Eircom in examinership

ART6 · 18-04-2012 02:23PM #1

It has just been announced (as expected) that the Court has approved examiners for the Eircom group, which is insolvent. That, for me, poses an interesting question: Eircom is responsible for the maintenance of the telecoms network. If they go to the wall, who will then take the network over?

I wonder if we are facing another M50 toll bridge debacle, where the taxpayer has to buy the whole caboodle back for ten times what it cost in the first place, while the money men who destroyed Eircom walk away with the profits?

Roll on a federal Europe wherein Irish politicians no longer have any role to play. This country is not capable of running itself:mad:

ardmacha · 18-04-2012 02:29PM

In Capitalism, someone takes over the network and makes money from it, since they didn't have all of the debt. Only Irish banks operate in different way,

KyussBishop · 18-04-2012 02:51PM

Eircom still have kind of a monopoly over the infrastructure, and it's my impression that ComReg are neutered in Eircom's favour, because Eircom have been free to screw over other ISP's (and their customers) on line reselling for years (or so is my impression).

Basic anti-competitive tactic of hooking anyone needing their line enabled, into a year-long contract with Eircom (so they can't go with other ISP's), and if you renége you get charged a years fees; ComReg do fúck all about it.

So I won't miss Eircom at all if they get broken up and state-ties permanently severed, but what to do with the infrastructure is a problem.

I don't know what the best thing to do with the infrastructure would be really; they have done an enormously crap job modernizing it, so it's far and away not worth the burden of nationalizing (maintenance would be expensive too), but it's essential infrastructure all the same so spinning it off to another private entity could be risky.

Really need other ISP's to invest more in modernized infrastructure.

GSF · 18-04-2012 03:12PM

Some one would buy the [creaking] network without having to buy the unioned labour force that goes with it. Run properly the network could be quite profitable and would support investment to deliver new services in most reasonably populated areas.

This could be the day that eircom is set free from its twin nemises - its legacy management and its unionised workforce. Both have been leaching the company dry for years.

ART6 · 18-04-2012 03:16PM

ardmacha wrote: »

In Capitalism, someone takes over the network and makes money from it, since they didn't have all of the debt. Only Irish banks operate in different way,

Or would they? I suspect that we have already seen an example of government thinking in the establishment of Bord Gais as the supply body for the new water undertaking. They have said that if Bord Gais is privatised then the water network will remain in public hands. That suggests a recognition that some services are essential to a modern society and cannot be fragmented and run by the private sector. As well as water, I would argue that telecommunications are equally essential and that no private company could be allowed to control the whole network, since, if it did, there would be no possibility of competition, and that would be against the EU ethos.

In any case, we are already facing the consequences of such a private company having that control. Ireland has, in (what?) twenty years, gone from a modern telecoms system to one of the most primitive. Broadband speeds that make us the laughing stock of the developed world?

So, if Eircom fails, then I would bet that the government would nationalise the telecoms network, paying several times over the odds for it in order to ensure that the current shareholders don't lose out. I would further expect that we will then be told that our telephone line rentals will increase by 50% to pay back the money borrowed from the National Pension Reserve Fund that was used to buy it.

Alternatively perhaps, someone like Vodafone could be permitted to buy it, and the Regulator would then rule on what they could charge other telecoms companies for access. As a stand-alone service without Eircom's telephone services, the Regulator would have to permit access charges high enough for Vodafone to make a profit. How they would get that past the EC is another matter!

In either case, line rentals will rise. I would bet my pension on that because that is how it works with this government.

Sleepy · 18-04-2012 03:20PM

Is there any way we could take the infrastructure into public ownership and contract out it's management, maintenance and upgrading to the private sector?

juan.kerr · 18-04-2012 03:24PM

ART6 wrote: »

I wonder if we are facing another M50 toll bridge debacle, where the taxpayer has to buy the whole caboodle back for ten times what it cost in the first place, while the money men who destroyed Eircom walk away with the profits?

And don't forget the ESOT and its members that backed each one of those takeovers.

Have the unions made any statements on the examinership and the involvement of their members in the aforementioned takeovers?

