[zuma]

Originally Posted by Horror!

Babcock & Brown now Eircom's main shareholder

I feel sick!

If we follow Australia's example then they'll drop our max home connection to 1.5Mb/s!!!

[jmcc]

Originally Posted by jwt

what would happen if the Gov. issued a notice to wind up the company pending repayment of debts?

Seizure of assets - the gov gets the network back?

Regards...jmcc

[Cryos]

Originally Posted by zuma

I feel sick!

If we follow Australia's example then they'll drop our max home connection to 1.5Mb/s!!!

You would feel sick if an australian telco was buying Eircom, however youve clearly missed the point that it has had 22% aquired by B & B who are an investment firm......

Good things can come from this.... wait i just had some wierd dejavous... TE rings a bell....

But seriously they plan to update the network and seem to be clued in on the irish market; eircom is like a treasure chest in a sunken ship all you need is the right crowd in to reef the loot!

Could be a good step in the right direction !

[bk]

Originally Posted by Blitz

But seriously they plan to update the network and seem to be clued in on the irish market; eircom is like a treasure chest in a sunken ship all you need is the right crowd in to reef the loot!

Could be a good step in the right direction !

Nooooo, they are an investment company, they have no interest or knowledge in how to run a telco, all they want to do is make a big proift in as short a period as possible. That means stripping the company, breaking it up and selling it off in little bits. It is the worst thing that could happen.

[eircomtribunal]

Originally Posted by bk

It is the worst thing that could happen.

First step: the purchase will be financed with borrowed money. The dept will then be put onto the company. Resold Eircom will from then on have to service an even higher dept and cough up a high dividend for the new owners at the same time.
And who'll do the dirty work of this further blood-squeezing, or gold-mining? The current nice guys, David McRedmond and Co, always welcome to the Irish Media with new lies and misinformation (because who would want to chance loosing all that advertising dosh?) who have an intricate knowledge of the company and the context (ComReg's, the DCMNR and the Irish Media's impotence). And probably they have already laid out the plans in detail to their new owners.
P.

[eircomtribunal]

Anybody in a position to post the article from page 6 on today's Irish Times business? The one about how Babcock promises to satisfy its shareholders, the Irish government, ComReg and the Irish consumers, all at the same time.
P.

[viking]

This the one you are looking for Peter?

Babcock & Brown looks for Eircom bid partners
Arthur Beesley, Senior Business Correspondent

Australian financiers Babcock & Brown Capital have entered discussions with a number of international investment groups with a view to mounting a joint bid for Eircom, the former State telecommunications company.

The Australians believe that a big international group or a consortium of smaller players would agree to take 30 per cent of the Irish company before or after a deal, market sources said.

Responding to concern that Eircom's network would be downgraded after a deal as new owners sought a short-term financial return, Babcock & Brown's executive director Rob Topfer insisted yesterday that the investment fund would prioritise investment in the network and had a business model that would encourage its development.

"For Eircom to grow with the general economy, expand its services and enter new markets, it will be imperative that it upgrades, extends and improves its network," he said.

"The reality is we've said we want to invest in the future. We believe in the future of telecommunications in Ireland and we're happy to invest in it."

In an Irish Times interview, Mr Topfer said Babcock & Brown was willing to acquire Eircom in its current form but said the "rather more sensible" option was to formally formally split the network division from the retail unit. Such a move had the potential to satisfy the customers, shareholders and staff of Eircom, and the Government and telecoms regulator ComReg.

He said the Eircom network would be open to all telcos, so a division would foster competition.

Babcock & Brown is now Eircom's biggest shareholder after it spent almost €500 million to bring its stake to 23.6 per cent, exceeding the 21.5 per cent held by the Employee Share Ownership Trust (Esot).

If the company can find sellers of Eircom stock at €2.20 per share, it is likely to continue accumulating shares towards the 29.9 per cent threshold that would trigger a mandatory bid. The share closed last night at €2.20, the maximum price at which the Babcock & Brown has bought the stock.

While the fund needs the co-operation of the Esot to execute a deal, it is discussing the possibility of a joint bid with other investors or an agreement to open a big stake in Eircom immediately after a deal.

The market sources did not reveal the identity of the groups that had entered discussions with Babcock & Brown. At least some of the groups are likely to be in the private equity sector, where money for transactions is in plentiful supply.

The €10.19 billion takeover of Danish telecoms group TDC three months ago by a consortium of five private equity groups - Permira Advisers, Apax Partners, the Blackstone Group, Kohlberg Kravis Roberts and Providence Equity Partners - is evidence of the sector's interest in telecoms.

