Minister denies Telecom bid under £200m

THE political row over the value of 35 per cent of Telecom Eireann deepened last night as the Communications Minister, Mr Lowry, said that the offer from the KPN/ Telia consortium was not under £200 million.

Meanwhile, Tele Danmark the other bidder for the Telecom stake, is considering seeking a partner for the bid.

Mr Lowry last night denied that the price offered by the Dutch Swedish consortium was under £200 million.

But he refused to disclose the bid figure, citing confidentiality agreements. In a statement, he said he "expects that all parties to the alliance process will respect confidentiality agreements".

Last night, Mr Lowry sent a copy of a letter to him from Telia director Mr Stig Johansson, to The Irish Times. In this letter Mr Johansson denied saying that the initial Telia bid "involves an investment of about one billion crowns".

In the letter, Mr Johansson said that he said the Telia investment was closer to one than ten billion crowns, in answer to a question from a Swedish financial paper, which had suggested that the bid was ten billion crowns.

However, following the interview with the Swedish paper, a reporter from the Reuters news room in Stockholm spoke to Mr Johansson. She quoted him as confirming that the bid "entails an investment of about a billion crowns for Telia".

Telia is a 50 per cent partner in the KPN/Telia consortium. Doubling the Telia figure (about £95 million) to allow for KNP's investment would have brought the offer to about £190 million. Mr Johansson was not available for comment yesterday.

Industry sources insisted last night that the offer is around £200 million and not more than £250 million. This figure is well below original expectation of £400 million to £500 million and follows a 1994 offer from British group Cable and Wireless of £460 million for a 40 per cent stake in Telecom.

Last night, Mr Lowry said that the £460 million offer from Cable and Wireless "was full of conditionality". The offer was based on Telecom being protected from competition until the year 2005, he said.

The value would have dropped in negotiations because this protection is now only in place until 1998, he insisted.

Meanwhile, Mr Gregers Mogensen, a director of the other bidder for the Telecom stake, Danish telephone group Tele Danmark, has hinted that while its preliminary bid was on its own this did not it intended proceed in the same way.

"It may be that we just haven't found the right partner yet" he said in answer to questions from Reuters. However he declined to comment further on the Tele Danmark position.

Tele Danmark is one of the two preliminary bids which have been received for a 35 per cent stake in Telecom Eireann. KNP/Telia is considered the front runner to form a strategic alliance with Telecom because of its connection through Unisource to a global network.

The preliminary bids, which include proposals on the transfer of technology and marketing skills to Telecom, are being assessed by officials at the Department of Transport, Energy and Communications and by Morgan Stanley which is advising the Government on the sale.

One of the issues which has concerned potential investors is the Government's position on the long term future of the remaining 60 per cent of the company.

Some potential investors would have had concerns about working effectively with a State share holder, especially in a company where major rationalisation is necessary.

The Progressive Democrats spokesman on communications, Mr Molloy, has called for a public flotation of the company.

He said the Government decision to retain a 60 per cent stake in Telecom "scared off most international interest and reduced the field to just two bidders".

Fianna Fail yesterday said it will oppose "any panic sale" of Telecom Eireann.