eir’s shareholders weigh trade sale to foreign buyer instead of IPO

14 Sep 2017

The hedge-fund owners of eir are weighing a possible trade sale of the telecoms group instead of a stock-market listing, which had previously been seen as the most likely sale option and was mooted for as early as next year.

There was speculation in Dublin financial circles this week that the owners of eir, led by Anchorage Capital, the biggest shareholder with 42 per cent, were already holding discussions about a potential sale of the business to French telco Iliad.
The French group denied this on Wednesday, however, saying: “Iliad is not in discussion about an acquisition.”

An industry source said a possible link-up between eir and Iliad was being discussed by people in investment banking and trade circles. But the source added that eir might not be seen as a neat fit with Iliad’s preference to act as a market challenger, whereas eir is the clear market leader in Ireland.

eir chief executive Richard Moat, speaking to The Irish Times on Wednesday after announcing full-year profit growth of 4 per cent, said he was aware of the market rumours that eir’s owners were considering a trade sale.

“But I cannot comment on such speculation,” he said.

When pressed specifically on whether the owners might run a process to sell eir to a telco such as Iliad, Mr Moat said: “If there was [a process], that would be a matter for the shareholders and not an issue for management.”

Profitability growing

Mr Moat said the business was progressing well from an operational standpoint and in terms of its revenue and growing profitability, and that he was focused on maintaining that, and not on its future ownership.

He described the possibility of an initial public offering as a “theoretical option”, which would appear to be a slight cooling of his position from late last year, when he described an IPO as more likely than a trade sale.

As well as Anchorage, eir’s shareholders include Singapore sovereign wealth fund GIC, at 20.6 per cent, and US fund Davidson Kempner, at 14 per cent.

Calls to Anchorage Capital in New York on Wednesday were not returned, while spokespeople for GIC in Singapore could not be reached after office hours there.

Representatives for Davidson Kempner in New York did not immediately respond to a call from The Irish Times.

Meanwhile, Mr Moat highlighted that the three months to the end of eir’s financial year in June comprised its ninth consecutive quarter of earnings growth, as it builds financial momentum.

Full-year profits rose 4 per cent to €520 million, while revenues were steady at €1.3 billion.

Mr Moat committed to stepping up eir’s fibre-to-the-home rollout of ultra-fast services to rural householders. The company said it would “pass” 300,000 homes by December 2018, which will require stepping up the rollout from 35,000 homes per quarter to 44,000 homes per quarter.

Chief financial officer Huib Costermans said eir’s interest bill savings would reach €40 million annually following the refinancing some of its debt pile last year.

The company also cut its costs by €26 million.

eir said its broadband connections rose by 5 per cent to 896,000, while its base of television subscribers rose by 17,000 to 71,000 customers.

It has 551,000 customers signed up to broadband, a quarter of which it says are on so-called “triple play” services.

The Irish Times
14 September 2017