Australian aims to transform market, page 6

© The Irish Times

[viking]

Maybe you meant this one:

Australian investor Robert Topfer aims to transform Irish telecoms market

Babcock & Brown is now likely to bid for Eircom as it is now the telco's biggest shareholder, writes Arthur Beesley, Senior Business Correspondent

Robert Topfer has spent the best part of €500 million building up a 23.6 per cent stake in Eircom for Babcock & Brown, the Australian investment fund. He's not ready to stop just yet and says he will do nothing less than transform the Irish telecoms market if he gets his way.

Ten days have passed since the Australians made their initial approach for the former State telco, but there's still a long way to go in the takeover process. While Babcock & Brown surfaced as a big shareholder in Eircom in October, Topfer says the fund first looked at the company last April. "The first day we ever took a look at it 'I said forget it, it's never going to happen'."

Quite a lot has happened since then, not least Swisscom's abortive approach for Eircom last November. A declaration by the Australians yesterday that they are now Eircom's biggest shareholder only serves to increase the likelihood of a formal bid.

The shape of any bid very much depends on Babcock's dialogue with the worker-controlled Employee Share Ownership Trust (Esot), which owns 21.5 per cent in Eircom and whose support Topfer will need to execute a deal.

It goes without saying that this particular straight-talking and highly confident Aussie is attracted by the prospects for Ireland's economic growth and the potential to grow a phone business whose broadband and recently-acquired mobile units are playing catch-up.

But while Topfer may not be ready yet to reveal his plans for the Irish group or the Esot, he insists his intentions are good. More than that, he wants to dispel suggestions that a fourth change of ownership since 1999 will see Eircom's network run into the ground before the Australians follow the other previous owners by selling off greatly diminished assets.

In Topfer's account, nothing could be further from the truth. Not only would a takeover be good for Eircom, it would be good for Ireland too as it would open the wholesale telecoms market to real competition for the first time. By turns, this would incentivise Babcock & Brown to invest in the network.

If that seems like the very opposite of the doomsday scenario, Topfer says a deal has the potential to satisfy the the interests of consumers, shareholders, staff, the Government and ComReg, the telecoms regulator. Long though that list is and varied though the interests are, he says it is entirely plausible that each group can be satisfied.

"The only basis on which you could come as a third party to that sort of position and believe you ever had any chance of winning is if you actually believe in the product you are selling... I can't actually understand what the commentators are trying to say. They're trying to say there's nothing left in there and yet these guys aren't going to invest in the future. If that's the case then we'd have bought a dud investment. We wouldn't do that. The reality is we've said we want to invest in the future."

A specialist in structured and corporate finance, Topfer says Babcock & Brown could buy Eircom and find ways of running the business effectively without changing its structure as a vertically integrated group. In such a scenario, there would be no formal division between the wholesale part of Eircom, which runs the phone network, and the retail element that sells phone services to homes and business.

Babcock & Brown would manage the investment as a private equity project and maintain Eircom's current capital expenditure programme, which, he says, envisages expenditure of some €1 billion over five years.

"Everybody in the community in Ireland would say that Valentia had done a great job of stabilising the business but that the business isn't currently investing to the required amount or hasn't historically invested to the required amount to keep up with the potential for growth.

"The company has put out its own view about how much capex it's going to spend and any analysis we would do of that business as a typical private equity-type deal includes that amount of capex."

Still, Topfer says the "rather more sensible" alternative is to separate the wholesale from the retail and treat the wholesale as a piece of infrastructure akin to a rail or electricity network or a water system. Thus the network would be run by Babcock & Brown's infrastructure funds, which manages billions of Australian dollars for the continent's booming pension funds. The retail arm would be run by the fund's corporate finance arm.

Australian pension funds are cash-rich thanks to a compulsory scheme introduced in 1996 that has obliged all workers to divert 9 per cent of their pay into retirement plans. Topfer says the investment requirements of such funds are wholly different to those of private equity funds, which seek a specific return in a set timeframe and which tailor capital expenditure and operating costs to achieve their objectives.

"These are long-term holds forever. We have no intention of selling any of these because the people who invest in them have said 'we want long-run returns forever not short-run returns'. We're not looking for tomorrow's dollar. We're here for dollars for the next 100 years," he says.

Just as it would not be in a fund's interests to run down the network, there would be every reason to invest heavily in the infrastructure. "The underlying growth around the business is there. It's clearly re-entering mobile and is underpenetrated in broadband so it is market growth going forward," he says.

"We think that there is an inflection point in the telco industry going into next-generation networks and I think that telco businesses will actually come out the other side of that much stronger."

He says there are clear advantages here for ComReg, which represents the interests of consumers. A wholesale company, whose board and management would be completely separate from the retailer, would offer transparent pricing and equal access to the network for all.

But for this to work, the objective of opening the local loop that embraces the "last mile" of the network would have to be dropped. Topfer agrees that that would involve a change of policy, but insists that this is not a case of an Australian flying into Dublin from London to dictate policy to the Government.

