SingTel linked to 'tentative' eircom bid

26 Jan 2009

The Irish Independent claims that Singapore Telecom (SingTel) has submitted a ‘tentative’ enquiry concerning exploring strategic options with Ireland’s former monopoly fixed line operator eircom, fuelling speculation that the telco is up for sale. Citing a ‘well-placed source’, the paper says the two sides first made contact several weeks ago, although this remains unconfirmed. The subject of eircom’s possible sale has been generating headlines for several months.

eircom is 57.1%-owned by Australian investment fund Babcock & Brown Capital (BCM), while the employee share ownership trust (ESOT) controls 35% and associates of BCM’s parent, Babcock & Brown, control a further 8%. In November 2008 BCM was reportedly poised to appoint UBS to sell its stake in the Irish incumbent. At the time, BCM had recently agreed to buy itself out of the parent and announced plans to sell off eircom, hoping to raise up to EUR2 billion (USD2.5 billion) in the process, despite the difficult financial climate. However, alongside the difficulties of raising finance to fund the bid in the current market, any potential buyer of eircom is likely to be put off by its EUR4.2 billion debt pile. There may also be some concern over the operator’s pension fund, the value of which has dropped dramatically in the last 18 months.

Ireland, eir, Singtel Group