Uncertainty still faces Eircom strategic sale

It's been another bad week for Eircom. The uncertainty surrounding the sale or otherwise of shares held by their strategic partners drags on, having a seriously negative effect on a share price already in the doldrums due to sectoral weakness.

At such a time, the last thing company executives, including chief executive Alfie Kane, needed was a public row with the Irish Association of Investment Managers over the nature of their proposed share option plan. Put bluntly, fund managers don't feel the company is setting its executives sufficiently challenging targets to earn what could be lucrative options. Any options would dilute the value of the existing shareholders and, given their recent travails, such investors would want to be sure the company is doing its utmost before allowing any such dilution.

If all that weren't bad enough, the Government has acted against the advice of the company and decided to "unbundle the local loop" - introduce competition in the final part of the telecoms sector, the connection from the individual home or office and the nearest exchange.

Up to now, Eircom has held full control on this part of the network and charged rivals for its use. It was looking to retain as much control as possible. However, the Minister, Ms O'Rourke, has gone for a more dramatic approach, allowing rivals direct access to the line.

For the consumer, the decision should mean the speedier introduction of faster telecommunications lowering costs and improving the range of services available to them. For Eircom, it just means it will have to work that little bit harder.