Breaking up Eircom is the right move for the company according to the Financial Times' influential Lex column.
The column notes that despite the interest of the O'Reilly and O'Brien consortia, there has not yet been a firm bid for the group. Furthermore, a bidding war for the group is unlikely, because a bigger offer would require more job cuts to justify it, which would encourage the Eircom ESOT to block the deal.
The column concludes that Eircom's position is still perilous given the uncertainty of a firm bid, and the overhang of the KPN/Telia 35% shareholding, which they are desperate to sell.
Eircom shares have outperformed the telecoms sector by 40% since the announcement of the sale of Eircell to Vodafone.
Other troubled telecom companies, recommends the FT, should follow Eircom's example and join the break up party.
