Lowry says Esat must reveal backers

ESAT DIGIFONE, the winning consortium in the mobile phone licence competition, must reveal who its backers are before signing for the licence, the Minister for Communications, Mr Lowry, has said.

He told the Dail yesterday it would become absolutely clear from the company itself who its investors are and it will have to say what the consortium's composition is and where its funding is coming from. "The company will make full disclosure of whom its backers are," he said.

He also said it was ironic that Persona, which is lodging an objection to the EU over the licence, had been so "vociferous" in relation to the issue of disclosure. It had been one of the consortiums which originally sought a commitment to confidentiality, he claimed.

Mr Dermot Desmond's financial services company, International Investment Underwriters (IIU), has been appointed advisers for the sale of a 20 per cent stake in Esat Digifone, which is 40 per cent owned by Esat Telecom and 40 per cent owned by the Norwegian state telephone company, Telenor.

The fact that the public has not been made aware of who will own this 20 per cent has been criticised by both the losing bidders for the licence and Opposition politicians, who have also been scathing about Mr Lowry's handling of the bidding process.

Mr Lowry was asked in the Dail if he had known who the beneficial owners of the winning consortium were before the licence was awarded and was pressed to give names there and then.

He refused, citing confidentiality clauses. He said the bid had been underwritten by "acceptable blue-chip investors" and he had been shown letters to that effect. Mr Lowry said the bid involved a £120 million capital investment upfront and argued that any deal of that size would be funded by a combination of debt and equity - normally 50:50.

"Five of the bidders proposed to fund it in this way," he said. This, he added, would have involved unidentified stake holders, arising either through private placement or through a stock market flotation.

Esat Digifone said last night all issues relating to investors would be clarified before the licence was signed. An Esat spokeswoman said the licence was in "the final stages" and was with the attorney general's office. The company expects to sign it early next week. Once tile licence is signed, the £15 million fee will be payable to the Government.

In the Dail yesterday, Opposition deputies again criticised Mr Lowry over the ceiling set on the licence. Applicants could bid no more than £15 million.

Mr Lowry said it had been decided to impose a £15 million limit on the bidding process following reservations expressed by the European Commission about taking an "auction approach" to the issue. Mr Lowry said the Commission considered that a high fee paid by the second GSM operator and not by Eircell would contravene Maastricht competition rules unless there were other compensatory measures.

He said it was decided to take a moderate approach on the fee.

Mr Lowry admitted Esat had not tendered the lowest tariffs of all the applicants. Citing confidentiality (as he did several times during his lengthy speech), he said: "I can say at this stage that the application with the lowest tariffs was demonstrably weak in respect of other major selection criteria."

The Minister also said unsuccessful applicants would be given individual briefing sessions where each would get an outline of the evaluation process and an assessment of their own application. It would not be possible to provide comparative details with respect to the winning or any other application, he said.

Progressive Democrat deputy Mr Bobby Molloy said this should have been done months ago and it would have saved a lot of disquiet.

Mr Lowry attacked Opposition deputies over their criticism of the licence award. "An innovative and vibrant young Irish company, which took on the big players from around the world and won, has had its name linked in the public mind with controversy and doubt," he said.