Eircom names Donovan as new chief executive

EIRCOM has chosen former Vodafone executive Paul Donovan as its new chief executive. He will take up his role on July 1st and replace acting chief executive Cathal Magee.

This will mark a return to Ireland for Mr Donovan, who ran Vodafone’s mobile phone business here for three years from 2001. Mr Donovan left Vodafone on December 31st, 2008, after a decade with the business and his six-month, non-compete clause runs out at the end of June.

Ironically, Eircom could have a new owner by the time Mr Donovan takes charge. The Irish company is currently for sale and Eircom Holdings, the Sydney-listed fund that owns 57 per cent of Eircom, recently indicated that it would return A$135 million to shareholders at the end of June if it has not received a satisfactory bid by then.

Australian financier and former Babcock Brown executive Rob Topfer recently tabled an A$176 million bid for Eircom while Singapore Technologies Telemedia is also believed to have made an approach for the company.

When asked about a possible change in ownership, Mr Donovan told The Irish Times: “That’s very much hypothetical. I can’t comment because I don’t know. It’s a matter for the shareholder. I’ve been brought in to run the business. My brief is to run the business efficiently on behalf of the shareholders.”

Mr Donovan will face many challenges with Eircom. In addition to the ownership issue, it has debts of close to €4 billion and a pension deficit of about €450 million. It is also seeking to trim down its workforce and needs to spend billions upgrading its fixed-line network. All of this is happening against a backdrop of declining revenues and customer numbers both in its fixed and mobile (Meteor) businesses.

Mr Donovan is believed to have been approached about the Eircom job about three months ago. Mr Magee, who has been with Eircom since 1995, was also interviewed for the post and was said to be disappointed at missing out on the top job.

Mr Magee will remain as acting chief executive until the end of June, but it is not clear what role he will fill after that date.

“That’s not an issue I plan to address until I arrive in the business,” Mr Donovan said. “I think Cathal has done a very good job . . . we have to figure out the best way to continue to work together.”

Mr Magee recently negotiated a restructuring deal with trade unions, which will see 1,200 jobs go over the next two years and pay cuts of up to 10 per cent for staff. He became acting chief executive at the end of February when Rex Comb stepped down as head of Eircom.

Mr Donovan, who is married with two children, said he was looking forward to returning to Ireland. “I really enjoyed living in Ireland. I led Vodafone Ireland very successfully for three years.”

Mr Donovan’s time with Vodafone Ireland coincided with its acquisition of Eircell, the mobile phone company purchased by the multinational from Eircom in 2001. Most recently he was Vodafone chief executive for Central Europe, Middle East and Asia Pacific.

Why did he leave Vodafone? “I had a job that involved travelling 150 to 160 days a year, mainly outside Europe, and I didn’t want to do that anymore. Having turned 50, I felt it was time for a new challenge.”

Mr Donovan has more than 15 years’ experience in the telecoms and IT industries and has held senior roles at BT, One2One and Optus Communications. He also held marketing roles at the Mars Group, Coca Cola and Schweppes Beverages.