Another victim of the poor regulation in Ireland?

Mr_Man

Looks like Smart are reconsidering their options..........

M.

SalteeDog

Poor regulation or just poor business? Didn't they make a winning bid for a licence that they just couldn't back up.

machalla

Seems to be a mix of Smart assuming that the terms and conditions that previously applied to winners of a 3G license would apply to them. Eircon do their best to make sure thats not the case, Comreg aquiesce as usual to Eircon and Smart are left out of pocket and wondering why they bothered to compete against a monopoly like Eircon in the first place..

This seems very odd. Comreg accepted the vodafone bond because it brought more players into the market but won't accept the Smart one because the 3g market is now so obviously flooded with players :rolleyes:

"ComReg said they allowed Vodafone more favourable terms on its 3G mobile licence than it was prepared to give Smart Telecom because it was necessary to bring new players into the market. "

Perhaps Vodafone were a safer bet than Smart financially speaking. Although Vodafone don't compete with Eircon for landlines directly but of course that would NEVER have anything to do with it...

Anyway thats one take on it. The various bits and pieces are summarised below from the enn.ie coverage of the case which might be helpful in making sense of it all.

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http://www.enn.ie/news.html?code=9729146
The paper also reports that Smart Telecom on Thursday opened its High Court challenge to ComReg's decision not to grant the company a third generation mobile phone licence. It is claimed ComReg acted unfairly towards Smart. The action follows ComReg's decision last February not to award the licence to Smart Mobile because of what ComReg claimed was a failure by Smart to provide, in a form acceptable to ComReg and within the specified deadline, a EUR100 million performance guarantee bond.

http://www.enn.ie/news.html?code=9731316
The Sunday Times reports that Eircom had threatened to sue the communications regulator ComReg over the awarding of the fourth 3G mobile licence to Smart Telecom. The revelation emerged during the Smart Telecom vs ComReg High Court hearing last week, at which Smart is suing ComReg over its decision to withdraw the offer of the fourth licence to Smart. Eircom's legal threat formed part of a campaign by Eircom to "ensure that the conditions" of the tender process were being adhered to, according to the paper.

http://www.enn.ie/news.html?code=9733804
The Irish Times reports that a judge on Tuesday questioned whether Smart Telecom was honest in its approach to resolving difficulties with ComReg over securing a 3G mobile licence. ComReg withdrew its offer of the licence in February, claiming that Smart failed to provide it with an acceptable bond for EUR100 million by an agreed deadline of 30 January. The court case continues on Wednesday.

http://www.enn.ie/news.html?code=9734956
The Irish Times reports that ComReg feared that Eircom was attempting to interfere in the granting of a 3G mobile licence to Smart Telecom, the High Court heard on Wednesday. Smart's chief operations officer, Ciaran Casey, told the court that during talks with ComReg, it was clear that the regulator was concerned that Eircom, the losing bidder for the licence, was attempting to get involved in the process. Casey said that one member of ComReg's staff described Eircom as the "dark angel" looking over the agency's shoulder, but ComReg's senior counsel said there was no evidence of this.

http://www.enn.ie/news.html?code=9742485
In its continuing coverage of the Smart Telecom case in the High Court, the paper reports that ComReg issued a mobile licence to Vodafone on terms that it was not subsequently prepared to accept from Smart, the court heard on Wednesday. It emerged that when ComReg granted Vodafone a 3G licence in 2002, it accepted a bond from the company declaring that penalties would not be paid if the licence was terminated. Smart included a similar term in its bonds, but the regulator told the company that this condition was unacceptable.

http://www.enn.ie/news.html?code=9743813
In its continuing coverage of the Smart Telecom case in the High Court, the paper says that a member of ComReg said they allowed Vodafone more favourable terms on its 3G mobile licence than it was prepared to give Smart Telecom because it was necessary to bring new players into the market. ComReg's John Doherty told the court that the regulator allowed Vodafone to include conditions on the financial guarantees that were part of its licence, but would not accept similar conditions from Smart, because the two licences were offered in "different times".

http://www.enn.ie/news.html?code=9747235
The same paper says that Smart Telecom is facing losses of at least EUR7.7 million if ComReg's decision to withdraw its offer of a 3G licence is upheld in the courts, the company has revealed. The expenses relate to consultant charges, financing costs and legal bills.

http://www.enn.ie/news.html?code=9749766
As the Smart Telecom case in the High Court continues, the paper reports that the court heard on Tuesday that ComReg withdrew its offer of a 3G licence to Smart before giving the company a chance to hear ComReg's final position on attempts to resolve differences between the two parties. Summing up Smart's case, senior counsel Michael Cush said that after the deadline had passed, ComReg decided to give Smart a chance to indicate when it could supply acceptable performance bonds. However, he said that ComReg had no definite position on whether or not it could accept the revocation and insolvency terms offered.

http://www.enn.ie/news.html?code=9752742
In its ongoing coverage of the Smart Telecom and ComReg case in the High Court, the Irish Times reports that, according to the regulator, Smart did not provide acceptable bonds to ComReg within the agreed deadline in order to be awarded its 3G licence. According to ComReg, Smart provided only "draft bonds" that had not been approved by the banks.

