Eircom's shares continue to fall

Eircom shares have continued to fall sharply following the decision by Swedish group Telia to delay the sale of its 14 per cent stake. The shares fell eight cents to a new low of €3.16 (£2.49) yesterday. Shareholders who bought into Eircom at the €3.90 flotation price are now nursing a 19 per cent loss on their investment. Analysts believe that it may be September or October before Telia's stake is finally sold.

NCB analyst Robert Hussey, who has recommended investors to "reduce" their Eircom holdings, said it was probably market conditions rather than its own flotation that led Telia to delay the sale of its Eircom stake. The sale price of the 21 per cent stake being sold by KPN may be as low as €2.75 a share, he said.

In a research note, Mr Hussey said Eircom's Internet business may be worth €780 million when it is floated later this year. This is based on the current valuation of Freeserve.

He adds that as well as Eircom.net and Indigo, Eircom is likely to include Ebeon in the Internet flotation. Global consolidation, third-generation licences and the ownership of British group Orange are the main factors preoccupying the main players in the telecoms sector, says Mr Hussey.