Smart MAY sell residential BB division

machalla

This is based off newspaper reports mainly but I think its only fair to warn anyone whos considering smart. No doubt some of you have seen the recent newspaper reports about smart running out of money and as of last friday dropping its staff levels from somewhere over the 300 mark to just 100 people remaining (if even that).

As it stands anyone who may be thinking of switching to them should be aware of the below newspaper reports.

To summarise. Smart want to sell off their residential BB division. So that probably means the current terms and conditions will be invalid if they sell to someone else. They have approached various people with the hope of selling off that part of the business. They currently have only ONE investor willing to fund them till that sell off takes place. If they don't sell we will probably all be looking for a new BB provider..


http://www.enn.ie/frontpage/news-9816351.html

The business section of the Sunday Tribune leads with news that Smart Telecom is seeking buyers for its residential telecoms business. Tribune sources suggest Smart has 39,000 residential customers and if the company seeks EUR100 per customer it would value the business at EUR3.9 million. The proposed sale is part of an extensive restructuring plan reported by ENN on Friday.

Meanwhile, the Sunday times reports that NCB Corporate Finance -- retained by Smart Telecom to restructure the firm -- has approached a number of group and private investors to seek interest in Smart's wholesale and fixed line businesses. It is understood BT, Imagine, Perlico, NTL, Carphone Warehouse and eTel founder Sean Melly have all been approached.

The Sunday Business Post reports that Smart's major backer, Brendan Murtagh, was the only source of emergency funding for its restructuring programme. Murtagh has agreed a loan of EUR2.4 million.


And I left this to the end so ye can ignore it as ye wish

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I am a big fan of Smart and the service they provide. They were (and probably still are) the only telecoms company who were able to provide BB to me over the appaling Eircon copper network due to their use of DSL2 and not insisting on very stringent line test qualifications. Any of the management or technical people I have dealt with have been more than helpful. I'll say nothing about their helpdesk though as its pretty standard quality as with most helpdesks I've experienced (awful!). Luckily I haven't had to deal with the helpdesk side too often.

Unfortunately they are really starting to look like a sinking ship these days. Its an utter shame that Comreg (and its dark shadow Eircon) have been allowed to leave the Irish Broadband market in such an appalling state over the past several years. This is clearly evidenced in Smarts case as a company who wishes to compete and provide the BEST value dsl product on the market at the moment are now all but bankrupt. I won't say they didn't have their own screwups (hiring in Eircon middle managers and staff for their sales division!) but the whole LLU scam that Eircon have been allowed to get away with is a disgrace and the Mr.Dempsey and Comreg are (as well as the incumbent Eircon) are to blame. Keep that in mind when the elections come around and you STILL can't get broadband.
[/rant]

steve-o

I've seen nothing to suggest they want to sell off the BB business. You've mentioned some sources that talk about the residential phone business. What makes you think they want to get rid of BB?

machalla

"The business section of the Sunday Tribune leads with news that Smart Telecom is seeking buyers for its residential telecoms business."

Good point.

Looking at it again they may mean the phone-service customers only not BB as they claim to have figures of 39,000 customers but BB customer figures are only around the 16,000 mark last I heard. I'm not sure how much of a separation there is between them.

I missed getting the SBP yesterday to see what that was all about.

The 2.4m loan they were given has to be paid back within 6 months at a rate of 6% it seems.

http://www.sbpost.ie/post/pages/p/story.aspx-qqqid=17491-qqqx=1.asp

aphex™

Guys they've said they are getting out of low margin areas like phone boxes and phone. This phone bit is where you pre-select to use smart for calls, while keeping your eircom line rental.

The real money is in value-added things like broadband. I'd be surprised if they sold the broadband part. If they did, loads of people would be interested in it and you wouldn't see a drop in service.

Jonnie_Onion

The only way they'll sell the BB division is if they go under.

malachy47

Smart collapse is bad news for jobs and for broadband


The slow collapse of Smart Telecom is unfortunate, especially for the 250 employees who last week were told that they no longer had a job at the telephone company. The company has decided to sell its residential phone business and its pay phone division.

Do not be surprised to find that Smart's core broadband business is also being touted around town. The problem for Smart is that this is hardly a seller's market.

The core residential business needs a critical mass, which Smart never attained. This low-margin business may well be sold, but will hardly bring home a hefty pay cheque.

The pay phone business is also a hard sell. We all know people whose mobile phone gets more usage than some pay phones, and yet the pay phone is much more expensive to maintain.

Smart is one of the only companies to have championed significant investment in pay phones - and look where that got it.

But Smart's biggest problem is in its broadband division. This is where much of the company's residual value lies, yet it is based on a business plan which is expensive and fundamentally flawed.

Very few small companies will have the cash to buy Smart's broadband division, and few entities with cash have the appetite for a business with a proven ability to eat up significant wads of shareholder cash. Smart is also encumbered by the fact that it is not the only Irish broadband company chasing buyers. Irish Broadband is owned by NTL, whose astute management has done very well by the company's shareholders. But even NTL could not make Irish Broadband sing for its supper, and it seems to be taking its time finding a buyer willing takeit off its hands.

Nor are Smart and Irish broadband alone. One chief executive of a telecoms company spoke of approaches from six different broadband companies looking for a buyer.

The problem is that Government and ComReg, who between them are responsible for a broadband market where customer transfer is so tortuous as to be an impediment to competition, have also created a market where few companies can turn a profit and where consolidation is difficult.

The Government's intervention in the broadband market has helped a myriad of small start-ups, many of which do not have compatible technologies.

A number of institutions, most notably Davy Stockbrokers, have looked at the possibility of consolidation but so far none has squared the circle of incompatible technologies and poor regulation.