RangeR

First 2 links reported today, the other was end of August. Doesn't look good at all for Smart.

Oisin Fanning steps down as CEO of Smart Telecom due to health reasons

Irish telco Smart Telecom has confirmed that chief executive Oisin Fanning is to step down on health grounds.

The company, which held its AGM today in Dublin, also announced a review of its business plan and operations, in conjunction with NCB Stockbrokers.

Smart is currently involved in a High Court case with regulator ComReg over the withdrawal of an offer of a 3G mobile licence. Smart's pre-tax losses more than doubled in its last financial year.

Smart's chief operations officer Ciaran Casey will head the review, which is expected to be finished by the end of the month. Smart said the aim was to 're-configure' the company to focus on profitable and high-growth areas of the telecoms market.

Smart told shareholders it now had 16,500 residential broadband customers, and 160 corporate customers.

Last month, Smart laid off an additional 18 of its residential sales staff following the decision by the firm to restructure its door-to-door sales division.

That move resulted in the loss of eight jobs last week.

The team has been reduced to 64 following the loss of 26 middle management and support staff jobs in the division.

A spokesman said that a further 36 members of the sector had left the company of their own volition.

The spokesman added that there would be no streamlining of other divisions in Smart Telecom and that a view had been taken that the "feet on the street" sales strategy was not working, which resulted in the restructuring.

"This decision has been taken to support a new strategy, which recognises an increase in inbound versus outbound sales and consumer concerns about cold calling in the industry," he said.

Smart Telecom made a loss of €23.1 million in 2005.

Smart Telecom shares drop 39% due to using up it's cash resources

LONDON (Reuters) - Shares in Ireland's Smart Telecom fell nearly 40 percent after the firm said it had used up its cash resources and that, even though it was confident of its prospects, there was no guarantee of future funding.

The company said that pending longer-term financing, it was relying on funding from its major shareholder. Reuters data show the company's majority shareholder as building products entrepreneur Murtagh Brendan.

Smart Telecom said it was undertaking a comprehensive strategic review of its business plan, target markets, operations and management structures. The review is being undertaken with NCB Corporate Finance.

"The aim of this review, which is expected to be concluded by the end of September, is to re-configure the company to focus on profitable and high-growth market segments," it said in a statement, adding that Chief Executive Oisin Fanning was leaving the group on health grounds.

"Smart Telecom is facing a challenging period, but we are confident that a re-focused and re-invigorated Smart will succeed in the Irish telecoms market," Chief Operations Officer Ciaran Casey said.

The group said in December it had completed the drawdown of a 56.7 million euro (38.5 million pound) financial package to be used for initial payments related to its winning Ireland's fourth 3G licence.

Established in 2000, Smart Telecom provides voice and data services to domestic and commercial customers and is the second-largest operator of payphones in Ireland.

Shares in the group were down 39 percent at 5-1/2 pence at 12:58 p.m., valuing the group at around 21 million pounds.

Smart Telecom lay off 18 MORE staff

SMART Telecom has laid off an additional 18 of its residential sales staff following the decision by the firm to restructure its door-to-door sales division.

That move resulted in the loss of eight jobs last week.

The team has been reduced to 64 following the loss of 26 middle management and support staff jobs in the division.

A spokesman said that a further 36 members of the sector had left the company of their own volition.

The spokesman added that there would be no streamlining of other divisions in Smart Telecom and that a view had been taken that the "feet on the street" sales strategy was not working, which resulted in the restructuring.

"This decision has been taken to support a new strategy, which recognises an increase in inbound versus outbound sales and consumer concerns about cold calling in the industry," he said.

Smart's residential sales team was established earlier this year after the company poached nearly 50 staff from Eircom.

The company is unlikely to meet a target, which was set to have 64,000 broadband subscribers by the middle of this year.

According to the latest figures, it has about 18,000 broadband subscribers.

eircomtribunal

Mike Maloney of BT Ireland, at last year's Galway broadband conference, predicted that within one to two years BT Ireland would be the only real competitor to the incumbent, as SMART had walked blindly into the LLU minefield created by Eircom and ComReg.
Oisin's departure from SMART signals the first step of SMART's demise. The citigroup report on Eircom then set out rather convincingly that SMART's competition to Eircom via LLU was not standing on an economically sound footing.
Isolde, John and Mike should be made to follow Oisin's path.

