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eircom up for sale

  • 31-01-2012 5:49pm
    #1
    Registered Users Posts: 4,046 ✭✭✭


    http://www.siliconrepublic.com/business/item/25576-irelands-incumbent-telco-e

    Eircom has appointed Morgan Stanley to advise it on the sale of the company, it revealed today. The company is expecting to receive proposals from interested parties in mid-March.

    "ERC Ireland Holdings Limited ('the company') today confirmed that the directors of the company have authorised the initiation of a process to assess the interest of third-party strategic and financial investors in a sale of the company," Eircom said in a statement.

    “This process will be conducted as part of the wider balance sheet remediation process currently under way," Eircom said.

    The move follows extensive negotiations between Eircom and its senior lenders.

    In December, a €200m proposal to restructure Eircom by shareholder ST Telemedia (STT) was rejected by the Irish incumbent operator's first lien lenders and as a result STT members of Eircom's board resigned with immediate effect.

    Eircom said today that first and second-lien lenders voted to extend a "covenant waiver" on the company's €3.65bn debt until 31 March, once again enabling it to avoid liquidation.


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Comments

  • Registered Users Posts: 32,417 ✭✭✭✭watty


    Hmmm... I'll take it if they pay me €2.5Billion. Getting it for €1 would be too expensive.


  • Registered Users Posts: 28,038 ✭✭✭✭drunkmonkey


    Would it be insane for the state to buy it back or maybe even a semi state like the ESB.


  • Banned (with Prison Access) Posts: 16,659 ✭✭✭✭dahamsta


    Thread title is missing the words "again again".


  • Closed Accounts Posts: 10,012 ✭✭✭✭thebman


    Would it be insane for the state to buy it back or maybe even a semi state like the ESB.

    Yes even if eircom do get bankrupt, it is not like the network will cease to exist. The business entity will die and someone else will buy the network (hopefully someone that knows how to run one next time).

    Not that the current crowd don't but how can you run a network with that much debt?


  • Registered Users Posts: 32,417 ✭✭✭✭watty


    Best thing for Consumer and Network would be a failure and firesale. Then the new owner would have the assets without the debt. Of course very bad for the gamblers people that loaned the money for leveraged buyouts.


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  • Registered Users Posts: 32,417 ✭✭✭✭watty


    Would it be insane for the state to buy it back or maybe even a semi state like the ESB.
    Yes. In fact insane for any one to "buy" it. You need paid to take it away, or else a halving of the debt.

    Currently you could do your own national fibre network from scratch for nearly 1/2 the Debt.


  • Registered Users Posts: 726 ✭✭✭Lister1


    Would it be insane for the state to buy it back or maybe even a semi state like the ESB.

    It would make perfect sense for the government to purchase the network side of the business.

    Retail part should be sold seperatly altough unfortunatly over recent years management have merged departments across the two sides of the business making seperation difficult.


  • Banned (with Prison Access) Posts: 16,659 ✭✭✭✭dahamsta


    It does but it's not going to happen with FG and the new right-wing Labour in charge, so it doesn't really bear talking about.


  • Closed Accounts Posts: 423 ✭✭timesnap


    We currently have an excellent value for money bundle from Eircom including 8MB NGB.
    We are the lucky one's i know in that we live close to an exchange and get just about the full 8meg speed (which easily serves our needs) and unlimited downloading
    Alongside that the cost of calls are virtually zero.
    The bundle we have is no longer available to new customers.

    My question is could a new owner simply take us off that bundle and set the price to anything they want?


  • Registered Users Posts: 4,046 ✭✭✭bealtine


    dahamsta wrote: »
    It does but it's not going to happen with FG and the new right-wing Labour in charge, so it doesn't really bear talking about.

    Haha right wing Labour...it sure seems like that ok.

