Cool Kane must deal with a.g.m. debris before moving Eircom on

Alfie Kane says he is unshaken by the five hours of, at times, personal abuse he endured at Eircom's marathon annual general meeting on Wednesday.

"It was pretty much as I expected," he says. "I am not deflected by it. Not out of arrogance or because I am uncaring but because I must not, as chief executive, get deflected from my job of articulating and executing a viable strategy to restore shareholder value. It would have been easy to overreact from a populist viewpoint, but it would not have been in the interest of shareholders," he said.

Mr Kane is keen to move on and talk about his strategy but there are a few issues to be dealt with first, not least the decision to push through a long-term incentive plan in the teeth of opposition from small shareholders. "People asked why we did not just take the scheme off the table for a year. It would have been easy to play to the gallery but to have done so would have left me with the task of recruiting, motivating and retaining staff without one of the basic tools of the trade," he said.

There is also the decision of the Eircom ESOP (employee share ownership plan) Trust, which holds 14.9 per cent of the company on behalf of the staff, to oppose the plan. The trust objected on the basis that the scheme would discourage management from making investment for fear of diluting earnings and losing their options.

"It is a valid point. The reasons for making it might have seem political but that does not mean it is an idiotic statement," he said.

In order to prevent this happening, the plan has been structured in such a way that it can be reviewed, he explains.

In any case, Eircom has already outlined its investment plans to the market and they have been factored into the share price at this stage, he said.

"Investments that are earnings diluting ultimately produce increased earnings. Otherwise why would we make them?" he asks. The last and most controversial overhang from the a.g.m. is the decision of the Minister for Public Enterprise, Ms O'Rourke, to vote against the scheme on the basis that the level of remuneration was "inappropriate".

"I cannot speak for the Minister and have no knowledge of her reasoning," said Mr Kane. He expressed surprise that she would oppose it on those grounds while the ESOP has declared support for it in principle, albeit voting against on a "technical" issue. The cornerstone of the frustration and anger expressed at Wednesday's meeting was not the share option scheme but the share price, believes Mr Kane.

His plan to restore shareholder value seems to be a simple one and has given rise to criticism that he does not have a strategic vision.

"We have a leading position in fixed line, mobile and Internet. Our strategy is to defend and grow that position at home and expand out of Ireland," he says.

Having a dominant position across the market is enviable but not much of an achievement for a former monopoly. Not so, argues Mr Kane, who draws a comparison with BT. The former British monopolist now only enjoys a dominant position in fixed lines. Mr Kane's defensive tactics are a combination of aggressive price cutting and cost eradication. The most recent step in this direction, the hiving off of the maintenance and service divisions as joint ventures, is almost complete.

He now plans to add another dimension to his defence, a more robust attitude towards what Eircom considers unfair demands by the regulatory authorities.

He gives the requirement that Eircom offers carrier pre-selection as an example of what he considered unfair. This technology - which allows competitors operate a seamless service over the Eircom network - is not available anywhere else in Europe.

In future the regulator and the Government can expect Eircom to put up a stronger fight. "We don't want any favours. We want a balanced regime," he said.

The focus of international expansion will remain Northern Ireland and Britain. "It is the next biggest market and 20 times bigger than Ireland. Five per cent of it would yield a significant amount of revenue," he explains.

Eircom has a clear strategy for its fixed-line business in the North and Britain. By the end of the year, the company will have built a fibre optic loop in the North that will give access to 80 per cent of the market. In Britain, the company is concentrating on building fibre networks in the main population centres.

Expanding the mobile business is more of a headache. Having pulled Eircom out of the bidding for the third generation mobile licence in Britain at £2.5 billion, Mr Kane has to find another way to offer a service across Europe for voice and data traffic. "We have got to find an answer; we need a good one," he said.

His strategy for the Internet division is also clear. It will be floated early next year and will incorporate the Golden Pages business to give it a strong revenue base. The original target of a float early next year has been pushed back because of what Mr Kane calls "a high level of corporate activity".

It is clear that he is talking about more than just helping KPN, Eircom's Dutch strategic partner, dispose of its 21 per cent stake. He will not say whether he is looking for another international partner but it is clearly something he has been thinking about.

If he finds the right one, or possibly two, he might solve both his KPN problem and find the answer to the mobile conundrum.

That would be something to tell the shareholders.