Eircom tests patience of its shareholders

Steady nerves are in demand among both investors in Telecom Eireann - now Eircom - and at the Department of Public Enterprise.

The decline in the share price of the privatised State telecoms outfit has left many among the 741,000 private investors regretting their failure to cash in for a quick profit when the company first floated on the exchange in July.

With the price of shares languishing just 15 cents above the flotation price and lower than they have been at any time since flotation, private investors will pin their hopes on two reports from brokers this week, which forecast a rosier future for the group.

The immediate future, however, is likely to see little change as concern about the Internet revolution, upon which telecoms rely for a goodly part of their investor value, holds back the sector. In addition, Eircom is trading at a higher relative value than its sectoral peers in Europe.

From the Government's point of view, the flotation euphoria will mean little if investors become disillusioned at the poor performance of the shares. That will do little to encourage public participation in the privatisations the Government is considering for Aer Lingus, Aer Rianta, ESB and others.