Corporate arrogance claim by O'Brien

 

Vodafone's stipulation - and Eircom's agreement - that whoever buys the fixed line operations will not be allowed to enter the mobile market in the Republic for three years was dismissed last night by Mr Denis O'Brien as "corporate arrogance at its worst".

Mr O'Brien, who is leading the eIsland €2.2 billion (£2.8 billion) bid for Eircom's fixed line operations, said Vodafone had "an absolute nerve to arrive in Ireland, buy Eircell and then dictate what the future owner of Eircom could or could not do within the mobile business".

He said the issue had competition ramifications and it was up to Telecommunications Regulator Ms Etain Doyle to decide whether this clause was allowable. He said that he would be very surprised if Vodafone would be allowed to decide who could compete in the mobile sector.

Vodafone sources maintained that the non-compete clause, was not uncommon and would apply to any new owner of Eircom.

Analysts said last night that they would be surprised if such a clause could be enforced. The Vodafone/Eircell deal must be approved by the relevant competition authorities. Both companies said yesterday that they did not anticipate any problems.

Mr O'Brien told RTE radio yesterday that the company would look to maintain or decrease its €2.2 billion offer. He has said that the telecoms market has deteriorated, by up to 30 per cent, since it made its offer. Merrion Capital analyst Mr John Coolican said ironically Eircom had rejected the eIsland bid on a day when eIsland could have bought everything (including the multimedia operations) for less than €2 billion. This was because the Eircom shares, in common with other telecoms shares, took a further hammering yesterday.

Eircom executives are likely to step back from deal making over Christmas. Talks will continue with eIsland, but their progress may depend on several factors, including whether another potential buyer enters the frame.

For now, it is likely that eIsland will be pressing Eircom for its projections for the next six months, given that margins are shrinking and the market is worsening.