STATE URGED TO STEP IN ON BROADBAND - Yesterday came the formal news that the board of Eircom is recommending that the company be sold to Australian Investment group Babcock & Brown and the Employee Share Ownership Trust (ESOT), who together have formed a new company BCM Ireland. BCM is 65% owned by Babcock & Brown and 35% owned by the ESOT.
The deal is valued at €2.4 billion with the company's debt level increasing to €3.8 billion.
Friends First economist Jim Power last month said Eircom ought to be renationalised, allowing the National Pensions Reserve Fund to invest in the company's network.
Mr Power said the company had failed to deliver broadband since being sold in 1999, saying there had been 'an ongoing attempt' to extract as much cash as possible out of the company at the expense of investment in the network.
The economist said there had been a 'strong PR campaign' about the availability, but his experience was that broadband was not always available where it was supposed to be.
Mr Power said many people had become 'seriously wealthy' from Eircom, but the problem began with the original Government decision, and the Government had 'failed badly' on broadband.
He said it was too late to argue that the State should take control of the network, and we could only hope that the new owner would deliver on broadband. But he questioned whether the necessary resources would be made available as the company was now heavily in debt. He said the State should step in to deliver broadband where it was not commercially feasible to do so.
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BEGG WOULDN'T BACK ANOTHER ESOT - David Begg, now general secretary of the Irish Congress of Trade Unions, was in charge at the time of the establishment of the Eircom ESOT back in the mid 1990s with some 14,000 members. At that time he was general secretary of the Communications Workers Union.
Mr Begg said that when it became clear that the Government would privatise the company, the ESOT was set up to ensure that workers would have an influence.
He said that with the benefit of hindsight, he regretted that the union had accommodated the idea of privatisation in any sense, as it had failed the country as a whole. Mr Begg said the ESOT members had done very well and the trust had been very well managed, but the interests of the people as a whole were more important.
Mr Begg said he was not in favour of similar schemes in other companies, and would prefer to keep these companies in State ownership. He said the unions had put forward a plan for a State holding company to allow State companies access to capital.
Asked about the ESOT's tax arrangements, Mr Begg said these had to be judged against the tax reliefs available to business.