P.

juliuspret

Hmm,
What are the chances that Sky will gobble up SMART once it becomes bankrupt?

spuddy

From today's Indo...

Top telecom firm runs out of cash

SHARES in Smart Telecom slumped yesterday after its chief executive stepped down and stockbrokers were called in to review the company's operations.

Some €50m was wiped off the value of the stock after chief operating officer Ciaran Casey confirmed that chief executive Oisin Fanning had quit.

Answering shareholder questions, Mr Casey said the company had run out of cash and was currently depending on large shareholders to write cheques on a week-to-week basis.

watty

juliuspret wrote:

Hmm,
What are the chances that Sky will gobble up SMART once it becomes bankrupt?

Not likely. Magnet would be a better target. They could ditch the shaky IPTV (satellite and shared dish for apartments is much better) and concentrate on the ADSL2 broadband.

Though both have phone services, and Smart is predominately a phone company, Sky seems only interested in Broadband.

Untill LLU is sorted, neither is a good buy.

It would nealy make more sense for sky to buy IBB, and I can't see that happening.

jwt

Well they lasted 9 months longer than I predicted.

Back in June 05 I thought they would be out of business after Christmas

John

probe

The core problem is that the DSL market in Ireland is regulated by eircom NOT comreg. Eircom controls the who, what, when, where, how and price of DSL availability.

Smart is one of the few companies who have actively engaged in loop unbundling for the provision of DSL services. Eircom does not want loop unbundling to work, because if/when it does work they will lose control of the market. Eircom appears willing and able to break anyone who dares to attempt to compete with them, as opposed to someone who re-sells their bitstream services. BT and others appear to have been happy to be resellers when they can add on other services (eg phone call packages) into the deal to a naive market that is clueless about the VoIP options available globally.

Anyone bold enough to have their line unbundled risks the wrath of eircom in the form of the disconnection of the old broadband service for up to a month, (perhaps more if they are particularly outspoken on boards!) – not to mention a change of phone number because eircom has so far refused to make numbering portability a fluid event.

There is no excuse for this. If comreg/DCMNR were doing their jobs property (and comreg was not “afraid” of eircom as came out in court recently) all unbundling changeover matters would happen by appointment. By this I mean, Smart or whoever was unbundling a customer would agree an appointed date and time where (a) the old ISP was disconnected and Smart was given access to the loop to “plug in” its services and (b) the number porting would take place. The break in service should be as little as 10 minutes. If either eircom or Smart is very busy at a particular location, the customer may have to wait a month or more for this appointment event to take place. It wouldn’t matter to most people PROVIDED THERE WAS NO MATERIAL BREAK IN SERVICE PROVISION AND THEIR OLD PHONE NUMBER CONTINUED TO WORK IMMEDIATELY WHEN THE NEW SERVICE PROVIDER TOOK OVER.

Obviously Smart or any other loop unbundler isn’t going to make a big deal in public about these delays because it will frighten off people from migrating to their services.

I also recall that Denis O’Brien’s Esat Telecom was financially on its knees in the period immediately prior to them receiving the 2nd GSM2 license (ie Digifone)….

The Irish mobile phone market is one of the most expensive and uncompetitive in the world. The bureaucratic conditions in comreg’s license regarding minimum coverage and financial guarantees are irrelevant in a market where there are four other mobile networks. SmartUMTS would have been just as entitled to national roaming with one or more GSM2 networks as Three has been. Again comreg has made a total mess of the licensing from the outset and the matter is now in court with eircom in the wings ready to use the court system too to grab the same UMTS spectrum rights if it is allowed to get away with “killing” this competitor.

eircomtribunal wrote:

Isolde, John and Mike should be made to follow Oisin's path.

Seconded.

probe

Foxwood

spuddy wrote:

From today's Indo...

Some €50m was wiped off the value of the stock after chief operating officer Ciaran Casey confirmed that chief executive Oisin Fanning had quit.

What that quote doesn't tell you is that less than 2% of Smarts shares were sold yesterday. That's not quite the "crash" that some people seem to think it is.

Hornet

Foxwood wrote:

What that quote doesn't tell you is that less than 2% of Smarts shares were sold yesterday. That's not quite the "crash" that some people seem to think it is.

The cruel thing about the stock market (and the well-known risk a listed company takes) is that the share price is completely independent from the amount of shares sold.

By the way: The crash did indeed happen as nobody was prepared to buy the shares for any higher price than approx. half of the prior closing price.

And the fact that Fanning stepped down is only a natural consequence of the desaster that occured during his reign.

I would dare to speculate that "health reasons" falls in the same category as with other CEOs in other companies "wants more time to spend with his family". But gone is gone, no matter what the reasons.

--Hornet