Q & A

Telecom Shares

I have encountered difficulties in registering for the Telecom Eireann share offer. I rang the Freefone number to register both myself and my daughter. The line was poor and it was difficult to be sure all the details had been correctly taken.

A few days later I rang back to check and again had difficulty hearing the agent dealing with me. The details for neither of us were correctly recorded; in fact, my daughter's were not logged at all. This was rectified.

Subsequently, I received the promised information pack but not my daughter's. I rang again and found none of our details were traceable. What can I now do to ensure we are correctly recorded on the system?

Mr W.O'D., Dublin

For reasons of space, I have somewhat distilled the details of your letter but your point remains how you can ensure your details and those of your daughter are correctly recorded to allow you priority in the eventual share offer.

There are a couple of points. First, if you have received an information pack, there is no doubt that your details are recorded. The pack would not be sent without such details being in the system.

It may be that there is some glitch in the system which does not enable the people manning the Freefone to trace details of those who have already received the pack, although this would be unusual.

However, this is an unusual offer and the public interest has been huge, so it is not beyond the bounds of possibility that problems have occurred.

There have been some backlogs in getting details processed by the data entry operators who are working flat out seven days a week. Also the number of applications has been unexpectedly strong in the early part of the registration period. This has levelled off as the registration period went on, easing the strain on the system.

With regard to your daughter, there is no doubt that she should also receive an information pack even if she is a minor. The top line of the address will be your name and the second line will be hers.

If you or anyone else has still to receive this information, the concern is understandable as the registration period closes today (Friday, May 28th).

If you still have any doubts or your daughter's pack has not arrived, you should contact the share information office via the Freefone helpline and ask to speak to the Special Inquiry Unit.

This has been set up specifically to deal with complicated queries, complaints or issues which cannot easily and quickly be handled by the people manning the Freefone lines. Remember it is not in Telecom's interest to be actively frustrating people in their effort to register. They want as much interest as possible and, to be fair, this is the first complaint of this kind I have heard.

Foreign residents

I am aware that the registration process is open only to those people with addresses in Ireland, but does that mean that I cannot buy shares in the company from Australia where I have lived for the past 12 years when the flotation eventually occurs?

I intend returning home and would be keen to invest in this offering. How do I go about getting a prospectus and/or application form?

Mr E.K., Sydney

I said last week that I would return to the issue of actually buying shares in Telecom Eireann from abroad as against the registration process, which ends today (May 28th).

The official situation is quite clear from the point of view of the company and its advisers. Announcing the public or retail share offer, they said it was open to people over the age of 18 with an address in the Republic.

Although there are good reasons for the way this offer was phrased, there is, in fact, nothing to preclude people from anywhere in the world applying to buy shares. However, it must be said that those who have not secured priority in allocation by registering for the flotation may well lose out.

Another limiting factor is that payment for the shares must be drawn on a bank account in the Republic. This can be done by cheque or by direct debit for those who already have or can open a bank account in the jurisdiction. A bank draft drawn on a bank branch here will also suffice.

The simple fact is that anyone - Irish or not - can apply for shares from anywhere in the world. However, neither Telecom, nor its advisers, can market or promote the offer outside of the jurisdiction of the State.

The reason is that if the offer were marketed to, say, all Irish people living abroad, it might well trigger a full initial public offering (IPO) in a whole range of markets due to the securities and exchange regulations in other countries.

To be fair, such legislation has been put in place to ensure that the consumer is protected from fraud in dealings with financial investments. However, in this instance, it works against those people living abroad who wish to invest in Telecom.

Each country has different rules as to what precisely would trigger a full IPO. Quite apart from the cost and delay in organising offerings in other jurisdictions, the rules governing the practice of such offers differs from one state to another, meaning that Telecom might have to run such offers in different ways in each of the jurisdictions.

The toughest rules apply in Britain and the US, places where a large number of Irish people might have been expected to show an interest in the flotation. This is especially true of Northern Ireland, which falls under UK securities law.

Efforts were made to see if the offer could be extended there without spilling over into Britain, but it proved impossible.

Another example of the difficulties is the situation in France, where as few as 50 people wishing to take part in the offer would trigger a full public offering in France. I don't know the rules for Australia, but rules there certainly will be.

So that is the problem; what about a solution? Well, there are a couple of ways you can still take part in the issue. The simplest way is to use an Irish address.

Of course, using such an address would mean that any documentation would be sent there and would have to be forwarded. In addition, there is a fraud auditor monitoring the flotation process.

Their responsibility is to ensure that everyone is who they say they are and is applying fairly. For instance, they would wish to ensure that people do not apply in several different names when the shares are effectively for one person.

The company has declared that people found to be in breach of the rules will be disqualified from the process and may well be prosecuted. However, it is still perfectly valid, if you have such and address and the shares are for you, to use it - providing you pay for the shares with money drawn on a bank account in the Republic.

Another way of buying the shares would be to operate through a stockbroker. They will certainly have prospectuses and application forms and will be able to post them out. While Telecom and its advisers are precluded from sending such documentation abroad, I know of nothing which prevents stockbrokers doing so in operating transactions with their clients.

A third way might be to contact one of the international banks involved in the process. These include Goldman Sachs, Dresdner, Societe Generale Paribas and Merrill Lynch. One or other of these is sure to have a presence in Sydney and may be the easiest way of securing a prospectus and application form.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, Fleet Street, Dublin 2 or email to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice.

Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.