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Eircom bows out of UK battle

February 16, 2011

By Staff Reporter

By Andrew Bushe

DUBLIN — The Irish telecommunications company Eircom has pulled out of Britain’s frenzied knockout war for so-called third-generation mobile phone licences after deciding that a bid beyond the £2.5 billion it had already made wasn’t worth it.

Eircom was launched on the Nasdaq last year.

After the announcement by Chief Executive Alfie Kane, that Eircom’s subsidiary 3G(UK) was throwing in the towel, the former state company’s shares fell back.

"We have decided to bow out for what we believe are very good reasons. We have a pretty good idea as to what the upper limit of justification would be, as distinct from the upper limit of our financing," Kane said.

"We could finance a higher bid but, in terms of justification for a reasonable business case, we believe we reached a point where to go beyond that doesn’t make good commercial sense."

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Kane said there would have been huge additional spending on infrastructure needed to enter the UK market where Eircom was not already established.

He said the company now hoped to make a deal with one of the successful bidders.

The fortunes being bid for the five licences has astonished analysts and many have been questioning if they are really worth it. The reserve prices for the licences when they were first offered a month ago was £100 million sterling.

The new phones will make the wireless Internet a reality and will be able to transfer huge amounts of data in seconds. It takes 28 minutes to transfer a detailed presentation on current networks. On third generation technology it would take only 8 seconds.

Phones, watches and other handheld devices will be powerful enough to show video on demand.

Within a couple of years, experts say, people will be connecting to the Internet on the move rather than via a bulky personal or laptop computers and the new systems have huge potential for electronic games.

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