    This is all down to capitalism 101, investors take risks, sometimes they win sometimes they lose. That's the nature of capitalism. Some of the "investors" ran away with millions, this current lot should get burnt. There should be no bailout for the vulture capitalist investors in eircom.

    eircom should be put out of it's misery by going into administration, once and for all. A debt mountain of nearly €4bn means that as a company it's insolvent.

    Even the network, at this time, is almost worthless, years of underinvestment and neglect have left it that way. The whole debacle is a sorry indictment of the stupidity of pointless wholesale privatization without any real or effective form of regulation.


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  • Banned (with Prison Access) Posts: 16,659 ✭✭✭✭dahamsta


    I don't think it's worthless and I don't agree with the oft-bandied FTTH-or-nuthin argument. DSL is just fine for most, FTTH is a massive project that'll have to be gradual in Ireland. It'll take decades.

    I'd like to see Eircom liquidated, I think admin will result in more of the same. And if possible, I'd like to see the liquidator forced to sell wholesale and retail separately, with contracts preventing reintegration.

    Don't get me started on new labour, they offend me; particularly people like Rabbitte who have completely flipped their outlook. When all the Left have left is Sinn Fein, I feel like giving up.


  • Registered Users Posts: 32,417 ✭✭✭✭watty


    Of course it's worth about €1.5Billion to €2.2Billion if there was no Debt, but the Debt is nearly twice the worth.

    Almost all of that Debt represents money in pockets of ESOP and due to leveraged buyouts of people that asset stripped. There has not been ANY net investment before STT. Just milking it and increasing the Debt.

    The AVERAGE speed for DSL is 3Mbps. Nearly 50% can never achieve 3Mbps on DSL. You need fibre at least to cabinets.

    Also line rental is crippling expensive in Ireland. The price of 10Mbps ought to be about €15 to €20 including line.

    Network & retail should have been privatised separately.
    There should be safeguards against asset stripping and leveraged buyouts.
    The World Bank now uses Eircom as a case study on the worst possible outcome of Privatisation of State Infrastructures.


  • Registered Users Posts: 9,046 ✭✭✭Dustaz


    The Deja-vu is so strong, I've actually forgotten what year it is :)


  • Registered Users Posts: 1,815 ✭✭✭imitation


    The fundamental problem with Eircom is that Ireland is a terrible market for landlines and DSL. The couple of cities in Ireland are fine, but the second you get out of the suburbs you have this nonsense of running miles of cable for a few houses.

    I experienced this first hand getting a new line to a house outside a city. I asked Eircom day one if I could get broadband, they said yes. They then went through all the hassle of setting up everything only to realise I was too far from the exchange, and I had to cancel the whole lot. I have since then gotten a wireless provider. I just wonder how many times this has happened and how much it has cost the company.

    I don't think any private company can keep up eircoms current setup. In my opinion the infrastructure should be kept and upgraded for areas with the population. Lower density areas should be switched to a mobile setup ( a proper one mind you, not dodgy 3G).

    I could see a private company doing the dog if they got eircom, and just cutting off customers that are too much hassle for line maintenance.


  • Technology & Internet Moderators Posts: 28,780 Mod ✭✭✭✭oscarBravo


    imitation wrote: »
    Lower density areas should be switched to a mobile setup ( a proper one mind you, not dodgy 3G).
    "Proper mobile broadband" is an oxymoron.


  • Moderators, Technology & Internet Moderators Posts: 1,332 Mod ✭✭✭✭croo


    "The Register" ran an article recently on how, state-side, consumers were abandoning DSL in favour of cable & fibre because of the limitations (speed & distance) of DSL.
    http://www.theregister.co.uk/2012/01/27/cable_adsl/

    I'm not in the industry, just a poor consumer, but with that in mind I do wonder if it's even worth the 1.5-2.2 billion any more. At one time it might have been but if the existing network has a fairly limited lifespan then what exactly would that 1.5-2.2b buy you?

    And with Eircom's revenue declining year-on-year now, you have to be making vast margins on their 400+m total revenue to any hope of getting that investment back... never mind a healthy profit for taking on a lot.

