time as a state-sponsored body, see the Telecom Éireann article.

Privatisation

Due to EU laws requiring the opening up of the Irish telecommunications market, Telecom Éireann was privatised, this was very controversial and subject to much debate. The process began in 1995, and by July 1999 the government had disposed of virtually all of its shareholding [1]. eircom plc was then floated on the Irish Stock Exchange, London Stock Exchange, and New York Stock Exchange on July 8 1999 and small/first-time investors were encouraged by the Irish Government to buy shares. The share price was set at €3.90. It later reached a high of €4.80, a 23% increase. Those initial investors that held onto their shares until July 2000 received a 4% bonus share allocation.
The eircom flotation is considered to have been an example of a stock market bubble — after the initial hype of the flotation died down, the stock price fell rapidly. Many of the 500,000 small investors were angered by the significant financial loss they incurred, blaming the government for not sufficiently warning them of the risks inherent in stock market investment. This may have been a factor in Mary O'Rourke, the then Minister for Public Enterprise losing her seat in the general election.

Disposal of Eircell, going private and refloatation

In 2001, eircom disposed of its mobile arm Eircell to Vodafone. The company was transferred to a separate entity, Eircell 2000 plc which was then sold to Vodafone via a share swoop. eircom shareholders got 1 Eircell 2000 share for 1 eircom share. The conversion rate was then 0.9478 Vodafone shares for every 2 Eircell 2000 shares. This left the eircom shareholder with not only shares in eircom, but Vodafone also.
After the demerger of Eircell, eircom itself was believed to be undervalued and became the subject of a bidding war between two consortia - the E-Island consortium headed by Denis O'Brien, and the Valentia Consortium headed by Sir Anthony O'Reilly, the chairman of Independent News and Media. Eventually in June 2001 the company agreed a recommended offer of €1.27 per eircom share. eircom plc was delisted from the stock exchange, become eircom Limited, a private limited company by shares and a subsidiary of Valentia.
However eircom did not remain a private company. On 19 March 2004 the company returned to the stock market (although the company being listed, 'eircom Group plc', was in fact a new holding company, and was registered in England and Wales rather than the Republic of Ireland). The company floated at €1.55 a share, but dipped on initial trading before recovering to trade above its float price.

Return to Mobile - Acuqisition of Meteor

In early 2005, several Irish newspapers reported that Meteor Mobile Communciations, the third mobile phone operator, was up for sale by its owners, Western Wireless. It was considered that this afforded eircom an opportunity to re-enter the mobile communications market. On 9 July 2005 it was reported by The Irish Times that there had been three bidders for Meteor: eircom, Smart Telecom, and a consortium led by Denis O'Brien. On 14 July 2005, RTÉ News reported on their business website that Denis O'Brien had withdrawn from bidding, and that it was understood that eircom was the top bidder at €410m. On 21 July it was announced that Smart Telecom had also withdrawn, leaving eircom as the sole bidder. eircom announced the agreement to purchase it on 25 July 2005 at a cost of €420m. [2].

Swisscom approach

On 2 November 2005 it was reported that the Swiss telecommunications company, Swisscom AG, had made an approach to eircom regarding a possible takeover of the company. However on 25 November the Swiss government announced that it would use its controlling stake in Swisscom to block any foreign takeovers, effectively ending hopes of a bid.

Babcock & Brown

In May 2006 it was announced that eircom is to be sold to the Australian investment group Babcock and Brown in a deal worth €2.4 billion. The Employee Share Ownership Trust, which represents workers at the company, will remain a minority shareholder. The sale was approved by shareholders on July 26 2006, and at close of business on 17 August 2006 the shares were delisted from the Official Lists of the Irish Stock Exchange and the London Stock Exchange, ending eircom's second period on the stock markets. The same day, Phillip Nolan resigned as chief executive of eircom and on 1 September Rex Comb was officially named as the new CEO. Tony O'Reilly resigned and was replaced by Pierre Danon, previously of BT Group plc and JP Morgan Chase.

Possible Disposal of Meteor and eircom Retail Arm?

In the Irish Independent ^[1] It has been reported that eircom's owners Babcock and Brown are planning to break up eircom Group plc. Retaining the core backbone Network Wholesale Division and selling the eircom Retail and Meteor Mobile Communications Divisions. It is reported that the retail arm of eircom could be worth €1bn and Meteor could be anything around ~€800m.

Competition

While eircom retains a virtual monopoly, at around 80%, on fixed line telephony in the State (the only exception being those operated by cable company NTL - Chorus previously offered wireless telephony but failed to renew their licence) it is required to allow carrier pre-selection (CPS). Introduced in Ireland in 2001, CPS allows subscribers to use an alternative provider for all their calls, without the need to dial indirect access codes or numbers, although they still receive a bill from eircom for line rental. Under a wholesale line rental scheme, it is now possible for customers, to have a single bill from an alternative provider, for example, BT Ireland, including the cost of eircom line rental, rather than continuing to receive a separate one from eircom for this cost. However, unlike the UK, where BT's competitors can now charge less than BT for line rental, it is not yet possible for operators in Ireland to buy the lines from eircom and charge their own rate for line rental, should they wish.

Criticisms of eircom

After the privatisation of eircom, the highly profitable mobile phone division, Eircell, was sold to Vodafone. Some consider this act to be asset stripping by the large investors with interests in eircom.
Ireland still lags in DSL penetration with 8% broadband penetration compared to the EU25 average of 14%[4] (Comreg, Q1 2006, Page 21).
eircom's line rental charges have increased over the years, now standing at €24.18 per month. However in the residential market, at c.$330/ppp, this is mariginally over the EU average of $300/ppp [5] (Comreg, Q1 2006, Page 15).
eircom announced in June 2007 that from the 30th of July line rental charges would increase by €1.18 bringing line rental charges - already the most expensive in Europe to a total of €25.36 per month for a PSTN analogue line, one source indicated it was the highest line rental charge in the world.^[2] Also announced was an increase of between 4.8 and 4.9% on local and national calls.(electricnews.net 15-06-2007 http://www.electricnews.net/article/47455.html. These moves have been criticised as excessive profit-taking and abuse of a dominant position in the market.

Broadband Roll-out

As of Q2 2006, 370,000 customers have broadband, 260,000 on DSL and the others on a mix of FWA, Cable and satellite. [6] (Comreg, Q1 2006, Page 19).
In terms of penetration over 85% of lines are currently on DSL enabled exchanges and of these over 90% can obtain DSL.

See also

★ Communications in the Republic of Ireland

★ List of Irish companies

References

1. Irish Independent Article (20-July-07)[3]
2. Irish Independent, 21 July 2007, Higher charges for phone users are on the line in telecoms sale

External Links

★ Official site

★ ComWreck - Independent Watchdog

★ eircomTribunal

★ EircomSucks

★ Ireland Off-Line

★ eircom Broadband Trickster Programme

★ Information about the privitasation of Eircom and how shareholders felt misled