back to article Irish national telco gets 100 days to escape €4bn debt hell

The Irish courts have stepped in to protect the country's largest telco from creditors after the firm careered €4bn into debt. A judge yesterday granted Eircom 100 days' grace to restructure its balance-sheet busting debts. This is the biggest such move in Irish corporate history. Eircom, the country's biggest broadband, …

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Devil

1000 jobs to go?

From the deckhands, not those that drove the ship onto the rocks, one assumes.

As usual.

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Re: 1000 jobs to go?

I would have expected those who drove the ship onto the rocks were already on the life rafts before it got this bad.

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"already on the life rafts"

It's customary to take the golden parachute or the private jet, not the life raft.

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FAIL

>Formerly state-owned, the telco was privatised in 1999 and has changed hands five times since its initial sale.

And people claim that BT is badly run!

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Gimp

Simples!!

1. Change the T&C's so the exit notice period is 120 days

2. Charge 2 years fees for early exit

3. ...

4. PROFIT!!!

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FAIL

Screw-ball approach to privatisation

They should never have sold off the copper and fiber network, only the customer-facing departments. Getting shot of the whole lot delayed the roll-out of broadband across the country, and has now left us in the situation where we'll have to buy back the whole sodding lot to ensure that rural areas keep their landlines.

FAIL, as in "Fianna..."

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Here's an idea...

How about having a response time of less than 5 weeks (say 5 days) when people order new phone and broadband lines. That way you can start billing them 4 weeks sooner.

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Mushroom

So far, so Eurozone

-- Justice Kelly said Eircom was "of great strategic importance for the State" and a "key provider of fixed-line services throughout the country".

Too big to fail? Important for the State? Is this Mussolini's Italy?

It's just another service provider. One with 800'000 EUR debt per employee. Who holds that debt btw?

Probably "we".

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Mushroom

Re: So far, so Eurozone

"We" always hold the debt. Companies don't actually exist except as a legal fiction, apart from the people. I suspect banks hold the debt which is why it can't be allowed to fail, that would add more fuel to the fiercely burning fire.

"We" hold the debt, that is why "we" insist on regulation. Ownership without responsibility is always going to bite you in the end. Companies always externalise costs if they can.

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Re: So far, so Eurozone

Wrong, it also owns the majority of the phone network, so it's not just a service provider. At the time, I was incandescent and made this known. The network should NEVER have been sold off as it is a strategic asset. It was a hoodwink that made some people very,very rich, and let the rest of us carry the can - while removing the countrywide telephone network plant from public ownership.

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FAIL

Eircom was "of great strategic importance for the State"

Then why the fuck was it privatised in the first place?

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Alien

In the misguided belief

that privatisation would magically make it profitable (and therefore less of a drain on the public purse) - same as everywhere else really...

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Re: Eircom was "of great strategic importance for the State"

Err..... to screw the people and the state, steal all their wealth and prospects and saddle them all with specially created and artificial surreal debt which then allows money to be printed and transferred to the parasites and sharks that caused the shenanigans in the first place, to buy more businesses and assets for their portfolios and empires whilst doing the whole cycle all over again ..... and again ....... and again unless it is stopped

I hope that explains it simply enough, Omgwtfbbqtime.

And to allow such things to happen, must surely have all and sundry rightly concluding that, wherever it happens, must the folk there be buck eejits with not a titter of wit or common sense between them, for would you not be a stupid ignorant mug to accept it and not do anything about it to ensure that it never ever happens again.

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Re: Eircom was "of great strategic importance for the State"

To earn the government of the time a pretty penny*. They were vastly overvalued during the IPO. Those in charge bought and sold immediately before the value plummeted.

* Also, they were required to do so by the EU to open up the telecoms market.

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Unhappy

Was anything real, lasting and worthwhile created in Ireland during it's boom? Because it seems to have been based on borrowing money from Germany to purchase magic beans which can then be sold to someone else at great profit. Aside from prudent network improvements, what did Eircom do with the borrowed money, for example?

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They did quite well out of the tax shelter biz, I believe.

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what did Eircom do with the borrowed money

Paid it to the Shareholders. Bought Meteor (mobile) because the previous asset strippers had sold Eircell (mobile) and trousered the cash.

Any small network improvements since privatisation have been paid for out of income,

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FAIL

Under investment anyone....?

Eircom... what a complete joke of a company. Sold off and under invested over the last x amount of years. It was fine when all we had were landlines and the internet didn't exist.... Then suddenly ADSL appeared and feck me, unsurprisingly most couldn't get it due to poor infrastructure and lack of exchanges that supported it. Our local exchange was upgraded but my landline was frequency split, so that two houses could share a copper pair for voice. Works for telephone, but gives a maximum dial up speed of 28K and means the line cannot support DSL.

