Opposition: Eircom takeover must bring telecoms investment

Opposition: Eircom takeover must bring telecoms investment

Opposition TDs today demanded improved investment in the telecoms sector if a proposed takeover of Eircom goes ahead.

Singapore Technologies Telemedia (STT) has moved to buy the business with the backing of Communications Minister Eamon Ryan.

But Labour TD Liz McManus said telecomms had been underfunded since the company was first sold ten years ago leaving the country’s networks deficient.

“It is vital that our telecom infrastructure is developed rapidly and it is important that this new takeover, once it is finalised, will deliver real improvements and deal with the digital divide that is so evident across the country,” she said.

If the deal goes through it will be Eircom’s fifth new owner since privatisation in 1999.

Simon Coveney, Fine Gael communications spokesman, said he hoped STT would prove to be different than previous venture capitalist investors.

“They (STT) are a very large global telecommunications company with considerable resources and so there is a realistic hope that this new owner is purchasing Eircom as a long-term investment in the Irish economy,” Mr Coveney said.

The Australian owner of the business, Eircom Holdings – formerly known as Babcock and Brown Capital – has agreed to sell the company to STT.

The Singapore firm secured agreement with the board and the Employee Share Ownership Trust (Esot), which owns 35% of the company, to co-operate with the deal.

Mr Ryan said the takeover could be beneficial to both Eircom and the telecomms sector.

“I believe the announcement can give rise to many benefits for eircom and for the Irish telecommunications sector,” the minister said.

Steve Fitzpatrick, general secretary of the Communications Workers Union, said the STT buy up was the best prospect of correcting years of underinvestment.

“The CWU and workers in eircom look forward to working with the new owners to deliver the 21st Century telecoms network that is critical to the recovery of the Irish economy, and which must form the foundation for a smart economy of innovation and technical excellence,” Mr Fitzpatrick said.

The Eircom board has been preparing to sell its holding in the company for several months, with speculation on a takeover most of this year.

Eircom’s latest accounts showed the company suffered an operating loss of €486m in the year to June.

The company has also been seeking 1,200 job cuts by June 2011 although it has so far resisted compulsory lay-offs.

Eircom chief executive Paul Donovan said the potential takeover was a very positive development and cleared up speculation about the company’s future.

“It is my hope that the transaction will be concluded swiftly and we in Eircom will continue in parallel to drive operational programmes that will transform the company at a time when the challenges in Ireland’s communications sector have never been greater, and the imperative in overcoming them more acute.”

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