Eircom in mobile arm disposal talks
(UPDATE: Previous London, adds background, analysts, updates share prices)
By Keiron Henderson
DUBLIN, Oct 9 (Reuters) - Irish telecoms group eircom Plc (quote from Yahoo! UK & Ireland: EIR.L)(NYSE:EIR - news) said on Monday it was in talks to sell all or part of its eircell mobile unit and an industry source said Britain's Vodafone was interested.
Eircom shares rose 11 percent on the news.
The source told Reuters eircom had been in talks with mobile phone giant Vodafone Group Plc (quote from Yahoo! UK & Ireland: VOD.L) for a couple of weeks and a deal could be struck within two weeks.
``The situation basically is whether or not it will be a part sale or full sale,'' said the source.
``I think it's fair to say that Vodafone are coming at it from the point of view of a full sale. Their view generally is that they prefer to have outright ownership,'' the source added.
Vodafone has declined to comment on a report in Britain's Sunday Times that eircom was in talks with a number of companies, including Vodafone about the sale of its mobile arm,
By 1035 GMT eircom shares were up 0.27 euros to 2.73 euros ($2.37), with around 1.4 million shares traded.
Analysts value eircom's mobile arm, with some 1.1 million subscribers, at around four billion euros, and say a deal could unlock value for shareholders as well as providing Vodafone with a strong foothold in Ireland.
``For Vodafone it would be a natural extension of their UK franchise. For eircom they would realise more value than that which the share price has been telling you. We would welcome it,'' said James McCafferty of SG Securities in London.
The telecoms industry source said any deal could value eircell at four to five billion euros and give Vodafone access to a growing market.
``They're probably looking at the Irish market from the point of view of 3G (third generation mobile licences) and see this as a more effective way of entering the Irish market,'' the source said.
A recent report from Ireland's telecommunications regulator said the country's mobile phone sector was growing at one of the fastest rates in western Europe.
Mobile market penetration was estimated at just below 50 percent, with around 1.86 million subscribers. The number of mobile lines now exceeds fixed lines.
Ireland currently has two mobile phone operators, eircell and Esat Digifone, owned by Norway's Telenor and British Telecommunications Plc (quote from Yahoo! UK & Ireland: BT.L).
U.S.-Irish consortium Meteor - grouping U.S. company Western Wireless Corp (NasdaqNM:WWCA - news) and Ireland's RD Communications - has won a third mobile licence and is expected to start services within a few months.
``There's an argument that says it might be a good time for eircom to unload the mobile asset because with the third operator coming in and further operators coming in through 3G clearly the market place is going to become much more competitive,'' the source said. |