KyussBishop · 18-04-2012 03:25PM

Re-nationalizing the infrastructure would be a disaster really, because not only would it cost more than the country can afford, but there wouldn't be the money to maintain it; doesn't seem an option to me.

Maybe the rest of the ISP's in the country could collectively take a stake in the infrastructure, and could then invest on modernizing it and could do away with the monopolistic crap we have going on right now?

Seems it would be in all their interests to do that, and they could collectively be the shareholders of a new company responsible for giving equal access and maintenance.

No idea how practical that would be, both politically (for the companies) and financially (with regards to investing), but it would provide some balanced future for the network.

How do other countries manage their infrastructure? (where they don't keep it outright nationalized)

GSF · 18-04-2012 03:27PM

Sleepy wrote: »

Is there any way we could take the infrastructure into public ownership and contract out it's management, maintenance and upgrading to the private sector?

Irish solution. Try to own the capital asset while getting someone else to pay for building, maintaining and improving it. Maybe we can ask the troika?

Robbo · 18-04-2012 03:30PM

Sleepy wrote: »

Is there any way we could take the infrastructure into public ownership and contract out it's management, maintenance and upgrading to the private sector?

Am I thinking of a Network Rail style operation?

ongarite · 18-04-2012 03:35PM

The current infrastructure is virtually worthless.
The vast majority of it is running on old ASDL1 tech with a few exchanges running ADSL2.

Its going to cost billions to upgrade to fibre cable & I can't see anyone willing to do this as the ROI is very low in this country.

Physical landlines into homes are on a big downward slide with UPC cable taking over the high end market & mobile broadband taking the low end, "just good enough" market.

Sleepy · 18-04-2012 04:24PM

More a "avoid another Eircom-style union at all costs" thinking.

Probably doesn't make financial sense to hang onto it at all given the inroads NTL have made on their customer base, however.

[Jackass] · 18-04-2012 04:26PM

ART6 wrote: »

Roll on a federal Europe wherein Irish politicians no longer have any role to play. This country is not capable of running itself:mad:

As a proud Irish man, it is amazing to say it, but just about the worst moment in our history was winning independence from the British.

Roll on a federal Europe ASAP.

GSF · 18-04-2012 05:13PM

[Jackass] wrote: »

As a proud Irish man, it is amazing to say it, but just about the worst moment in our history was winning independence from the British.

Roll on a federal Europe ASAP.

There are plenty of idiots in European governance too. You just have to look at the euro project to see that. As for wastage, how about having a rotating parliament that sits in different locations at a huge cost.

Farmer Pudsey · 18-04-2012 11:51PM

We are now seeing the cost of a one policy fit all size's of countries in europe. It has nothing to do with unionised labour or old technology.
Ireland had the finest telecommunication's systen in europe in 1990 and the cheapes electricity, what happened.
The EU decided that we needed competition, deregulation and privitation. We are a country of 4 million people give or take in a country 1/3 the size of GB. London has twice the population of us and Manchester and Birningham are around our population size. When it was decided to float Telecom Eireann/eircom for 10 years before spending was reduced as far as possible then it was floated without insisting on continous investment in the network.
I do not think that UPC will invest in towns like Killarney or Castlebar and no telecoms company will invest in small villages and rural houses. The same will happen with the post office and the price of electricity will continue to rise so that competition can come in.
We are now after 10-15 years of deregulation yet only in the major cities have we any sort of competition look at the Terrestial digital television nobody wanted it we have not got the population base for competition in utilities in GB they have about 4-5 major mobile players we have effectively about 3.
In electricity we have 3 two statebodies and a heavy subsised wind energy sector there are major grants for wind turbines and a renewable leavy on electricity generated by non renewable's which have to be usede all the time as the wind energy is not dependable
So how do we think that we can have competition in Telecoms the only area we could have very effective competition is on bus transport and that is not allowed by government policy

PS If I could buy it at the moment I would sell meteor and any other parts such as phonewatch and lancom I would load all the copper cables on a ship and sell them ( try to get it done before the lad's rob it) and sell all the property sell there fleet. In theory I would make a profit.

Delancey · 18-04-2012 11:51PM

The examinership was well-flagged for some time and it's no surprise , what has surprised me is the lack of comment/coverage/debate surrounding it - here we have the principle fixed telecomms provider with a large workforce seeking court protection and it has all been met with a deafening silence.