    It seems to me that, as others have said, the money to be made from Eircom has long been made & pocketed.


  • Closed Accounts Posts: 354 ✭✭arctan


    people still think that Eircom is dead in the water ...

    residential wise, yes there is considerable loss in revenue (not that it's a loss in general, it's still a profitable part of the company, it's just a fall in revenue overall compared to previous years)

    business and wholesale wise, Eircom is very profitable, it's the main money maker in the company which people seem to over look (mainly because people probably only deal with/see the residential side through their own dealings with Eircom).... pulling in fibre, leased lines, connection to the NGN network, diversity links (sometimes double or trible diversity if its a data centre) for business customers are HUGE revenues for Eircom ...

    Meteor and eMobile franchise is another huge money maker

    basically, 9 times out of 10, if it's not UPC, the other operator will be using Eircom's network somewhere along the line, which is profit to Eircom.

    Overall Eircom is still very profitable, it's the debt that is murdering the company and scaring away investors, the debt is not going away so the two main outcomes most likely are

    splittin up of the company and investors holding onto the profitable parts of the company (NGN core network, wholesale service, meteor) and selling off the fixed access side to OLO's who will take some of the debt burdon ...

    or

    restructuring of debt, introduction of new services along with going into partnership with OLO's to make the company more profitable ...

    Eircom also have a lot of real estate which it can sell off still (which is not asset stripping, it's properties which are redundant), especially with exchanges getting smaller and smaller (already happening at a few locations) but again, in the property boom, that'd be great, not so great at the moment.

    either way, it's a long term problem, Tony O'Reilly's asset stripping and using Eircom as loan security legacy will live on for the next few decades unless Eircom start making yearly profits nearer the billion mark, without any major growth in Europe, and Ireland still only getting back on it's feet, it'll be down to cost cutting measures to start bringing up margins. The next two or three rounds of redundancies will cut the wage bill considerabley, especially in the office staff.

    but it seems like Eircom are preparing for both outcomes, rollout for fibre to the curb is to continue during the year along with the network rollout of NGN, but the rebranding of Eircom wholesale earlier in the week doesn't make it look to promising for Eircom staying together as one company.


  • Registered Users Posts: 32,417 ✭✭✭✭watty


    The mobile side is worth nearly 1 Billlion. Successive "so called" investors that asset stripped and laided on the money they borrowed to "buy it" created the Debt. Also partly the stupidity of the Esot/Esop parasitism.


  • Registered Users Posts: 1,815 ✭✭✭imitation


    oscarBravo wrote: »
    "Proper mobile broadband" is an oxymoron.

    At the moment yes, but technology marches on. I'm on a wireless line of sight 8 mb connection and its flawless, gives me full speed with no latency issues. Much of Africa went from no phone system to mobile phones because of the reduced cost. I think it will go the same way here for one off houses around the countryside.


  • Closed Accounts Posts: 13,874 ✭✭✭✭PogMoThoin


    imitation wrote: »
    At the moment yes, but technology marches on. I'm on a wireless line of sight 8 mb connection and its flawless, gives me full speed with no latency issues. Much of Africa went from no phone system to mobile phones because of the reduced cost. I think it will go the same way here for one off houses around the countryside.

    You're getting things mixed up. What you got isn't mobile, it's fixed wireless, there's a big difference. Fixed wireless works.

    Mobile internet on the other hand doesn't always work and shouldn't be classed as broadband, which is why it's classed as midband on here


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  • Registered Users Posts: 32,417 ✭✭✭✭watty


    Kenya you can order fibre.

    Most of africa is busy ditching VSAT (satellite Internet) and replacing it with Fixed Wireless, Microwave and fibre.

    Inherently no operator will ever install enough bases to ensure Broadband performance is ensured from ANY mobile system. Mobile is about x8 to x20 less capacity than Fixed Wireless in same spectrum and has no adequate method of contention control other than a low cap. It's never always on.

