End of Eircom is nigh?

Xennon

THERE IS a “real possibility” that Eircom could collapse within six months, a representative of the Communications Workers Union has claimed.

On the second day of the union’s three-day conference in Wexford, its general secretary Stevie Fitzpatrick said the “perilous” financial situation of the company, allied to the loss of customers, was posing a threat to the future of the company and its 5,500 employees.

“This once great company is now on the brink of collapse and the silence from Government and the regulator, both of whom can play a part in rescuing the company, is both deafening and extremely worrying,” said Mr Fitzpatrick yesterday.

He said Eircom’s new owners, Singapore Technologies Telemedia (STT), had a €4 billion debt to service.

“If the company continues to lose market share and remains bound by overregulation, they will run into serious problems within the next six months and maybe earlier in trying to service that debt.”

The Employee Share Ownership Plan (Esop), whose beneficiaries include members of the union, owns 35 per cent of the company.

The union said the Government needed to take Eircom’s future seriously and “support the company, or else it will be facing another very costly collapse”.

Responding to the union’s claims, Eircom said in a statement it was “confident” that it could resolve its cost issues and continue servicing its debt.

“Eircom is making very significant strides for the future. In recent months, we have stabilised our ownership structure, and secured in ST Telemedia a strategic partner for the future,” the statement said.

The statement added that Eircom had recently eliminated its pension deficit and reduced its operating costs by €130 million – or 17 per cent – since the 2007-2008 fiscal year.

“The company is successfully rolling out high-speed broadband supported by our fixed line next generation and 3G networks,” it said. “We are confident that we will successfully address ongoing cost issues and service our debt appropriately.”

http://www.irishtimes.com/newspaper/finance/2010/0507/1224269865692.html

STT, THE Singapore-based owner of Eircom, has set up an international advisory body to help manage its investment here.

It includes Brendan Tuohy, a former secretary general of the Department of Communications.

The body hasn’t met yet and is expected to have at least half a dozen members.

Tuohy’s selection is intriguing. STT is no doubt hoping that he can provide useful insights into its dealings with ComReg and the Government.

Babcock Brown had a tricky relationship with the regulator and Government and STT doesn’t want to repeat that mistake.

STT has floated the idea of industry players collaborating with Eircom to invest in upgrading the network. This might involve state funds in the name of the smart economy.

A major restructuring of Eircom is also rumoured to be in the pipeline, which will have to be managed carefully. Tuohy could be in for a busy time.

http://www.irishtimes.com/newspaper/finance/2010/0507/1224269865448.html

So since B&B stripped what they could out of Eircom, it now looks like STT are gonna try and get government money through Touhy......nice move indeed

In an internal letter to staff seen by the Irish Independent, Mr Donovan said that "well-funded" global companies including Vodafone and UPC have been targeting Eircom's customers and revenues "very aggressively".

http://www.independent.ie/business/irish/eircom-chief-warns-of-difficult-choices-ahead-2156861.html

No Mr Donavan, you are wrong. I was a rather content Eircom customer until Eircom managed to F|_|cK up their DSL service, now Im looking elsewhere. Neither of those companies have tried very hard to target Eircom, they're just cheaper, more advanced and provide an arguably better service.

watty

They have a virtual DSL monopoly.

The grossly inferior inherently more costly to run "Mobile Internet" is taking customers because eircom's line rental is laughably overpriced. The eircom pricing reflects their artificial asset-strip / leveraged buyout induced massive debt, not the real running cost which for a x10 better service should be 1/2 the retail price of Mobile.

eircom's previous owners have managed to almost destroy fixed line infrastructure. STT knew what they were buying and should not get 1 cent of government money.

It would now cost less to ignore eircom and do a parallel mostly fibre (+ some quality fixed wireless for extreme rural) from scratch than upgrade eircom to fibre.

Less that 66% of households even have lines now.

Sponge Bob

eircoms problem is the legacy of the George Soros/O'Reilly and Babcock leverages between 2001 and 2006. In that time each purchaser loaded eircom with debt (bonds) to pay for their takeover of it. This debt pile went from around €0 to around €4bn in that time. The celtic tiger economy kept the cash coming in to pay the interest.....until now.

The bondholders are big boys, they knew they were buying a turd anyway. At a guess the companies precarious cash flow will trigger a defeasance if not an outright default over the next year and then we will probably see some outworkings on the secondary markets ....just like any junk bond when it defaults in fact

But there will be no service interruption or anything like that.