Hardly likely to enhance confidence in our much-touted ' smart economy '.

jimmycrackcorm · 18-04-2012 11:56PM

Farmer Pudsey wrote: »

We are now seeing the cost of a one policy fit all size's of countries in europe. It has nothing to do with unionised labour or old technology.
Ireland had the finest telecommunication's systen in europe in 1990 and the cheapes electricity, what happened.
The EU decided that we needed competition, deregulation and privitation. We are a country of 4 million people give or take in a country 1/3 the size of GB. London has twice the population of us and Manchester and Birningham are around our population size. When it was decided to float Telecom Eireann/eircom for 10 years before spending was reduced as far as possible then it was floated without insisting on continous investment in the network.
I do not think that UPC will invest in towns like Killarney or Castlebar and no telecoms company will invest in small villages and rural houses. The same will happen with the post office and the price of electricity will continue to rise so that competition can come in.
We are now after 10-15 years of deregulation yet only in the major cities have we any sort of competition look at the Terrestial digital television nobody wanted it we have not got the population base for competition in utilities in GB they have about 4-5 major mobile players we have effectively about 3.
In electricity we have 3 two statebodies and a heavy subsised wind energy sector there are major grants for wind turbines and a renewable leavy on electricity generated by non renewable's which have to be usede all the time as the wind energy is not dependable
So how do we think that we can have competition in Telecoms the only area we could have very effective competition is on bus transport and that is not allowed by government policy

Funny how it is UPC that has been leading the way in speed / cost. You might criticize UPC for not investing in towns but Eircom has been always slow to adopt even before privatisation and are in no hurry to improve anything where there is unlikely to be any competition.

drunkmonkey · 19-04-2012 12:04AM

So what happens over the next 100 days?

Delancey · 19-04-2012 12:41AM

drunkmonkey wrote: »

So what happens over the next 100 days?

The Examiner will hold talk with the various creditors , given the huge level of debt there will probably be some sort of write-off of a portion of the debt , rest of the debt will probably require a re-structuring of some sort to allow a longer re-payment term.
Virtually all Examiner recovery plans require fresh investment though where this will come from is anyone's guess.
Difficult to see there not being resructuring of operations with consequent job losses.

The above is the way Examinerships usually go but given the size of Eircom (and its debts) this one may pan out differently.

In the meantime Eircom is under the protection of the court and nobody may bring a petition to order its winding up , at the end of 100 days the examiner should have a scheme set up and will present this to the court for approval.

thethingis · 19-04-2012 12:52AM

Remember the asset stripping consultant robbers that went in years ago and sold off Eircell and Cable link. Who were they? How much did they extract in fees for their theft?

Delancey · 19-04-2012 01:46AM

thethingis wrote: »

Remember the asset stripping consultant robbers that went in years ago and sold off Eircell and Cable link. Who were they? How much did they extract in fees for their theft?

Consultants ? Meh ! What about the CEO who sold Eircell to Vodafone for a song and then after leaving Eircom became a Vodafone director ?

vetinari · 19-04-2012 04:43AM

Eircom was ruined by going private. Farmer Pudsey is right, their technology was state of the art at the start of the nineties. As a semi state company, they were debt free and turned a profit. Since privatization, they've been leveraged with debt and bled dry. It's got f**k all to do with the unions. Selling Eircell is just one example of a colossal mistakes by their management.

femur61 · 19-04-2012 05:26AM

Apologies for being inane but why do people say since privatisation eircom became saddled with debt? Surely when the government was pumping money into eircom unconditionally it will always balance the books.

ART6 · 19-04-2012 06:59AM

Delancey wrote: »

The Examiner will hold talk with the various creditors , given the huge level of debt there will probably be some sort of write-off of a portion of the debt , rest of the debt will probably require a re-structuring of some sort to allow a longer re-payment term.
Virtually all Examiner recovery plans require fresh investment though where this will come from is anyone's guess.
Difficult to see there not being resructuring of operations with consequent job losses.

The above is the way Examinerships usually go but given the size of Eircom (and its debts) this one may pan out differently.

