Esat Digifone will remain Irish-controlled, pledged O’Brien

BUSINESSMAN Denis O’Brien pledged that Esat Digifone would remain Irish-controlled and there would be a three-to-one voting ratio in favour of the Irish investors, the Moriarty Tribunal heard yesterday.

"It has been our goal that the company would remain Irish and that's the reason why we have insisted on these voting requirements for the Irish investors," he told government officials on September 12, 1995, during his consortium's oral presentation for the second mobile telephone licence.

When British Telecom bought out the Irish telecoms operation in January 2000, Mr O'Brien sold his stake for £220m. The joint venture between Norwegian State telecoms firm Telenor and Mr O'Brien's Communicorp Group was announced in October, 1995, as the successful consortium and got the licence in May 1996.

As the tribunal continued to listen to the presentations made by the top three contenders for the GSM licence, chairman Mr Justice Michael Moriarty said he considered it important to hear all nine hours of the audio tapes.

However, he gave permission for legal teams, if they so wished, to leave the hearing and avoid enduring what he termed this atrophied process.

At Esat Digifone's three-hour presentation in the Department of Communications, Mr O'Brien said he had the overwhelming support of Irish business.

He produced 500 letters, describing them as pledges of support for his consortium's bid for the second GSM licence.

If the consortium won the GSM licence competition, Telenor executive Arve Johannsen told the Government project group that Communicorp and Telenor would each hold 40% of the shares, with the remaining 20% being held by institutional investors AIB, Investment Bank of Ireland, Standard Life Ireland and Advent International, an investment company.

Telenor and Communicorp, he indicated, would further reduce their shareholdings, which would mean those of the Irish and institutional investors and the public would go up.

At the end of the presentation, senior civil servant Martin Brennan, who chaired the GSM project group, told Mr O'Brien if they needed any more information they would ask for it in writing.

"We are not going to send in any further material for you to review," Mr O'Brien replied.

However, two weeks later a letter was sent to the department on September 29, 1995, giving details of financier Dermot Desmond's investment in the consortium.

It stated that IIU Nominees Ltd which replaced Advent International had arranged on behalf of the consortium to underwrite all of the equity not held by Telenor.

The correspondence was sent back and no copy was kept on the department's file. Mr O'Brien pledged a launch of the mobile phone service within nine months, while Mr Johannsen said the funding of £124m was already in place and £71m equity was available.

Former Digifone executive Barry Maloney said his consortium's business plan envisaged a rise to 40% by 2009.