Eventually 3 yrs ago Eircom put in more copper pairs and we had to pay to upgrade our shared line. So finally have bog standard max speed ADSL (a technology which is already 12 years old with a contention ratio of 48:1). As I live a few kms from the exchange I get half the 8mb max ADSL speed.

But I shouldn't complain as I'm one of the 'lucky ones' with this new fangled internet. Compare the ROI with NI. According to OfCom June 2011 81% of homes in NI are connected to a FTTC exchange....

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Anonymous Coward

Re: Under investment anyone....?

I did some work for Eircom a few years ago at one of their IT and Coms facilities. It was clear to me then (and I told them so) that the lack of investment in the technical infrastructure, and the skills of their staff, was at a critical level in terms of their ability to deliver reasonable levels of services.

It makes you wonder where all the money has gone - certainly not on the gear and the people.

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Ireland must have a fantastic system

4Bn euro for a population of 4million ?

So assuming all that debt went into providing services for it's customers they must have put a couple of grand into linking each household.

How is the service over there - do you get gigabit at home or did they skip that and go straight to fiber?

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Mushroom

Re: Ireland must have a fantastic system

Not a cent of the Debt was invested. All that debt has gone into the pockets of "owners". They can't be called investors as the spending on capital equipment has been negligible.

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Pirate

Re: Ireland must have a fantastic system

Indeed HALF the Debt would give everyone in Ireland Fibre to the home.

Thus there is no point in "rescuing it" in sense of putting ANY outside money in. The Creditors (bond holders etc) were stupid enough to assist in the theft of assets and building the mountain of Debt. It's their problem.

Ireland needs to do a new system from scratch in parallel. You can't even pull out the copper and put in fibre as most of the ducts are wrong kind of pipe and the cable insulation "welds" to it.

I blame Maggie Thatcher, Ronald Reagan and Charlie Haughty as wel as of course the criminals that legged it with the loot.

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Flame

Financial Regulation

Leveraged Buyouts should be illegal for ANYTHING.

Asset stripping should need permission of the regulator.

Lifeboats? Hah. There is over 5 Billion in the pockets of former owners and asset strippers. The mystery is why STT bought it. (180Million). Presumably they thought they could seriously "hair cut" the bond holders as they did previously with buying Global Crossing in Ireland.

It's so bad in Ireland that BT practically gave Vodafone their Irish Retail Customer base. My 8Mbps fixed wireless is batter than 66% of Irish Broadband. If UPC wasn't running Cabel BB, my 8Mbps fixed wireless would be better than 95%.

Highest line rental in the World...

82 % had phone lines before privatisation

heading for 60% and 1/2 of those are entirely paid for by Social Welfare (people that don't realise that the Mobile is covered by scheme).

Mobile is horrendously more expensive to run than fixed line, yet a modest phone user can save 50% to 75% by ditching fixed line and only having mobile because of the €26 a month line Rental. Sky is cheaper!

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Devil

Eircom got spitroasted

Caught in a very uncomfortable position between the asset strippers who flogged off key assets and trousered the money, and ComReg. ComReg have pretty much regulated Eircom into the ground, aided and abetted by 'competitors' like BT Ireland who are extremely well versed in gaming regulators to their own advantage. It's a nice example of how regulation and competition don't mix in a small market with a natural monopoly. My bet is Eircom Retail will get flogged off leaving a baby Openreach trying to manage the infrastructure.

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FAIL

Let's just hope.....

That the 4 billion Euros doesn't get defaulted on, then banks find that they need to write off the loans/bonds, and then the bill for restructuring that debt ends up on the laps of the Irish people.

What am I saying! It's not like something like that could ever happen in Ireland!!

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Anonymous Coward

re: Eircom got spitroasted

Very true, but to be honest, no one comes out of this saga covered in glory; the asset stripping VCs, Fianna Fail, ComReg, but also the ESOP members (employees and former employees) who kept giving themselves undeserved dividends year in year out, and the Unions who've dragged their heels through every attempt at restructuring. That's one of the problems with splitting off retail and leaving behind the network business - you wouldn't want the network and you wouldn't want a lot of the time servers who've dragged their heels at every attempt to reform working practices. Ironically the retail side is the bit that's slimmed down and got competitive (as it can be) whilst dragging the millstone of a network around for years.

Scary thing is, the Irish government will probably end up making exactly the same mistakes with all the family silver they're preparing to flog off at the moment.

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Re: re: Eircom got spitroasted

"Ironically the retail side is the bit that's slimmed down and got competitive (as it can be) whilst dragging the millstone of a network around for years."

