€40m sought for Eircom masts

Goodbody Stockbrokers is seeking to raise €40 million in equity from its clients to fund the acquisition of 338 Eircom masts by a company called Towercom, writes Ciarán Hancock, Business Affairs Correspondent

The fundraising began in November and Goodbody is believed to have raised more than half the funds to date. It hopes to close off the cash call by Christmas. The masts were sold to Towercom in September by Eircom for €155 million. Towercom is backed by Threefold, a communications infrastructure group headed by Tony Killarney, and Connecticut-based Plainfield Asset Management. These are providing €5 million each in equity and they are also raising €110 million in debt to fund the deal.

Towercom comprises 338 masts, of which 230 are leased to Vodafone only. The other 108 are considered "core" assets and are used by a number of telcos, including Eircom, Meteor, Vodafone and Hutchinson Whampoa. More than 80 per cent of the revenues are derived from Eircom and Vodafone. The masts achieved revenues of €10.3 million in the year to the end of March. In a note to clients, Goodbody predicts this will rise to €12.5 million in 2008 and to €18 million by 2012. The business is hugely profitable. Earnings before interest, tax, depreciation and amortisation are forecast at €11.1 million for 2008 rising to €16.5 million by 2012.

This is based on "heavy" usage by telcos, driven by greater demand for data services, which require more bandwidth.

Goodbody also cites the expansion of fixed wireless broadband, 3G and 4G mobile services, and the roll out of the Tetra network for emergency services as means of driving revenues.