Eircom set to buy Meteor

EIRCOM became the last man standing in the race to buy Meteor yesterday after smaller rival Smart Telecom said it was no longer interested in the country's third mobile operator.

Smart, which had teamed up with British mobile brand Virgin to consider making a bid, dropped out just a week after the only other prospective buyer, a Denis O'Brien-headed consortium, said the asking price was too high. Eircom is believed to have tabled a bid of more than €410 million but has consistently declined to comment on its involvement in the sale process.

Smart said it had formed the view that there was no upside in buying Meteor at the price demanded and also blamed a lack of detailed information that would be necessary for bidders to get comfortable with the business.

"The boards of Smart Telecom and Virgin Mobile concluded that, at the value being attributed to the business, and in the absence of sufficient due diligence material being made available to prospective bidders, a transaction was not in the best interests of our respective companies and shareholders," Smart said in a statement.

"Smart will now, in association with Virgin Mobile and its co-investors, consider other commercial opportunities for profitable development in the Irish market."

The company was understood to have attracted the support of a number of heavyweight investors, including former Glen Dimplex co-owner Lochlann Quinn, but had been considered an outside bet in the race.

The withdrawal of Smart and Mr O'Brien leaves the way clear for eircom to re-enter the mobile market, which it exited in 2001 with the sale of its Eircell subsidiary to Vodafone. The company signed up to a non-compete clause at the time but this has since expired.

Eircom had been keen, however, to reassure investors that it had back-up plans in place if it failed to get its hands on Meteor. These included becoming a mobile virtual network operator (MVNO), which would allow it use the infrastructure of another operator to sell a mobile service under its own brand, or acquiring a mobile licence in its own right and building a new network from scratch.

Many analysts had already singled out Eircom as the most likely buyer for Meteor, which was put on the market earlier this year by Western Wireless, its American parent.

Meteor struggled to win customers in its early years but became more attractive over the past 12 months as it steadily increased market share. It was valued at around €150 million last year but its value soared on the back of a performance that has seen it corner around 10% of the mobile market. Its owner is understood to be ready to offload the business, however, as part of a new strategy to get rid of overseas assets and concentrate on its home market.

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