Eircom rejects takeover offer of up to €3.3bn

Eircom last night said that it has recently turned down a takeover approach. 

The rejected bid valued the so-called ‘enterprise value’ of Eircom — which includes the company’s huge debt load — at up to €3.3bn.

In a brief statement to the Irish Stock Exchange, the company said that it has previously received a non-binding expression of interest for an aggregate price in the range of €3.2bn to €3.3bn. “While the bidder was very credible, the board believed that, with the business reaching an inflection point, the indicated price range undervalued the group. The matter is, therefore, not being progressed,” the company said.

Market sources suggested that the bid was definitively rejected and unlikely to be revived. The news comes as valuations of telecoms firms have increased in recent times.

Earlier this week, analysts said Eircom — which exited examinership almost three years ago — could float in the next two years. The company, earlier this week, hailed an “inflection point” after its revenues stabilised in the latest quarter. Eircom has debts of around €2.2bn; making it one of the most indebted telecom companies in Europe, for its size.

Revenues in its latest quarter — from the traditional fixed-line business — fell by 3% to €235m, from a year earlier; while its mobile revenues rose by 5%, €87m over the same period.

Overall, group revenues of €311m were down only 1% from a year earlier, in the quarter, while operating costs dropped 6% to €191m. As a result, EBITDA earnings increased 8% to €120m in the quarter.