Almost €20m wiped off Smart value as regulator withdraws 3G licence

SHARES in Smart Telecom lost as much as a fifth of their value yesterday after the Communications Regulator withdrew its offer of a third-generation mobile-phone licence from the company.

Smart rushed to the High Court to secure an injunction against ComReg, but its shares fell by 20% at one point yesterday before ending the day down 16.5%. Nearly €20 million was wiped off the firm’s market value. Smart was awarded the final third generation mobile licence last November ahead of Eircom.

Since then, Smart had agreed to pay almost €57m for the licence and has been working on a package to pay for a 3G network. Late last year it raised more than €55m from investors, including the Murtagh family (of building materials’ company Kingspan).

Smart said it was informed by ComReg on Monday night that the offer of the licence was being withdrawn as it had failed to provide a performance bond in the form acceptable by the regulator. But the company said it was working on a deal with major financiers and this appeared to be acceptable to ComReg.

Despite the setback, Smart believes it will emerge with the licence.

“While ComReg’s communication on the mobile license was surprising and disappointing, we will not let it detract from the success and potential of our core business.

"I believe we will be reinstated as the lawful recipient of the last remaining 3G mobile licence,” chief executive Oisin Fanning said. ComReg would not comment on the matter yesterday.

Mr Fanning said while the action to secure the licence was ongoing, Smart’s fixed line telecoms and broadband internet business was continuing to develop.

The company said its residential sales team has signed up nearly 4,200 customers in the past couple of months and the company expects to improve this rate of broadband customer acquisition as more telephones exchanges are opened up to competition.

Goodbody Stockbrokers said yesterday that should Smart Telecom be unsuccessful in the legal challenge with ComReg, then Eircom, owners of Meteor, is the most likely alternative candidate for the licence.

“The regulator probably comes off worst in all of this.

"Its original decision to grant the licence to Smart Telecom was seen as highly unusual, given Smart Telecom’s lack of experience in mobile (when compared to the likes of Meteor) and its lack of a long-term track record in Irish telecommunications (compared to Eircom),” the broker said.