Telecom flotation could be windfall for workers

By Andrew Bushe

DUBLIN — A multi-million-share giveaway as part of the planned Telecom Eireann flotation later this year will leave the 11,500 workforce with a multi-million-pound bonanza that may be worth in the region of £100,000 to each of them.

The windfall deal is expected to set a precedent for the possible flotation of other semistate bodies like Aer Lingus, Aer Rianta, Bord Gais, the ESB and parts of CIE.

Under the deal, any Telecom employee with more than a year’s service in the company will get an equal share of the 14.9 percent of the company reserved for the workers.

Con Scanlon, general secretary of the Communications Workers Union, who was one of the trade union leaders who negotiated the deal, said the shares would be held by a trust with four directors from the union side, an independent director and two from the company.

The workers are getting 5 percent of the shares when Telecom is floated in June for work changes and agreeing to the transformation from a state company to the private sector.

They agreed to buy the other 9.9 percent at what appears to be a knock-down price if the latest estimates of the value of the company prove to be correct.

Stockbrokers said this month the company will be worth £5.5 billion when floated compared to the £1.9 billion valuation when the unions sealed their purchase deal.

With Telecom shares a premium buy on stock exchanges throughout the world, however, many observers expect the value to soar even higher when the shares are offered.

Scanlon denied it was a giveaway and the workers had in many respects paid dearly for their shares.

"The workers in Telecom Eireann forfeited a bonus scheme," Scanlon said. "They will now be making a contribution of 5.3 percent to their pension scheme, which they didn’t have to do before and they have to make radical changes to the way they work."

The trust has borrowed £95 million from Zurich Capital Markets to pay for the 9.9 percent. Dividends from the shares is expected to be pay this off over about seven to 10 years. The shares cannot be sold off until the loan is repaid.

The 5 percent shareholding can be cashed in after five years and, at the £5.5 billion valuation this shareholding alone would give each of the workers a £24,000 payoff.

There is no differentiation between workers as regards length of service or seniority in the company. "Every worker from the chief executive down gets the same," Scanlon said.