Smart announces sweeping job cuts, seeks funding

26 Sep 2006

Beleaguered Irish alternative operator Smart Telecom, which two weeks ago confirmed it had run out of money, has laid off two-thirds of its workforce and placed its pay-telephone and calling card businesses up for sale. The company confirmed the measures in a statement to the London Stock Exchange, where its share price has plummeted 80% since the news broke. Smart Telecom went on to say that, following its urgent internal review, it is pinning its hopes on the success of its broadband operation, but admits it has been forced to seek a loan from its main shareholder – the Murtagh family of the building material group Kingspan – in order to keep going, for now. However, it has failed to secure cash from any other sources and the USD3 million loan from its shareholder comes with several strings attached.

Smart’s CEO Ciaran Casey tried to play up the support given by its backers saying: ‘The decision by key investors to support the new strategy is very positive news for our customers, staff and other stakeholders,’ however, the fact remains that Smart could potentially lose its option to take control of Broad Band Communications Limited, which is the actual owner of Smart’s key Dublin fibre infrastructure. Smart realises it now needs to find significant equity financing to maintain it in the short-term, but admits it is unsure as to what form this should take. Adding to its woes, the company’s preliminary financial results for 1H 2006 were poor: sales of USD26 million were down 15% on the corresponding period of 2005, and losses of USD44.6 million were up – taking into account the USD12.6 million the company has spent on its failed attempt to secure a 3G licence. On a more positive note, Smart has 17,100 residential broadband customers and a further 2,000 in the process of being connected. It also claims to have 160 corporate customers, several of which are ‘blue-chip companies’.