Babcock chief calls for splitting of Eircom

Separating Eircom into two parts is the only way that the Republic can have a "properly functioning" telecom industry, a senior Babcock & Brown executive said at the weekend.

Rob Topfer, head of corporate finance at Babcock, and the main driver behind the group's acquisition of Eircom in 2006, said smaller countries like the Republic needed specific measures to allow for the creation of a healthy market.

It has proposed splitting Eircom in two, a structure that would allow for the company's fixed-line and mobile businesses to be sold off. The firm would then be left with its network, which would ultimately be owned by Babcock. The network would be used by all telecom operators, who would pay Eircom for open access.

"I think this is the future in countries where multiple networks are not sustainable," Mr Topfer told the International Herald Tribune at the weekend.

"In these countries, I believe network separation is the only way you can practically deliver open-access networks. If you only have one network, to have a properly functioning industry, you have to have an open-access market," he said.

The Government is considering Eircom's proposal, which chimes to an extent with EU plans to allow the European Commission to force former telecom monopolies to split their network and services businesses into subsidiaries of the same company.

Eircom is prepared to offer the Government a minority stake in any network that would result from a split in return for control over State-owned broadband networks. Comreg, the telecom regulator, said in October that it wanted to hire consultants to examine Eircom's proposal.

Speaking to the International Herald Tribune, Comreg chairman John Doherty declined to put a timetable on this process.

"On the one hand, structural separation could be the key to taking the Irish telecom sector to a new level," he said. "On the other hand, this is a little like Humpty Dumpty. If we were to do it wrong, there is no safety net, no way to put Eircom back together again," he said.

The consultants, who are to be commissioned next month, will consider four aspects of the proposed split: operational and regulatory issues; strategic issues; corporate finance issues and economic and accounting issues.