Or helped invoke the wrath of ComReg :p.

But that's the problem of trying to artificially create competition in a small market. The network isn't really the millstone, it's the key strategic asset, but if Eircom isn't allowed to make money, then no money gets re-invested in the network. Competitors will invest to chase big customers, like MS, Google etc so there may be access competition around places like Clonshaugh or City West. But the competitors have no real interest in residential or serving Ireland's small towns and rural communities. Best bet for Ireland may be to re-nationalise Wholesale and create a stronger USO so network investments can get made. Competitors will of course hate that idea.

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Anonymous Coward

Don't even buy it back

It should be seized, by force, and the bosses jailed.

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Anonymous Coward

Re: Don't even buy it back

Which bosses? The current ones who inherited the debt and have spent years trying to lower it? The original ones who flogged the company in the first place (and by the way there was chronic under-investment even before eircom was floated; the company billing and customer management system dates back to 1979!)? The five waves of VC who loaded all the debt into the business since floatation? There are a lot of fingers to point in this saga but I'd say the one lot who are blameless are the current management, except inasmuch as they were daft enough to take on this mess in the first place?

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Flame

Oh wow

I'd expect that in Romania, my home country, but Ireland? I mean, come on, that's like... the West, right? You don't do stupid shit in the west. You only do stupid shit in the east (and that's why you impose every possible restriction you can - the east isn't "Europe" enough). Yet Romania only did this with the (heavily outdated and very uncompetitive) industry. Telecom is doing pretty well, given that the national operator was sold to the Greeks (you know them, the book cookers). But then, they kind of have to. The competition is kicking them in the balls with fiber to you damn door. They just don't have enough time to strip the assets, because as soon as they'd do that, the firm would collapse the next day, not in the next 12 years. Plus, because they have REAL competition, the state wouldn't give a fuck if they went tits up - and I think the Greeks are pretty aware of that, since the state doesn't give a fuck about anything else either over there.

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Bronze badge

The sheer wealth of hate I feel for Thatcherism knows no bounds

I am glad the cow is still alive for one reason and one reason only, that her demonic rape of Britain's utilities has spread out so far and wide, before coming back to slap her to time immemorial, that countries whose whole ethos was to stand against her kind should suffer from her kind of greed.

Let me see her inane grin one more time.

I'd love to see some Hibernian shove a potato in it.

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Re: The sheer wealth of hate I feel for Thatcherism knows no bounds

and exactly what has this to do with Thatcherism? this is a southern Irish company in southern ireland! its there equivalent of BT

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FAIL

Re: The sheer wealth of hate I feel for Thatcherism knows no bounds

...and has also prevented you from creating a coherent comment.

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FAIL

Ahh privatisation...

There's plenty of cash to be made by privatising public assets, just don't expect:

- lower prices

- competition

- public dividends, nor

- investment, or even survival it seems.

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Anonymous Coward

The eircom thing....

...makes me sick to my stomach. I don't know if I have my facts right, but here's my memory of the thing.

Norwich Union was floated and anyone who had money in them got free cash. Suddenly everyone in Ireland felt like a backward gobshite for not investing in this stockmarket thing. The government at the time rode this wave and managed to sell the Ireland's own utility back to the people, but not so much of it that they'd actually have any control. The people of Ireland having a say in this corporate mullarky appealed to Ireland's socialist sensibilities at the time, and everyone bought it hook line and sinker.

The unrealistically priced IPO was bought by everyone that could spare the minimum buy-in of £250 as an investment in their and their children's future. People who knew about these things got out inside a week, or on the dead cat bounce, and the eejits that held on were ultimately robbed of 3/4s of their investment by a big conglomerate that managed to get enough power to buy back the remaining shares from the people against their wishes.

Meanwhile, eircom spent the next god knows how many years trying to get sold. No investment. No improvement of services. Avoiding ADSL like the plague because a) they couldn't provide good enough service on the dodgy copper and b) it ate into their ridiculously priced leased line/frame relay/isdn business. (20k for a 512Mb line).

As someone said above - no-one's a winner on this. The ESOP crew did very well though, and I don't begrudge them. Ultimately, they were the only average joes that actually got what everyone had been hoping for.

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Anonymous Coward

Re: The eircom thing....

"As someone said above - no-one's a winner on this. The ESOP crew did very well though, and I don't begrudge them. Ultimately, they were the only average joes that actually got what everyone had been hoping for."

I begrudge them. Average joes my arse, their block of votes could have stopped the stupidity at any point in the sad game of pass the parcel, but they only had eyes for mé féin

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Flame

On the other side of the balance sheet the money the state got for flogging eircom has been raided from the National Pensions Reserve Fund to bailout banks and property speculators.

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