Bill opens way for flotation of Telecom

 

A key step towards the floatation of Telecom Eireann has been announced by the Minister for Public Enterprise, Ms O'Rourke. She said last night the Government had approved the publication of the Postal and Telecommunications (Amendment) Bill, 1998, paving the way for the flotation next year.

The Bill, to be presented to the Dail early next year, will enable an Initial Public Offering (IPO) of shares in the company to proceed. It will also make legislation pertaining to Telecom compatible with its subsequent status as a publicly quoted company.

However, full details of the Bill, including an estimate on how much of the company will be sold off, have yet to be disclosed. The flotation is expected to take place next June or September.

The Minister said yesterday the "the approval to publish the Bill and present it to the Dail in the New Year is significant because it meets one of the key deadlines set for completion of the IPO process."

She added: "The public offering of shares in Telecom Eireann is a fundamental part of our overall strategy for ensuring an open and fully competitive telecommunications sector and it is very important that we maintain the strong momentum that we have achieved in this process over the last 18 months."

Most observers predict the company will be sold off for between 25 and 30 per cent. Depending on market conditions, that is likely to bring in between £700 m and £1 billion to the Exchequer.

The Government currently holds 51 per cent of the company. The Swedish firm Telia and Holland's KPN together own 20 per cent and have an option to increase their stake to up to 35 per cent. Telecom workers, meanwhile, will be able to purchase up to 14.9 per cent of the company's equity under an Employee Share Ownership Plan.

It emerged last month that floating the company will cost £40 m. The bulk of this comprises fees and commission to AIB and Merrill Lynch as the lead bankers and advisers.