Esat confirms bid for An Post net provider

ESAT has confirmed that it has bid for the assets of the An Post subsidiary, Internet service provider PostGem/Ireland On-Line.

NTL Cabletel, and Independent News and Media, are also believed to be among the final bidders, although a final decision is not expected from An Post for about another two weeks. Independent News and Media will neither confirm nor deny its interest in PostGem/ IOL, while a spokesman for NTL Cabletel was unavailable for comment.

Recently, IOL's business, which has a residential customer base of around 30,000 people for Internet services, has started to suffer in the wake of moves by other ISPs to offer free Internet access.

Last night, IOL staff were believed to be holding a private meeting to work out a strategy for communication with management in the light of concerns over the sale.

Since it emerged that An Post had engaged the US investment advisers, Hambrecht & Quest, to assess the strategic future of PostGem/IOL, and a prospectus was issued to prospective buyers in June, there has been intense speculation as to who the likely buyer might be.

Some industry sources have said rumours about potential bidders may have been deliberately fuelled in order to boost industry interest in the business. The final purchase price of the business could range from anywhere between £14 million (#17 million) and £40 million (#50 million).

EsatNet, the commercial Internet arm of Esat Telecom, is believed to be very interested in the PostGem arm of the offering. It already has a strong reputation as a business ISP, and it would be attracted to the strong data business PostGem would bring to the table, in particular its lottery and social welfare contracts with An Post.

Independent News and Media's interest in PostGem/IOL is less clear, since its exact new media strategy has not been detailed. However, the addition of an immediate customer base of around 30,000 is likely to have obvious advantages for its stated plans to forge ahead in the delivery of digital content and telephony services.

NTL is likely to consider the company as a vehicle for building its network in the Republic, but as with its Cablelink acquisition, PostGem/ IOL is expected to require considerable investment.