In the meantime Eircom is under the protection of the court and nobody may bring a petition to order its winding up , at the end of 100 days the examiner should have a scheme set up and will present this to the court for approval.

Given that Anglo Irish, AIB, etc. were "too big to fail" and under EU orders had to be bailed out by the taxpayer so that the bond holders could not lose, will it be decided that Eircom is also "too big to fail"? After all, if it does and no-one else has any interest in buying the network, then Ireland would be left without any national telecoms network at all. Goodbye high-tech society, hello stone age!

I wait with interest to see when the EU announce that the taxpayer must clear Eircom's debts in order that its creditors don't lose their money. After all, the sum involved is about the same as that to be cut from the budget this year, so another doubling of the carbon tax, household charge, etc. etc. would about cover it:rolleyes:

GSF · 19-04-2012 08:20AM

vetinari wrote: »

It's got f**k all to do with the unions.

So whats the ESOT then if its not a partner in the bleeding dry of eircom's cash reserves?

Farmer Pudsey · 19-04-2012 09:18AM

femur61 wrote: »

Apologies for being inane but why do people say since privatisation eircom became saddled with debt? Surely when the government was pumping money into eircom unconditionally it will always balance the books.

I like a lot of other people was uneducated about Telecom Eireann/Eircom until a niece of mine did a thesis on it about 7 years ago it was made a semi state in the mid 80's along with An Post it seems that it was overloaded with staff as all the staff in the P&T had to be accomodated and An Post could only take a limited amount.

It was laso loaded with debt around 1 billion (I think)in in ten years we had a state of the art telecommunication company paying a dividend to the Exchequer. In that time it recieved no state aid. The call came to privitise it and we know what happened.

I see the same clamour to privitise Coillte, The ESB and An bord Gais yet private enterprise only want An Post deregulated and the same for the buses.
I believe that the public transport should be deregulated, an Post should be left alone otherwise we will have no postal system within 10 years, Coillte I am not sure about as it seem it might be a golden goose with the price of fuel. The ESB and Bord Gais shoulld be reformed and forced to pay a divident to the government not massive wages to their employees

creedp · 19-04-2012 09:41AM

Farmer Pudsey wrote: »

The ESB and Bord Gais shoulld be reformed and forced to pay a divident to the government not massive wages to their employees

ESB does pay a dividend to its shareholder the Government at present but as it is such a profitable company its shareholder should either demand it pay a higher dividend, invest more of the profits in the business or reduce its price to the customer (its ultimate shareholder). The current position seems to be (and must be supported by its shareholder) to give out a significant proportion of its profits to its employees in the form of pretty good terms and conditions. Its great though when deregularisation and competition mean that the price of electricity is artifically raised in order to make is attractive for the private sector to enter the market and the outcome of this is that a small number of public sector workers get enhanced pay and conditions because of the increased profitability associated with this competition .. the irony of it!

GSF · 19-04-2012 11:10AM

Ah the nostalgia for waiting half a year for a landline or paying Eircell £1 a minute to call another mobile. Happy days when eircom could make a profit without having to break a sweat.

Farmer Pudsey · 19-04-2012 11:27AM

GSF wrote: »

Ah the nostalgia for waiting half a year for a landline or paying Eircell £1 a minute to call another mobile. Happy days when eircom could make a profit without having to break a sweat.

Another misconception nearly all new lines by the 90's were installed within one month 20 working days. Also Eircell 1£ a minuite maybe at the very start but by the mid 90's call costs were comining down fast all new technology's are expensive at the start especially when you are are a sparsely populated country. Look at computers 10 years ago you would spend 1500 euro on a desktop today 350 on a laptop, Flatscreen TV 12 years ago 24" over 1000 today 40" 4000euro

Delancey · 19-04-2012 11:48AM

Selling Eircell ruined Eircom - they were left with a declining revenue and customer base in fixed line and locked out of the ' mobile revolution '.

kippy · 19-04-2012 11:51AM

Where now for Eircom?
Is there any chance the company will be split, the network sold to the state (I know, in this era of privitisation it is unlikely) however I do believe the network is a key asset (probably a key cash drain as well).

Eircom in examinership

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