Swisscom rumoured to have given up on Eircom

FRESH doubts were raised over the proposed takeover of Eircom yesterday when it was reported that potential buyer Swisscom had turned its attention to Denmark’s top fixed-line operator.

A Swiss newspaper said Swisscom had started detailed talks with TDC, the former Danish state monopoly that is valued at over €10 billion, around four times the size of Eircom. The paper added Swisscom was also lining up a knockout bid for Dutch telecoms heavyweight KPN, which is bigger than Swisscom and valued at around €20 billion.

Swisscom refused to comment on the reports. It has made no comment on its interest in Eircom other than a brief statement confirming that talks were underway. It also said, however, that Eircom was just one of a number of investment opportunities it had looked at recently and that “there can be no certainty that an offer will in fact be made”.

Eircom shares have slid steadily from the €2.45 peak reached when news of the Swisscom approach was made public. Eircom traded at just €2.24 in late trading on Friday, a fall of almost 10% since the start of the month. Swisscom is understood to be considering an offer that would value the company at around €2.41 per share.

But the share price has suffered on the back of a cool reaction from the Swiss investment community and concerns that the deal may fall apart.

Swisscom has failed in a number of high-profile takeover attempts recently, including aborted bids to get control of major telecoms companies in Austria and the Czech Republic. A leading Swiss investment banker said earlier this month the proposed Eircom deal made little strategic sense but could have limited financial benefits.

Investors were alsoconfused by last week’s comments by a Swisscom executive the firm would take no action that would damage its existing relationship with mobile giant Vodafone, which has a 25% stake in Swisscom Mobile.

A Swisscom takeover of Eircom would put the company in direct competition with Vodafone in Ireland through Meteor.