By Andrew Bushe
DUBLIN — Stock markets reacted badly to the news that the Dutch and Swedish companies KPN and Telia are selling their entire 35 percent stake in the recently privatized state telecommunication company, Eircom. The sale realized a profit of £1.1 billion for the two groups.
Eircom’s group chief executive, Alfie Kane, denied that the total sale, which he learned about only last Friday, was a blow to the company.
"Its not a disaster at all," he said. "Its partly expected, partly unexpected but just reflects the rapidly changing environment that we operate in the telecom business."
However, the news saw share price on the Dublin market drop from 4.18 euros (£3.29) to 4.01 euros (£3.16)– still above the July float price of 3.90 euros (£3.07) — before it recovered — to 4.10 euros (£3.23).
Eircom said the precise timing and nature of the joint share disposal — which is held through a joint company Comsource — has not been decided.
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"Eircom intends to work closely with KPN and Telia to effect an orderly disposal of their shareholding, " a statement said.
The flotation of the former Telecom Eireann company in Dublin, London and New York five months ago led to the biggest share stampede in Irish history with more than 574,000 people buying shares.
Eircom’s workforce own 14.9 percent of the company.
Fine Gael Public Enterprise spokesman Ivan Yates said the public had been repeatedly assured that KPN would be a long-term Eircom investor.
He said people had also been led to believe that KPN would buy Telia’s share and he called for an explanation about how the public had been duped.
The Dutch KPN owns 21 percent of the Eircom and the Swedish Telia owns 14 percent.
The joint 35 percent they own is worth about 2.5 billion punts (3.17 billion euros).
The two companies bought their stakes in Eircom – then called Telecom Eireann — in December 1996 when the Irish government was seeking strategic partners.
For competition reasons, the Telia sale had been expected due to its link up with Telenor of Norway. Telenor owns 49.5 percent of the second Irish mobile phone operator Esat Digifone.
"Change is the name of the game," Kane said. "While it is news from KPN, it is not a complete surprise when viewed in the context of telecom developments."
Kane said that KPN had said they would review their position, not only in the light of Telia’s exit, but also in terms of their own international strategy.
"What they are doing is focusing more in Central and Eastern Europe and expanding their own home market," he said.