Rather, he says the solution is the most sensible. "It depends whether it's a good thing for Ireland. No-one's telling anyone to do anything," he says.

"The regulator is sitting in a position where it's currently fighting with Eircom, constantly and losing... The solution for the regulator is to say 'let's accept that there isn't going to be any network competition and that the competition is going to be at the retail level'."

The advantage for the Government would lie in the withdrawal from the loss-making Metropolitan Area Networks scheme, which was designed to compensate for under-investment by Eircom. "We expect nobody's going to invest in networking because we're going to do it."

Topfer says such a plan would appeal to Eircom's staff, because it would protect employment in the network. They get a utility asset that is perfect in the sense that jobs are always going to be there. Everybody acknowledges that a utility is always going to be there. There's not a lot of downside for the worker in that."

For all that, he appears to acknowledge that staff on the retail side would be vulnerable in the drive to create efficiencies in a newly competitive industry. "There is a downside for a worker in the retail side of the business, that's possible."

Babcock & Brown is here for the long haul. If its next priority is to convince the Esot, Topfer believes he has found the solution to the logjam in Irish telecoms. He insists that a deal would not have to be built around a breakup of Eircom, but it is clear where his preference lies.

© The Irish Times

[damien]

Hey Babcockonians,
Our number is on our website for when you want to ring us and ask us what will best suit the consumer.

Damien.

[jwt]

Still, Topfer says the "rather more sensible" alternative is to separate the wholesale from the retail and treat the wholesale as a piece of infrastructure akin to a rail or electricity network or a water system. Thus the network would be run by Babcock & Brown's infrastructure funds, which manages billions of Australian dollars for the continent's booming pension funds. The retail arm would be run by the fund's corporate finance arm.

But for this to work, the objective of opening the local loop that embraces the "last mile" of the network would have to be dropped.

"The regulator is sitting in a position where it's currently fighting with Eircom, constantly and losing... The solution for the regulator is to say 'let's accept that there isn't going to be any network competition and that the competition is going to be at the retail level'

The advantage for the Government would lie in the withdrawal from the loss-making Metropolitan Area Networks scheme, which was designed to compensate for under-investment by Eircom. "We expect nobody's going to invest in networking because we're going to do it."

So

Spilt eircom into retail and network

Let the retail fend for itself.



The network side generate profits. Kill off MANS, LLU basically any network competition.

Yep that’ll definitely generate profits alright.

[OfflerCrocGod]

Originally Posted by jwt

Yep that’ll definitely generate profits alright.

After reading all that crap in the article I felt nearly sick - he described a perfect HELL. What crap! They dont want to drop retail they simply want a total 100% monopoly they want all other competition to totally disappear; €ircon under these peoples control will actually go backwards. Does he think he runs the country? "Drop LLU I dont like it."

[To_be_confirmed]

In an absolute economic sense competition can be less effficient than a monopoly (duplication of resources etc.) but I can't believe that eircom will become the investment and consumer driven do-gooder business that B&B seem to portray.

[Blaster99]

At least they seem to have understood that unless eircom invests in new services it will go nowhere.

But their infrastructure monopoly ideas are complete bollocks.

[netwhizkid]

Originally Posted by Blaster99

At least they seem to have understood that unless eircom invests in new services it will go nowhere.

But their infrastructure monopoly ideas are complete bollocks.

I beg to differ, LLU is pure thrash, All the exchanges should be under total Eircom Control with the Investment but into each and every one. Have regulation by ComReg or Mutual agreements between Eircom and the other telcos on reselling prices.. they buy the time and bandwidth cheaply off Eircom and sell it off at a profit providing they can keep their minimal costs down. Since Privatisation Eircom has dropped its prices a lot as have the other telcos too. But it is a race to the bottom in terms of Service, like there has been no major investment into the Network as a result of this cut-throat race in terms of prices. It is like buying food, if you pay low prices you usually get crap food this particular food being the fact that all most of the Country can get is Dial-up. Pay a lot of money to the Monopoly and Broadband can be got then. Like Telecom Eireann were a forward thinking company and were always investing. Ireland actually had a good Telecommunications network under Telecom Eireann. The same cannot be said for Eircom however. I myself favour Nationalising Eircom and upgrading the Network but not allowing LLU but having a fair level playing field for all Operators. If that was done there is no doubt that we could once again be at the forefront of cutting edge technology. As for Babcock & Brown I feel much better about the whole deal having read that piece from the Irish Times. I don't care where the money comes from once it is pumped into the network and the Broadband Situation improves.

[TimTim]

Originally Posted by netwhizkid

big long ass rant

That might just work, netwhizkid!

Maybe they should call this brilliant new product bitstream?