MunsterCycling

Let it sink, no way should public money be wasted on this heap of crud private company.

fartmaster

What will happen to all the infrastructure if Eircom go under? surely it wont be left to rot?

Kensington

fartmaster wrote: »

surely it wont be left to rot?

Sure isn't that what's already happening anyway?

mehmeh12

fartmaster wrote: »

What will happen to all the infrastructure if Eircom go under? surely it wont be left to rot?

What will happen to all the dsl resellers and eircom itself? As someone who cant get upc/magnet i think that would leave a lot of people without internet.

Xennon

By the way for those of you who dont know him, please give it up for Mr Brendan Touhy

During that time he saw in major broadband-infrastructure initiatives such as the Government's €65m metropolitan area network (MAN) strategy and the Group Broadband Scheme

In 2009,

he joined the Quinn Group board. He also chairs Vyro-Games, a start-up technology company and is a non-executive director at Wind Energy Direct.

http://www.independent.ie/business/brendan-tuohy-1923956.html

fartmaster

Xennon wrote: »

By the way for those of you who dont know him, please give it up for Mr Brendan Touhy


In 2009,
http://www.independent.ie/business/brendan-tuohy-1923956.html

whats your point?

fartmaster

mehmeh12 wrote: »

What will happen to all the dsl resellers and eircom itself? As someone who cant get upc/magnet i think that would leave a lot of people without internet.

surely someone, the government, must take over this infrastructure if Eircom go bust?

Ziycon

Another telco will buy the infrastructure for cheap and run it no doubt and will have no debt to worry about!

the_syco

Hrm... if Eircom told the regulator to go f**k themselves, and didn't:

Have to keep their broadband prices higher than the competition
and
Have to give their competition new products before their own customers

They may have a chance. Currently, both are done to "help competition". It screwing Eircoms own customers is of no concern to the regulator, it seems :rolleyes:

Can't see it happening, though.

Xennon

whats your point?

No point just providing information.

Unfortunately we, the state, buying the Eircom infrastructure would be like buying a clapped out Lada to drive from Paris to Hong Kong, you'd be faster walking.

Not only that but we sold that same lada to a crowd of lads who stripped all the bits of any value from it, they sold it to a lad from the east who is now probably going to try and sell it back to us with a smelly back seat for more than what we sold it for in the first place.

Better option: Build a new one with all the new shiny bits and it will last far longer, then rent it out to other lads, but this time, dont sell it, just find a good mechanic to keep it running in top notch order.

No offense to any Lada owners

Theta

Xennon wrote: »

Better option: Build a new one with all the new shiny bits and it will last far longer, then rent it out to other lads, but this time, dont sell it, just find a good mechanic to keep it running in top notch order.

If the state did buy the "grid" so to speak it would be cheaper to salvage large sections and just recondition the core. It would be a nightmare cabling a new network to each house so it would be better to keep the locals.

Fat_Fingers

Really now? Taxpayers paid and created Eircom. When 35% of that wealth was transferred from taxpayer directly to unions under The Employee Share Ownership Plan there was no complains. Esop did not do much about consequent destruction of Eircom by Denis O'Brien , Tony O'Reilly, Babcock & Brown, as long as they had their fingers in the pie. Now that that pie has turned into turd they want taxpayer again to give them free money?

Steviemak

Eircom's core network is actually in good enough condition. That is where all the NGB investment has taken place. Its the access network that is in bits and upgrading that will cost billions. Billons nobody has, either the govt or eircom. That is why eircom want all of industry and the govt to pool their resources and then share the network. Letting eircom go to the wall sounds great but its investment we need and no operator is prepared to invest in the access network.

spooky donkey

Funny after having bad expierences with both eircom and AIB about 6 years ago I predicted both of them would go under one day. And witch bank is getting the most from Nama now AIB!!!

I had ended my relationship with both of them at the time.

Moriarty

the_syco wrote: »

Hrm... if Eircom told the regulator to go f**k themselves, and didn't:

Have to keep their broadband prices higher than the competition
and
Have to give their competition new products before their own customers

They may have a chance. Currently, both are done to "help competition". It screwing Eircoms own customers is of no concern to the regulator, it seems :rolleyes:

Can't see it happening, though.

Neither of those are true though. Despite whatever propaganda you may have heard, eircom.net is entitled to every service at the same price and time as every other ISP in the country. Eircom.net charge more for their services because they can due to customer inertia and them being the incumbent (and hence most recognisable) telco in the country.

