Amid all the hype and hoopla over British Telecom's takeover of Esat, the hard fact remains that when all the sums are done this is a horrendously expensive deal for BT and one that can only be justified if the British company is able to make Denis O'Brien's plans to boost Esat's market share come true.
Most of the coverage has centred on the £1.9 billion (€2.4 billion) that BT is going to hand over to Esat shareholders. Lucky Esat shareholders! But for BT, to that £1.9 billion windfall payment has to be added the £300 million Esat debt it has had to take on board, the £900 million-odd it will have to pay Telenor if the Norwegians decide to exit Esat Digifone as well as the £170 million-plus payment as compensation to the ESB and AIG for exiting Ocean.
God knows how much the serried ranks of investment bankers, corporate financiers, stockbrokers, lawyers and public relations spinners are going to receive for their efforts over the past couple of weeks. But given that BT is going to have to stump for both its own costs and Esat's costs, as well as the cost of advisers for the Telenor and Ocean negotiations, then it is likely that the advisers - the ones who always win - will trouser well in excess of £50 million and possibly double that for their efforts.
The grand total if Telenor does decide to get out of Digifone is more than £3.3 billion. That sort of money will have to be justified by success in the telecoms marketplace.
While we on this side of the pond may have gone on and on about Denis O'Brien's triumph, the fact is that the Esat deal has barely registered in London with t4he market not getting over-enthusiastic about it. BT might have the image here of a goahead telecoms giant, but many analysts take the view that BT is really a slumbering giant, shown up on the corporate front by upstarts like Vodafone Airtouch.
As for the Irish market, even investors like Standard Life which benefited from the Esat deal, have mixed feelings about the impact of the deal for the market in general.
"Stocks such as Esat will be missed by the Irish market as it materially reduces the choice available in a small concentrated market like Ireland. This is at a time when the market is already struggling somewhat under the weight of a lack of domestic and international interest. So while, in the short-term, M&A [mergers and acquisitions] can provide good returns in selected stocks, longer term such developments in a small market can be damaging," Standard Life's Mr Pat Woods commented this week.