    Mobile vs Fixed
    http://www.radioway.info/comparewireless/

    More reading here http://www.techtir.ie/comms

    Decent fixed wireless beats 75% of DSL connections in Ireland.
    No Mobile account can ensure you connect when you want or even get entry level DSL speed. Mobile is totally unpredictable performance.


  • Registered Users Posts: 1,815 ✭✭✭imitation


    Apologies for confusing the two, but my point is that the labour and other costs of running cable aren't sustainable in Ireland for scattered development. In my opinion wireless will be future in these cases (and I'm not suggesting 3G or HSPDA, but newer and future technologies). Africa and mobile telecoms was my example of wireless vs cable.

    I'm sure you can order fibre in Keyna, but I can imagine the response you'd get if you request it for a house 5 miles from the nearest town with a handful of houses nearby.


  • Closed Accounts Posts: 13,874 ✭✭✭✭PogMoThoin


    Fibre is much cheaper than copper. Forget Eircom and their obsolete copper network, the ESB are already delivering to every house in the country. Less than €5 Billion would build a fibre network with those in very remote areas covered by fixed wireless. How much are those banks costing again?


  • Registered Users Posts: 32,417 ✭✭✭✭watty


    If you're creative, probably less than €2.7Billion. Assuming a minimum of 18Mbps on a 20Mbps package on Fixed Wireless for those really too far. But anywhere you can run an ESB cable you can run a Fibre cheaper.


  • Closed Accounts Posts: 354 ✭✭arctan


    great to hear all the good feedback about FWA .... my personal experiences of it was it's a pile of ****e, prone to intermittent service etc...

    it's obsolete anyways, final changeovers to Fixed cellular service (pretty much meteor wireless broadband) are due to be finished during the summer and the spectrum for FWA being sold off


  • Closed Accounts Posts: 354 ✭✭arctan


    PogMoThoin wrote: »
    Forget Eircom and their obsolete copper network, the ESB are already delivering to every house in the country.

    spot the oxymoron :D


  • Registered Users Posts: 32,417 ✭✭✭✭watty


    arctan wrote: »
    great to hear all the good feedback about FWA .... my personal experiences of it was it's a pile of ****e, prone to intermittent service etc...

    it's obsolete anyways, final changeovers to Fixed cellular service (pretty much meteor wireless broadband) are due to be finished during the summer and the spectrum for FWA being sold off

    No, Eircom's FWA allocation was misused and underutilised with 30 year old obsolete technology. Imagine also misuse their FWA allocation by deploying a system intended for 2.3GHz or 2.5GHz Mobile (not Broadband) on 3.6GHz Fixed allocation and calling it Broadband. Other ISPs are using FWA properly.

    If you use decent technology then FWA beats Mobile by x8 minimum.

    "Fixed cellular" is an oxymoron as the same mast is supporting mobile users, there is no guaranteed connection if number of Mobile users are connected.

    Eircom have no money, have under-invested. Using Meteor is a "cop-out" that requires no investment. Real FWA should have been invested in and then there would have been no fake NBS and RBS (neither delivers Broadband, largely one is Mobile and the other Satellite).


  • Closed Accounts Posts: 354 ✭✭arctan


    out of interest

    what providers with what technologies do you think are doing it properly ?


  • Registered Users Posts: 28,038 ✭✭✭✭drunkmonkey


    The Next step for mobile is 4G(LTE), that should have a pretty big impact on DSL. It should leapfrog over dsl if the networks get it right. I think the spectrum auction for it is pretty close.


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  • Registered Users Posts: 1,755 ✭✭✭clohamon


    I think the spectrum auction for it is pretty close.

    O2 don't think so.
    Telefonica believes that the earliest such an auction could now be completed is Quarter 3 of 2012…..
    …All of these factors have serious and adverse knock-on effects on the feasible start date of the T1 licence, pushing the date forward to at least early 2014 and shortening the T1 licence to a maximum of only 12-18 months in duration.

    (page 60 comreg Document 11/102)


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