Telecom will fund seed capital for former staff

Telecom Eireann has established a £2 million fund to help people who leave the company set up their own businesses.

The fund will target employees who wish to establish telecommunications and technology related businesses.

It will also be aimed at people who want to start or expand businesses which Telecom may consider outsourcing itself. This includes some cabling and jointing work and electrical contracting.

A Telecom spokesman said seed capital for start-up companies could be difficult to obtain here and the new fund was designed to help fill the gap and enable companies to start up or expand where they might have been unable to do so.

The fund is co-financed by Enterprise Ireland through an EU Seed Capital programme. To be negotiated on an individual basis, it will offer financial packages ranging from £30,000 to £300,000. The fund will help new businesses by providing investment finance in the form of convertible loan finance and/or by subscribing for ordinary shares on a minority basis.

It is understood that Telecom and Enterprise Ireland are well disposed to topping up the fund or establishing a further fund if there is a strong demand for it.

Telecom said it would be able to link up with other venture capital funds or finance houses to invest in companies for a commercial return, if more monies were needed, seeking to realise its investment within five years. The new fund is to be known as the Telecom Eireann Enterprise Fund and Enterprise Ireland will reserve the right to appoint a non-executive director to the board of the investee companies.

Telecom chief executive Mr Alfie Kane said he believed when the Irish telecoms market was fully liberalised, it would sustain a large number of small enterprises which would provide support services to the industry. He said the fund was a very exciting opportunity for Telecom employees who wanted to start up their own businesses. Around 2,500 people are expected to leave Telecom Eireann voluntarily over the next three years under its transformation plan, a complex restructuring process aimed at making the company fully competitive.

Meanwhile, Telecom has also established a resource business unit within the group to retrain and re-skill employees as part of the transformation programme. Approximately 3,000 people are expected to take part in retraining projects to enable them to move to other jobs within the organisation.