WorldCom scrambles to banish concerns

 

WorldCom yesterday began the mammoth task of calling its 6,000 customers in the Republic to try to allay growing concerns about the viability of telecoms contracts with the struggling firm, writes Jamie Smyth

The company, which employs 180 staff in Dublin, Cork and Limerick, supplies voice, internet and data services to many top multinationals in the Republic. It also supplies services to hundreds of mid-size firms and public bodies such as State broadcaster RTÉ.

A WorldCom Ireland spokeswoman said the firm was actively contacting customers yesterday to discuss the situation.

"It is business as usual," she added.

But most stock market analysts and industry experts disagree. "Chapter 11 bankruptcy is almost inevitable given the great loss of confidence in the firm," said Dr Chris Doyle, consultant economist, University of Warwick. "Customers will by now be searching for insurance by looking for alternative providers."

WorldCom's main competitors - Eircom, Esat Group, Colt and Nevadatele.com - are well placed to poach existing corporate clients such as Aer Lingus, Ulster Bank and Irish Life & Permanent.

One operator told The Irish Times last night they had already fielded calls from several WorldCom customers about the fallout from the accounting scandal.

Ironically, Eircom and Esat are also among the largest creditors of WorldCom. Both companies have existing interconnect agreements with the US telecoms group, which enable it to use their networks to supply services. Both firms would be concerned about these debts if WorldCom went out of business.

However, in the longer term, such a move might be positive for them, reducing competition within the market.

Senior industry sources said events at WorldCom and the continuing meltdown within the telecoms industry had severely shaken confidence in the sector.

Firms operating here, including US multinational Dell, have switched telecoms operators following the recent demise of another pan-European telecoms firm, KPNQwest.

The Dutch group, which is also the subject of investigations by regulators, carries up to 40 per cent of Europe's internet traffic. But the company, which controls a 25,000 kilometre fibre network, filed for bankruptcy last month amid the sharp downturn in the sector.

KPNQwest's network will now be sold off in a piecemeal fashion to competing telecoms firms over the next few weeks, following a decision by US firm AT&T yesterday to drop out of the bidding.

The break-up of WorldCom's operations in the US, Europe and Asia is also likely due to the fallout from the scandal. But this is unlikely to mean the end for WorldCom's operations here, said Mr Ultan Ryan, consultant with Mason Communications.

"WorldCom in Ireland can always be sold as a going concern. They have a reasonably solid customer base and, after Esat and Eircom, are the next-biggest operator," he said.

"The only question mark would remain over who would want to buy the business," he said.