William Fry and EY to examine funding and structure of National Broadband Ireland

The Department of Communications has asked legal firm William Fry and accounting firm EY to examine the claims made in recent media reports in relation to the funding, ownership and control of National Broadband Ireland (NBI), the company set up to deliver the €2.9 billion national broadband project.

The department said the move did not constitute a review of the project, insisting it was part of the ongoing work of the NBP contract governance team and “the detailed contract compliance checking” that is carried out by the department.

William Fry and EY had been engaged “on an ongoing basis to assist in the oversight of the NBP contract requirements since 2020”, the department said.

The move comes, however, as it emerged that NBI investors extracted €50 million in fees and interest payments on loans provided to the company last year, the project’s first full year of operation.

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According to accounts for Metallah Ltd, the parent company of NBI Infrastructure and NBI Deployment, the two NBI delivery companies, it paid €32.7 million to NBI Bidco LLC, a US firm controlled by US tech entrepreneur David McCourt.

Mr McCourt and his investment vehicle, Granahan McCourt, is the lead investor in the project.

The payment “related to costs incurred by the group’s investors over a period of number of years in connection with the tender, bid, negotiation and successful conclusion of the 25-year” project, the Metallah accounts said.

Metallah paid a further €3.4 million to Granahan McCourt Dublin LLC, another US company controlled by Mr McCourt, for “organisational readiness and network design activities” related to the project and €1.9 million to another entity known as NBI Management Limited.

Broadband contract

NBI was awarded the State contract to roll out broadband to 540,000 homes and businesses in 2019 after Eir and ESB-Vodafone joint venture Siro withdrew from the competition.

It was forced to cut its target for the number of premises “passed” by the network this year from 115,000 to 60,000 as Covid-related delays hit the initial rollout.

The accounts filed with the Companies Registration Office (CRO) show Metallah received €98 million in loans from NBI investors, which, as well as Granahan McCourt include US hedge fund Oak Hill, which have been used to fund the initial phase of the project. It paid out €11.8 million in interest on these loans last year.

As part of the deal, NBI investors had promised an initial equity investment of €175 million plus €45 million in working capital but it has emerged that the €98 million in loans is part of this investment. The department said the financial commitment is €223 million, of which €48 million is working capital.

“The investors are providing equity funding in NBI through the purchase of shares and the provision of shareholder loans. Utilising both these instruments is a standard form of investment in infrastructure projects and they have a similar risk profile as they are unsecured,” the department said.