Back in 1999, Eircom, the state-owned telco of the Irish Republic was privatised in a deluge of hype and hope. Since then Ireland's economic fortunes have sunk and the national carrier has sunk with them. Martyn Warwick reports.
There can be little doubt that the Irish economy is still in a parlous state. On a walk round Dublin, where property prices are in precipitate decline, any visitor will see expensive building projects that have been left to rot. It's both emblematic and symptomatic of the state of the nation.
The last time I was there, a few months ago, my taxi driver actually spat out of the cab window as we drove past the abandoned shell of what was to be the grandiose new dockside headquarters of the bank that most Irish people regard as being the main cause of the bursting of the bubble that brought the Celtic Tiger to its knees.
It's the same across the country; half built new houses, deserted projects, roads starting in the middle of fields and going nowhere and a new wave of emigration taking the best and brightest talents overseas.
Then there's Eircom, Ireland's incumbent telco. Sold off to the Irish public in a frenzied IPO at the height of the boom, the Irish were encouraged by their own government to take a punt with their hard-earned punts to become citizen shareholders are now left repenting at leisure the investments they made in such haste.
And what a mess Eircom is in. The carrier has debts of more than €4 billion, (an unbelievebly massive sum for a small and lightly-populated country), and yesterday the Irish courts acted to give the embattled company a 100-day period of grace and shelter from the storm during which time it must completely restructure itself.
This exercise will involve the loss of at least 1000 rank and file jobs - that's 20 per cent of Eircom's workforce.
The company is now in the hands of administrative accountants drafted-in from outside the industry as they devise a plan whereby the telco'ss 200 biggest creditors will be persuaded, cajoled and otherwise arm-twisted to take the Hobson's Choice of Eircom stock in lieu of payments due - or nothing.
Remarkably upbeat, given the dire straits the organisation is in, the CEO of the Eircom group, Paul Donovan says it's "business as usual" while the the reorganisation takes place and that it is "necessary and unavoidable step on our journey to addressing the unsustainable level of debt on our balance sheet and continuing our operational transformation into a vibrant and competitive company."
Got to love that "transformation into a vibrant and competitive company." It'll be a bloody miracle when that happens.
Eircom was privatised back in the heady days of 1999 and has changed hands five times since. Two months ago when the the Eircom s restructuring process actually began in earnest, Mr Justice Kelly described Eircom's history since privatisation as as "corporate game of pass-the-parcel" during which a few people had "won handsomely" while the majority lost out big time.
The judge also opined that Eircom is “of great strategic importance for the Irish State” and remains a “key provider of fixed-line services throughout the country”. So it needs to be saved, and no doubt it will be, in one form or another. However, the entire farrago should remind us of that old gambler's caveat, "The value of your investment can fall as well as rise." Many Irish citizens have learned this the hard way.
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