Making sense of Eircom

Every time the issue of Eircom’s suggested return to the stock market is mentioned, one fundamental question comes to mind – who on earth would want to buy it?

Eircom has proven a graveyard for investors' dreams across multiple changes of ownership.

Staff, who secured a winning stake in the business back at its original 1999 flotation and the exchequer which scored a payday from that IP0, would certainly be number among the few winners but that is little testament to its success as a private sector business.

Certainly a vast number of largely unsophisticated small-time investors who ploughed their money into that flotation are still nursing losses from the exercise and the experience has arguably done more damage to the Irish Stock Exchange’s efforts to encourage widespread share ownership than any other single factor.

But it’s not just such “easy marks” who have been left out of pocket. Some of the most sophisticated investors in telcos worldwide have slunk away from Ireland, chastened by the engagement.

And all the time, Eircom has done little to suggest it is capable of turning itself from an unwieldy State entity into a dynamic local market leader in one of the faster growing segments of the global economy of the past two decades – not helped by a confused strategy on the rapidly growing mobile market over that time.

That failure has seen others nibble away at its dominant position as a former monopoly. Vodafone, Telefónica O2 and, latterly, Hutchison Whampoa have not exactly been revolutionary in their approach to the Irish market but they have at least invested in their networks. At Eircom, a disproportionate element of the accumulating debt has been built up by successive owners ' leveraged purchases.

So now, having passed into the hands of its bondholders in the State’s largest examinership to date, the company is once again on the block.

It’s easy to understand why the bondholders would seek to take some of their money off the table.

What someone needs to explain is why anybody should facilitate them in doing so?