I'd challenge you to show me proof if you want to continue spouting this, as I seem to remember you coming out with this before. Eircom.net benefit significantly from being part of eircom compared to if they were just another telco and to suggest the opposite is, to put it bluntly, farcical

Xennon

Eircom's core network is actually in good enough condition.

Steviemak, I'd love to see some evidence of this, because at least then there would be some hope for the two and a half thousand or so employees of Eircom.

Its certainly not what seems evident on the ground so to speak. There seems to be a huge backhaul problem (poss. over-contention on the radius server) at the limerick main exchange. I can state this, because on one of the numerous attempts made by Eircom tech support to remedy my problem (packet loss in the evening time) the Stream CSR told me that they're sitting on a 50Mb line. He could run bandwidth tests to Galway at peak times and would get about 20Mb but could only get about 5Mb to Limerick.

If you scan the various forums including Eircoms, there are many who upgraded to NGB, only to have it fall to ISDN levels. More are loosing connections. This has been happening since January.

Are they changing over from ATM to IP based network? it really looks like they dont know how. They are loosing customers in droves because of this, but they seem blind to that. Stream seem to be doing their best to act as a smoke screen, whether they know it or not.

Believe me, Eircom going to the wall is not something I would like to see happen. There's enough of that going around at the moment.

mehmeh12

God i would just love it if upc bought out eircom and upgraded the network to fibre. That would solve a lot of problems for people who cant get upc at the moment.

SeaSide

Fat_Fingers wrote: »

Really now? Taxpayers paid and created Eircom. When 35% of that wealth was transferred from taxpayer directly to unions under The Employee Share Ownership Plan there was no complains. Esop did not do much about consequent destruction of Eircom by Denis O'Brien , Tony O'Reilly, Babcock & Brown, as long as they had their fingers in the pie. Now that that pie has turned into turd they want taxpayer again to give them free money?

I think Denis O'Brien might have an alibi.

thefinalstage

Xennon wrote: »

Steviemak, I'd love to see some evidence of this, because at least then there would be some hope for the two and a half thousand or so employees of Eircom.

Its certainly not what seems evident on the ground so to speak. There seems to be a huge backhaul problem (poss. over-contention on the radius server) at the limerick main exchange. I can state this, because on one of the numerous attempts made by Eircom tech support to remedy my problem (packet loss in the evening time) the Stream CSR told me that they're sitting on a 50Mb line. He could run bandwidth tests to Galway at peak times and would get about 20Mb but could only get about 5Mb to Limerick.

Thats because the speedtest.net site in Limerick is FUBAR.

Xennon wrote: »

If you scan the various forums including Eircoms, there are many who upgraded to NGB, only to have it fall to ISDN levels. More are loosing connections. This has been happening since January.

Most of those messages are from non NGB areas you know...

mehmeh12 wrote: »

God i would just love it if upc bought out eircom and upgraded the network to fibre. That would solve a lot of problems for people who cant get upc at the moment.

Not gonna happen. They are a limited company and it woudl not be cost effective at all to do that.

Steviemak

mehmeh12 wrote: »

God i would just love it if upc bought out eircom and upgraded the network to fibre. That would solve a lot of problems for people who cant get upc at the moment.

Unfortunately, UPC wouldn't touch eircom with a barge pole. UPC have spent 300 million to upgrade their network to 100mbits. eircom have spent billions just to stand still as the copper network is in such bad shape.

If UPC had to serve rural areas with cable or fibre they would go bust or leave ireland altogether. Cherry picking isn't an option for eircom and rightly so.

skelliser

I gaurantee that the gov will bail them out!

who is this

I hope it goes under. As far as I'm concerned it'll do nothing but good, for several reasons.

1. The network infrastructure is NOT going to just vanish with the legal entity. It will be sold, possibly broken up, to different operators, (if that happened it would level the playing field since no company would own all the lines anymore)

2. Right now the thousands of customers require those thousands of eircom workers to maintain that network. If it goes under, they'll just switch to other providers, and those providers will need more staff to cope.

3. If #2 doesn't result in ALL of the ex-eircom staff being rehired, it's because some were superfluous, therefore they should've gone anyway.

4. Customers moving likely wouldn't tend to gravitate towards a single operator so the distribution of customers would be more equal and increase competition.

5. Meteor would probably be sold off to some other company. A mobile company should ideally (IMO) have the advantage of being closely linked with a landline provider, including at least partially-integrated services, or be part of a larger group of mobile operators providing it with roaming advantages, manufacturer leverage etc. Right now Meteor has neither in practice.