Smart will look to a big company, which is already a major player in broadband in Ireland, or is looking to enter it. I give you short odds on the company cosying up to BT, which has the ability to take it on board. But BT would be an obvious choice.

A less obvious one would be Sky, which already has a broadband service in the UK and so must be looking at offering a similar service in Ireland. Smart would give it a platform which would otherwise be expensive to develop.

One Smart employee who is not likely to be out of work for long is Maria Pearl Roche, partner to Oisin Fanning, who as chief executive led Smart to its current troubles. Her association with Mr Fanning made her departure fairly predictable, but Ms Roche's technical ability is very well regarded in telecoms circles, who feel she was one of Smart's greatest assets.

Gregor Samsa

Even if they just sell their residential phone service and keep the BB business, they'll have to change their T&Cs - which could impact on the free Line Rental.

You could never get Smart BB without getting their Phone service too, so if they sell the Phone Service, it's a fundamental change to the service they provide - meaning they'd need to issue new T&Cs for the remaining Broadband-only service.

Anyway, the 'Line Rental' portion would probably fall under the Phone service business, not Broadband, so whoever bought the Phone business would probably be responsible for paying Eircom the Line Rental charge - so it would be up to them whether to charge customers for it or not.

Foxwood

phutyle wrote:

Even if they just sell their residential phone service and keep the BB business, they'll have to change their T&Cs - which could impact on the free Line Rental.

You could never get Smart BB without getting their Phone service too, so if they sell the Phone Service, it's a fundamental change to the service they provide - meaning they'd need to issue new T&Cs for the remaining Broadband-only service.

Anyway, the 'Line Rental' portion would probably fall under the Phone service business, not Broadband, so whoever bought the Phone business would probably be responsible for paying Eircom the Line Rental charge - so it would be up to them whether to charge customers for it or not.

Smart has 2 different "phone services". In LLU areas, Smart takes over the copper line between your house and the exchange and provide various services over that copper line. In non LLU areas, they use bog-standard CPS to provide phone service, just as Imagine, perlico, Gaelic Telecom, etc do. That's the "low margin" residential business that they're looking t get rid of.

Splitting the phone and broadband service for LLU customers would simply make it more expensive to deliver that service, so that's not going to happen. The "Free Line Rental" arises from the fact that Smart are already paying eircom for the unbundled loop, so the line rental is already included in the Smart bill.

The interesting question is whether it would make sense for Smart to start offering Bitstream service, so that they could start establishing customers in exchanges that are not currently LLU enabled. That's still a "low margin" business, (especially the way BT do it, where they pay eircom more than they charge their customers) but it would have allowed them to leverage the advertising they were doing.

machalla

I think there was a bit of mis-typing in the article from Irish Independent.

"Irish Broadband is owned by NTL".

Irish BB is owned by NTR aren't they? National Toll Roads (they of the might morphin traffic jams on the m50 toll plaza).

Imagine the combination of ineptitude if NTL and IBB were one and the same? Would explain a lot..

Foxwood

machalla wrote:

I think there was a bit of mis-typing in the article from Irish Independent.

"Irish Broadband is owned by NTL".

Irish BB is owned by NTR aren't they? National Toll Roads (they of the might morphin traffic jams on the m50 toll plaza).

Imagine the combination of ineptitude if NTL and IBB were one and the same? Would explain a lot..

Yeah, the article as clearly written by someone who had to look "broadband" up in a dictionary.

Smart and IBB are not, by any stretch of the imagination, chasing the same customer base. Smart are building a platform that will deliver a range of services in a built up area, with a signal density that will actually benefit from a higher customer density, whereas IBBs technology suffers as the customer base increases.

watty

Yep the Troll Booth people own IBB, and NTL is gone from these shores. IBB for sale.

watty

Foxwood wrote:

The interesting question is whether it would make sense for Smart to start offering Bitstream service, so that they could start establishing customers in exchanges that are not currently LLU enabled. That's still a "low margin" business, (especially the way BT do it, where they pay eircom more than they charge their customers) but it would have allowed them to leverage the advertising they were doing.

It's doubtfull if Smart could make more than 1 Euro a year reselling bitstream...

machalla

And of course if they do Eircon can claim their customers as proof of the progress of BB in Ireland.. I think they claim the bitstream ones but not the LLU ones like Smarts.

I also tend to doubt Eircon woul give smart any sort of vaourable terms for bitstream. So €1 might even be pushing it

Endymion

So smart owe 90 million, but they are going to sell off the cuts of the business base for what? 3.9million?

I doubt that somehow.

Foxwood

machalla wrote:

I also tend to doubt Eircon woul give smart any sort of vaourable terms for bitstream. So €1 might even be pushing it

eircom has a stadard pricelist for bitstream. All bitstream resellers get the same price.

From October 2nd, the Bitstream service will cost resellers €10.29, €13.15 and €22.85 plus VAT for the 1MB, 2MB and 3MB services. There are additional overheads, but there's room for a bit more than a €1 a year.

Mountjoy Mugger

That's a helluva difference between the 2MB and 3MB products.

Does not the mighty Comreg approve these rates, or am I mistaken?

Foxwood

Mountjoy Mugger wrote:

Does not the mighty Comreg approve these rates, or am I mistaken?

Don't think so - there's absolutely no mention of them on the ComReg site.

dub45

A major problem facing Smart at the moment must be getting any new customers at all?

Blaster99

Magnet sells a special bitstream product as an entry point, so Smart could do the same. Magnet seems to claim that they can switch from that bitstream product to a shared LLU service when it comes available in the exchange, so something funny is going on in the land of LLU. If it works, then that's a "smart" way to get customers that can later be switched to a more innovative and profitable LLU service.