Shareholders approve Eircom sale

Fourth owner in six years

Eircom's shareholders voted overwhelmingly in favour of a takeover by Australian investment house Babcock & Brown at a meeting in Dublin today.

The deal values Eircom at almost €2.4bn and formalises the fourth change of ownership of Eircom in six years.

The institutional shareholders who have approved B&B's bid for the company are not members of the public who originally bought into Eircom's share scheme in 1999. These institutional shareholders have made a 62 per cent profit on their investment since the telecommunications company floated in 2004. That compares to a suspected loss of around 25 per cent for the 500,000 individuals who bought Eircom shares when the Irish government originally sold the company six years ago.

In a speech to the shareholders, Eircom chairman Anthony O'Reilly described the deal as a happy conclusion to a tough journey.

"When Valentia acquired Eircom in 2001, shortly after its flotation by the Government, the company had no broadband, no mobile, a rapidly declining market share, an inefficient cost base and a deeply disgruntled shareholder community. In contrast today, Eircom has rolled out broadband, re-entered Mobile with a flourish, stabilised its market share through good products, delivered services at prices cheaper than the EU average, and satisfied shareholders with exceptional returns," he said.

In response to industry criticism aimed at Eircom over local loop unbundling (LLU), O'Reilly said other operators were trying to force uneconomic access or prices on Eircom. "This is their self-interest and it is our job to protect our own shareholders' investment, a job which your management does very well - delivering what one analyst called 'a regulatory masterclass'," he told shareholders.

He added that although good regulation is vital to a healthy industry, "rarely are these regulatory issues matters of national importance as other operators like to claim."

O'Reilly told shareholders that every town in Ireland and 200 other communities now had access to broadband. He also questioned comparisons between the Republic and Northern Ireland, where he said the near 100 percent broadband penetration in the Province had been achieved with the support of public funds.

"History will record that Eircom, despite the fiercest criticism, became the first private entity in the State to roll out a major nationwide infrastructure, at no cost to the tax-payer," he said.

O'Reilly concluded that due to the dedication of Eircom's employees, the company is in good condition for the future and its potential new owners, and "I feel, to quote a phrase, that 'my work here is done'," he said.

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