Eircom's share price has been volatile today following the announcement that KPN and Telia are selling their 35% stake in the company. Speculation is now mounting that this could trigger a take-over bid. Today, shares in Eircom recovered some of the value they lost on the Irish Stock Exchange after the two major shareholders announced that they are selling their combined stake. The announcement by the Dutch telecommunications firm, KPN, and the Swedish company, Telia, came five months after the former Telecom Éireann was floated on the stockmarket.
Shares in Eircom fell 2% after news of the sales this morning. Telia had been expected to sell its 14% stake, but the news that KPN is selling its 21% has come as a surprise. Fine Gael spokesman on public enterprise, Ivan Yates, has said buyers of Eircom shares were repeatedly told that KPN would be a long-term investor. Speaking on Morning Ireland, Eircom chief executive Alfie Kane, denied it was a blow for the company. Early trading of Eircom's shares this morning indicated that the market was less than pleased with the news. By 9am shares had fallen about 14 euro cents or just over 3.4%.
The actual process of disposing of the 35% stake has not yet been decided. It could either be a trade sale, that is a sell off to another telecoms operator. The latter avenue is the least desirable as it would mean that Eircom has no outside telecoms expert assisting in its future growth and development and given the highly competitive nature of the industry this would be a major negative. At today’s market value, the 35% stake is worth in the region of £2.5bn.