Kensington

Steviemak wrote: »

That is why eircom want all of industry and the govt to pool their resources and then share the network. Letting eircom go to the wall sounds great but its investment we need and no operator is prepared to invest in the access network.

Riiiiiiiiiiiiiiiiight!
This wouldn't be the same Eircom that opposed CPS (Carrier PreSelect), opposed LLU, fought cuts to wholesale rates charged to other operators requested by ComReg, made switching to any operator other than Eircom retail a living hell, stifled competition in every way that they could and requested increase after increase after increase in line rental?

And now we're expected to believe they're some concerned, patriotic company looking for everyone in the industry to pull together and build a bigger, better network for the future that everyone can share equally and happily?

MunsterCycling

I'm loading my cannon as I type!

Steviemak

Kensington wrote: »

Riiiiiiiiiiiiiiiiight!
This wouldn't be the same Eircom that opposed CPS (Carrier PreSelect), opposed LLU, fought cuts to wholesale rates charged to other operators requested by ComReg, made switching to any operator other than Eircom retail a living hell, stifled competition in every way that they could and requested increase after increase after increase in line rental?

And now we're expected to believe they're some concerned, patriotic company looking for everyone in the industry to pull together and build a bigger, better network for the future that everyone can share equally and happily?

The current eircom is only 5 months old. But regardless of that i've only relayed what the current CEO of eircom has stated. Whether you believe it or not is another thing.

http://www.siliconrepublic.com/news/article/15703/comms/eircoms-broadband-upgrade-plan

“We need to work out the regulatory models around fibre to lay that future down and reduce the amount of risk. I want to make it very clear that I don’t believe in the future Eircom will be the sole provider of fibre in this country.

“We need to make sure that access happens and that telecoms companies work together to reach as many households as possible.

“It would be a tragedy in the fibre world if we were to repeat the errors of the past, where networks overbuilt in certain areas where would be huge amounts of theoretical capacity. It is very much our challenge, as well as our partners', in industry. We are coming at this with a much more open perspective than we would have in the past,” Donovan said

Xennon

Thats because the speedtest.net site in Limerick is FUBAR.

Ive been playing around with that, youre correct, completely FUBAR. Lets not start on their DNS.

Re the people who have NGB and complaining, theres quiet a few on twitter and on their own Broadband forums (which by the way has to have the most obscure forum layout ever seen) which leads me to believe that there are some serious issues with this upgrade.

If #2 doesn't result in ALL of the ex-eircom staff being rehired, it's because some were superfluous, therefore they should've gone anyway.

Im not a fan of this view, these people rely on these jobs for an income, they have families to feed and bills to pay, designing a plan for eircom or any company that has such a flippant attitude towards human beings is not the way forward, these 'superflous' people have to be taken into account.

The government had the opportunity to buy back Eircom and retake control of the infrastructure before STT bought it. But this would have meant admitting a mistake in the first place, and no-one in the Dáil makes mistakes!

If the core infrastructure of Eircom is advanced enough then surely it would make sense to start upgrading the access network? Surely there should be some research done to see if its viable before we all start assuming that its too expensive.

UPC are to be commended for their forward thinking, what was it called....Powernet? But even in the case of UPC we have a monopoly situation as they own the cable.

My belief is that Ireland cant ignore fibre technology. If we do then we can forget about holding onto a technological economy. Copper based services just wont cut it for much longer. Data is the power of the future, if we're too slow to handle it, then we'd better start learning another language.

Steviemak

Another point to note about the employees of eircom is that thousands of them are on civil service contracts so even if eircom go bust it'll be the taxpayer and not the company who has to continue paying their salaries until retirement.

who is this

Xennon wrote: »

Im not a fan of this view, these people rely on these jobs for an income, they have families to feed and bills to pay, designing a plan for eircom or any company that has such a flippant attitude towards human beings is not the way forward, these 'superflous' people have to be taken into account.

Doesn't matter, that's how a free market economy is supposed to work. If they keep their jobs despite not being needed, they will never have any incentive to get a job that does need to be done, and the customer will pay the price. And don't put words in my mouth, when I said superfluous I was referring to positions not people.

Keeping people from starving to death is the State's responsibility. If I was running the show, all those superfluous jobs in eircom would be gone yes (if there are any, cause as I said, if there aren't then they'll get new jobs anyway), but there'd also be free healthcare and better unemployment benefit among many other changes, so take easy before you start call people names. But we digress...