February 16, 2011
By Staff Reporter
By Andrew Bushe
DUBLIN — An Post, the Irish state mail company, has sold off its money-losing internet service provider to Esat Telecom for £115 million, giving the phone company about 35,000 customers in the highly competitive market.
PostGem/Ireland On-Line lost £200,000 last year and its position has been strongly challenged by a shake-up in the market and free services being provided by Ocean, Esat itself, Indigo and Gateway.
An Post was hived off as a separate state company when the postal/phone service Department of Posts and Telegraphs was split up in 1984, but the deal will now again link it to a telephone company.
As part of the deal, An Post gets £24 million in Esat shares and chief executive John Hynes said the company plans to hold onto the Esat shares in "the medium term."
The cash realized would be used to accelerate the modernization of the postal service and for possible alliances or acquisitions.
Sign up to The Irish Echo Newsletter
The An Post subsidiaries had been thought to be worth about £30-£50 million, but Esat chairman Denis O’Brien said the price for the businesses was a fair one and the losses last year were "tiny" on what was a high-growth sector.
The amalgamation of PostGem/Ireland On-Line and the Esat Clear services would make it, O’Brien said, No. 1 in the market "by some distance."