O2-3 deal a mixed bag for Eircom

What the lords of the European Commission giveth Eircom with one hand, they taketh away with the other. The telco should be scratching its head after yesterday's clearance of the €850 million O2-3 merger. Did it benefit, or not?

On the one hand, the Commission insisted that 3 extend the network-sharing arrangement between O2 and Eircom's Meteor. Great news for the former State incumbent. On the other hand, Europe paved the way for UPC to enter the mobile market using 3's network. That should worry Eircom.

The 3-O2 deal grabbed all the headlines yesterday, drowning out Eircom’s results for the third quarter. It announced a “stabilisation” of its earnings, but scratch the surface and it is apparent that almost all of the stabilisation came from cost-cutting. Eircom’s revenues fell by 5 per cent.

It knows its scope for hacking back its cost base has been greatly reduced – there are only so many network engineers you can make redundant – and that it must grow its sales in order for the company to have a bright future. Remember, too, that Eircom is only four or five months away from a flotation.

So it is easy to see why the company has been making such a song and dance about being the first operator to offer quad-play – television, landline, broadband and mobile – on the one package.

It has also impressively overhauled its network and is rolling out 4G mobile services faster than any of its competitors.

New network, new products, new customers, new revenues ...

But with UPC now on the verge of a mobile offering via the 3-O2 deal, Eircom will no longer have the quad-play pitch to itself. And UPC will now attempt to cross-sell mobile services to its entire base of a million accounts.

That’s very bad news for Meteor.

Then again, Eircom revealed yesterday that it has sold only about 10,000 television subscriptions since it launched its quad-play rocket six months ago.

Maybe cross-selling in telecoms isn’t so straightforward after all.