[Irish Times] "Eircom may collapse within six months"

trekkypj

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

Anyone care to give their thoughts on the article below? I'd like to hear what the regulars have to say on this.

I am of the opinion that far from re-investing in the company, our new telco overlords are going to run it into the wall and then do a deal with bondholders to sharply reduce the debt burden.

So suppose the company collapses. What's the best way of picking our phone and internet sectors out of the mire and getting them where they need to be(say in getting fibre for all)? Will the network be broken up and divided out among a rash of smaller local providers selling services?

Irish Times - 7 May 2010 wrote:

Eircom may collapse within six months, union leader warns.

LAURA SLATTERY

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.”

Optimalprimerib

they are getting their just deserves. They have single handily held back the broadband capabilaties in this country to the stone age. As long as the land line ownership rights are freed to all companies, this could be great news

trekkypj

Optimalprimerib wrote: »

they are getting their just deserves. They have single handily held back the broadband capabilaties in this country to the stone age. As long as the land line ownership rights are freed to all companies, this could be great news

Hard to disagree with those sentiments. But what I'm really driving at is what will we do post-Eircom? After all, Eircom for good or ill has a near monopoly in rural areas - if they go under who's going to keep the phone network and internet service going?

watty

STT will invest.

Obviously they will try and get outside support. But Boys and Wolves come to mind, so no-one will help.

Stinicker

I blame the Government and ComReg for this mess, Comreg never regulated Eircom properly and LLU never happened and is now too late to have any effect.

The Government I blame for this mess really as firstly they privatised Eircom instead of privatising Eircom retail and retaining the infrastructure network, opening it to all and investing to upgrade it to FTTH. Eircom had a spate of owners who wrecked it and totally withheld investment into Broadband.

Finally the Government threw a spanner in the works of Eircom by awarding the NBS to Three who haven't the first clue about Broadband or anything related to it. Where I live we got Three NBS late last year and it had been the biggest disaster going with slow speeds and it is totally unusable as a service. Eircom followed in (with private investment no Gov money like three got) and the local exchange is now 24mb enabled this year and loads of Three customers are now migrating over to Eircom.

I hope Eircom are run into the ground and make the bondholders bend over, STT are doing this cutely, with a collapse of Eircom they may also get to extract funds out of the Government, two or three exchanges out of order in Dublin and cut of international links to the WWW and they would soon force the govs hand. I hope it comes full circle and the Government have to bail them out as it was the Government who created the mess in the first place and aggravated it over the years.

Sponge Bob

This is not a threat to the existing network/service Trekky , it is a threat to the bondholders and PIK Note holders. The network is all there is to pay the interest on the debt of €4bn .

eircoms fixed line turnover has fallen from around €2.5bn 4 years ago ( pre Meteor) to around €2bn now with meteor.

Fixed line revenue is now likely sub €1.5bn where it was €2.5bn four years ago ( meteor contributed €100m that year for a total turnover of €2.6bn because they were bought in the year ending March 2006

mike65

“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.”

Plus

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

equals

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

trekkypj

Sponge Bob wrote: »

This is not a threat to the existing network/service Trekky , it is a threat to the bondholders and PIK Note holders. The network is all there is to pay the interest on the debt of €4bn .

eircoms fixed line turnover has fallen from around €2.5bn 4 years ago ( pre Meteor) to around €2bn now with meteor.

Fixed line revenue is now likely sub €1.5bn where it was €2.5bn four years ago ( meteor contributed €100m that year for a total turnover of €2.6bn because they were bought in the year ending March 2006

Hmmm I get what you're saying. And I know services themselves probably won't be affected.

But customers get spooked by the uncertainty. And there's always the possibility of degraded service, poorer tech support, longer waits to get a phone line installed and so on.

I do hope the bondholders get taken to the cleaners for being dumb enough to lend money to them. Too bad, so sad.