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Eircom in talks with Vodaphone

February 16, 2011

By Staff Reporter

By Andrew Bushe

DUBLIN — Half a million Eircom shareholders who have seen their investment in the former state telecom company plummet have finally gotten some good news with confirmation that the company is in talks about the sale of its mobile Eircell.

Eircom is in negotiations with the world’s biggest mobile phone company, Vodaphone. The talks were confirmed in a brief statement to the Stock Exchange.

Eircom said talks are at a "preliminary stage" and did not name Vodaphone as the potential buyer.

The share price, which had dropped a third below the issue price of July 1999, rallied by 12 percent to 2.75 euros. This is still well short of the 3.90 euros launch price and the 5 euros it reached shortly after the float.

Some analysts believe the talks may trigger a full takeover of the company by Vodaphone.

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The sale of Eircell for about £4 billion would mean Eircom would have to focus on its less profitable fixed line operation and the flotation of its multi-media business, which is expected next year.

Investors are hoping the talks will flush out another major international telecom company and that a bidding war will push up the shares.

Eircell has about 60 percent of the burgeoning Irish mobile market with about 1.3 million customers. The main competition is the Esat Digifone company — now owned by British Telecom — but a third contender, Meteor, is due to roll out its network later this year.

Last month, the government’s telecommunications regulator, Etain Doyle, said the number of mobile phones exceeded the number of fixed lines for the first time. There are 1.86 million out of a population of 3.79 million, or a market penetration of just under 50 percent.

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