Eircom flotation likely this year as telecoms stocks rally

SPECULATION is mounting that Eircom will return to the market this year, five years after its initial flotation.

If this happens, owners Valentia, who control 70% of the company, could make €1.5 billion.

Independent Newspapers boss Tony O’Reilly and billionaire financier George Soros are members of the current ownership group.

Providence Equity, a major US investment group, is the other major stakeholder.

They have already gained €500 million from the refinancing of the company’s debt last year.

Tony O’Reilly, who holds 5% of the equity, will get a pay out of €137m if the deal goes ahead with a €4bn price tag.

As stock markets recover, telecom stocks are back in favour, and some analysts are suggesting the time has come for the venture capitalists to cash in their chips. However, they will need the support of international investors.

Jeremy Batstone of London stockbrokers Fyshe Group believes there may be an appetite among such investors for Eircom. He says there is an increased interest in corporate activity generally as the stock markets pick up, while there was a strong rally in telecoms stocks last year.

Batstone says most of this rally was in the mobile sector, but fixed line companies may now be more attractive because of their reliable revenue streams.

After three years “in the wilderness” the telecoms sector has revived, with many investors believing it may have been premature to write such companies off.