[IT]Eircom contract at the mercy of a tender

viking

Current Account: While the markets focus on a possible takeover of Eircom, the Government and its competitors are still concerned about its dominance of the Republic's fixed-line business.

But in six months, the Government itself may have the chance to introduce some element of competition to the market.

A €100 million contract for internal Government telecommunications services will be up for renewal in May. Eircom is the current holder, the contract comes up every year, the Government has up to this point availed of a clause to continue it for another 12 months.

However, at this time of year, a cross-departmental programme group reviews various service contracts, including the telecoms deal, and it can recommend whether it should be put out to tender.

There is some speculation that the Government could display its annoyance at Eircom's reluctance to open up its local networks to competitors by putting it up for tender and allowing Eircom's competitors a crack at winning it.

These tenders are generally beauty parades. It's no accident then that BT has teamed up with Cara Group, which has good experience of doing business with the Government and the State.

I reckon if Gov dropped eircom it would allow eircom to use the excuse "we've lost our biggest customer therefore our investment forecasts will need to be reviewed". Thats why I reckon the Gov won't be dropping them, they will only ever rattle the sabre in eircom's direction...

OfflerCrocGod

The goverment could just get off its ass and get some proper LLU introduced and give the contract to BT. With that kind of revenue inflow BT would be capable of real investment and with NTL could get eircon to finally move. That wont happen though; the Gov will just keep giving our money to eircon.

crawler

Good Wireline Telco + Good wireless telco + Good system integrator + mobile operator = Winning formula.

paulm17781

OfflerCrocGod wrote:

The goverment could just get off its ass and get some proper LLU introduced and give the contract to BT. With that kind of revenue inflow BT would be capable of real investment and with NTL could get eircon to finally move. That wont happen though; the Gov will just keep giving our money to eircon.

BT have contracts with AIB and other large companies. While the 100m from the government would be nice for them, I doubt it would revolutionise them.

damien

Yes it bloody would. They've been saying so themselves. It's the biggest contract around.

paulm17781

damien.m wrote:

Yes it bloody would. They've been saying so themselves. It's the biggest contract around.

True, but if they get it they aren't going to go "Aha, now let us bring Broadband to the remote parts of Ireland, ha ha". More likely the'd continue as they are only with more money.

damien

paulm17781 wrote:

True, but if they get it they aren't going to go "Aha, now let us bring Broadband to the remote parts of Ireland, ha ha". More likely the'd continue as they are only with more money.

Funny you should mention that:

http://www.ofcomwatch.co.uk/2005/11/bt-subsidised-for-enabling-some-rural

The UK Govt outlined how many millions they payed BT to roll out to rural locations over there.

paulm17781

damien.m wrote:

Funny you should mention that:

http://www.ofcomwatch.co.uk/2005/11/bt-subsidised-for-enabling-some-rural

The UK Govt outlined how many millions they payed BT to roll out to rural locations over there.

There's the key word, payed. Sadly they would still make Eircon do this here and it would be an unmitigated success. :rolleyes:

OfflerCrocGod

paulm17781 wrote:

BT have contracts with AIB and other large companies. While the 100m from the government would be nice for them, I doubt it would revolutionise them.

€ircons cash flow would be crimped by €100 million! Their entire cash flow is €800 million, in one stroke the Gov could remove 1/8 of eircons cash flow (not all of it I suppose, BT still must pay eircon for the lines)! The profit on that deal must be big too, €10-15 million? that would also hit them hard there. Of course the stock price would take another dive......ummm they would not like it at all. I wish it would happen