Eir’s catch-22: the National Broadband Plan

State’s largest telco finds itself in a curious position ahead a probable flotation next year

If Eir wins the tender it must cough up roughly €500 million to buy a set of contracts it already has. Photograph: Andrew Matthews/PA Wire

If Eir wins the tender it must cough up roughly €500 million to buy a set of contracts it already has. Photograph: Andrew Matthews/PA Wire

 

Eir finds itself in a rather curious situation regarding the Government’s National Broadband Plan (NBP).

If the State’s largest telco wins the tender it must cough up roughly €500 million to buy a set of contracts it already has, as the main provider of broadband to rural Ireland.

This will only diminish its balance sheet value ahead of probable flotation next year.

Alternatively, if it loses a strategic contract in its own backyard to rivals Siro or Enet its attractiveness to investors could be damaged.

The company’s damned if it wins and damned if it doesn’t. Its position has prompted suspicions that it may be playing fast and loose with the Government’s tender.

Costly interventions

Eir is rolling out its new fibre broadband product across the country as well as promising to hook up more than 300,000 homes already earmarked for the NBP, which were previously deemed uneconomic.

However, many households in the areas connected by the company claim they’re being left out. Typically these homes are in out-of-the-way locations that require costly interventions to reach with fibre cable.

This issue was brought up by Minister for State at the Office of Public Works Sean Canney, who according to the Sunday Business Post, accused Eir of trying to capture the market before the awarding of the contract.

Either way, it is proving a major headache for the Department of Communications, as it has to keep adding more homes to its proposed intervention footprint.

Housing stock

The target area has grown from 700,000 to more than 900,000 homes, nearly 40 per cent of the State’s entire housing stock, in less than a year.

However, the department is powerless to intervene as Eir is free to make commercial decisions about which homes it connects.

Critics claim Eir is cherrypicking the quasi-commercial homes to make the Government’s contract less viable for rivals and/or slow up the process altogether, which would suit its flotation plans.

The company denies this, insisting its move to connect more homes will lessen the cost of the tender to the State and is a good thing given the urgent need for broadband in rural parts.