SITTING in a top-floor office of Telecom Eireann's St Stephen's Green headquarters Mr Alfie Kane, the man who has been the chief executive of Telecom Eireann for the past 20 months, explains that he wants to take Telecom from being an indebted company to being an investing company.
"My vision for Telecom Eireann is based initially on a transition process leading on to an investment era. We have a lot of strengths, a lot of ability, a lot of reasons for believing in ourselves.
"Unfortunately we also have a lot of millstones around our neck. But as soon as we remove them there is no reason not to begin a significant investment and expansion period."
Perhaps the largest of those millstones is Telecom's debt, which at one point breached about £1.2 billion. In the last financial year - Mr Kane's first full year with the company that debt was reduced by £107 million. The maximum repayment in any of the preceding years was £50 million.
Mr Kane intends to significantly accelerate that repayment. reducing by 50 per cent Telecom's existing £862 million debt within two to three years. "We will then go on to eliminate the debt completely," he said.
When that debt is cleared Mr Kane wants to exploit investment opportunities outside Ireland. "What we are talking about is changing the very culture of the company. Look at the progress which was made in the 1980s, we have to do twice as much in half the time.
Although much of the attention directed at Telecom has concentrated on the search for a strategic partner, Mr Kane is keen to stress that this accounts for only 20 per cent of what needs to be done at Telecom.
"I talk in terms of 80/20," he said. "Some 80 per cent of what we are doing needs to be done whether we have a strategic partner or not. If a good deal is not done, there might not be a deal. It's not a fire sale. It's not something which absolutely needs to happen," he says about the strategic alliance.
Since joining Telecom, Mr Kane has carried out a strategic review of the company. That review, he says, identified a number of gaps in Telecom's strength. Any potential partner will have to satisfy Telecom that it can fill those gaps before being seriously considered.
It's highly likely, however, that a deal will be done. The Government has said that Telecom will have a strategic partner, by the end of next summer. That partner will probably pay between £400 million and £500 million for a 35 per cent stake.
Last week the Government announced it intends to give £220 million from the proceeds of the sale to Telecom. Mr Kane's comments suggest that this figure was agreed only after some tough negotiations. "It was a pragmatic compromise, an agreed deal," he says. "What is important is that"" we agreed a way forward." Mr Kane believes that while it is important to conclude a deal as soon as possible the delay has benefited Telecom. He believes that the company is now in a much stronger financial position than it was two years ago and is therefore in a stronger negotiating position.
That financial position will have to continue to improve. Mr Kane believes that cost reduction is key to that process. However he is keen to emphasise that costs need to be reduced across the board and not just in the much-publicised staffing area. It is a fact, however, that Mr Kane has signalled the need for Telecom to reduce it's annual wage bill by £100 million. This is most likely to be achieved by reducing the company's 12,000 strong workforce by about 2,000.
Mr Kane says that over the past 18 months "practically speaking", 1,000 people have left the company's payroll. About 750 have taken voluntary redundancy and a further 250 have moved to Britain on contract to British Telecom.
In future those who leave Telecom will be assisted in setting up their own business. Within the next year Mr Kane intends to set up an enterprise company which will give financial and expert assistance to departing workers with a business idea.
While costs have been reduced the price of calls has also come down. Over the past two years domestic bills have been reduced by 10 per cent and the cost of business calls has fallen by over 20 per cent.
As well as the price reductions announced by Telecom earlier this week, Mr Kane says Telecom is introducing two new business discount schemes with immediate effect. The first is the "international term discount scheme" which will bring to 3 per cent the level of discount available or international calls. The second, the multi. site discount scheme, will allow businesses to achieve discounts of 10 per cent on local calls, 20 per cent on national long-distance calls and 30 per cent on cross-channel ant international calls.
The greater reduction in the cost of business calls is in part due to the existence of limited competition in the business market. During the past two years companies such as Esat and TCL have taken some high-profile accounts from Telecom.
"In any competitive marketplace the monopoly will inevitably lose market share," says Mr Kane, "We have but one message for our competitors," he adds - "look after our customers, because before long we will win them back."
