Ahern to meet McCreevy ahead of decision on €30m Eircom State deal

dahamsta

Issue Date Tue, May 18 04
Ahern to meet McCreevy ahead of decision on €30m Eircom State deal

THE Department of Communications has been lobbying the Government over the past couple of days to take into account the importance of competition in the procurement of government contracts.

The move comes ahead of a decision over a €30m internet and data services deal currently with Eircom.

The Irish Independent has learned that Communications Minister Dermot Ahern will meet Finance Minister Charlie McCreevy within the next week ahead of a decision on the contract which is expected later this month.

Currently, over 90pc of all government telecoms-related business is with Eircom and is estimated to be worth over €130m annually to the telecommunications firm.

There had been expectations earlier in the year that the deal would be put up for public tender in a bid to increase competition in the procurement of government contracts.

However, it is believed that Eircom competitors are concerned that the Department of Finance "will roll over on this one" and renew the contract with the incumbent.

A spokeswoman for the Department of Finance would not comment on a decision and said: "The review is ongoing."

The review of the contract is being conducted by the Civil Service Centre for Management and Organisation Development (CMOD), which delivers advisory and support services to departments and offices in a number of areas, including information technology.

Meanwhile, broker Smith Barney - which is a division of Citigroup - has issued a 'hold' recommendation on Eircom at €1.45.

Citigroup, which was one of the bookrunners in the Eircom flotation, said that at first glance the telecommunications company poses a series of dilemmas for investors.

"Modelling the existing business and valuing its cashflows is relatively straightforward, while modelling and valuing the opportunities is more complex," according to the broker.

Smith Barney also said that while entering the mobile market is an opportunity for the company, it is also the greatest threat to Eircom's voice revenue stream. "Despite the higher mobile cost, we believe that much of the local traffic and revenue will steadily move to the mobile networks."

Shares in Eircom finished at €1.39, down 5c on the day.

Ailish O'Hora

thegills

the Department of Finance "will roll over on this one"

Surely in this day and age this wouldn't be permitted especially as it's a public contract.

I would imagine that Ahern will insist that the Govt look to use the MAN networks to carry their traffic where possible: the DCMNR has reserved fibre capacity and rack space in the PoPs on each MAN for themselves.

thegills

Ripwave

Originally posted by thegills
Surely in this day and age this wouldn't be permitted especially as it's a public contract.

Do you read the papers, thegills? You'd think that moving the Department of the Marine to a landlocked county wouldn't be permitted in this day and age, or allowing the Fianna Fail Director of Elections to spend €50m of taxpayers money on a questionable electronic voting system wouldn't be allowed in this day and age.

This is Ireland - just about anything is permitted, unless someone makes a big enough fuss about it.

spongebob

I think the dodgy e-voting system initiative came from the Dept Of The Environment Ripwave but you are on the right track as there was no tender for it.

Seems ESAT kicked up , after all the tender for the MSE (the government owned National Fibre Carrier including the MANs) is apparently going to Eircom despite their being excluded from tendering by Ahern last summer .

Eircom got someone in Limerick to front that tender from what i can see.

M

Ripwave

Originally posted by Muck
I think the dodgy e-voting system initiative came from the Dept Of The Environment

No, the Department do what they are told to do. (They explicitly told the Minister at the beginning of 2003 that it wasn't feasible to do a nationwide rollout in time for the European and Local Elections, but the FF Director of Elections over-ruled them, and told them that he wanted it in place by June 2004, and that was that).
The Government is supposed to be accountable to the Dáil, but as the members of the Cabinet can control a majority of the votes in the Dáil (because of the party whip), there is no accountability, and Ministers can, and do, pull all sorts of "strokes", and nobody so much as bats an eyelid.

Paying retail prices for a quarter of a million residential lines, as the Department of Social Welfare does is just another example of this sort of "cosy" attitude to eircom. (That's another €70 million, plus VAT each year).

Which reminds me, has anyone heard anything about WLR recently?

No? Didn't think so!

spongebob

Originally posted by Ripwave
Paying retail prices for a quarter of a million residential lines, as the Department of Social Welfare does is just another example of this sort of "cosy" attitude to eircom. (That's another €70 million, plus VAT each year).

Forgot about that bit of research you did Ripwave......and before the most recent line rental hike too. Any chcnce you could contact them again for an updated figure ?

The EU Commission might be interested , especially if you cannot go with a mobile operator for example.

M