There has been some serious action in the big fishtank of European telecommunications over the last few weeks, with the prospect of a lot more entertainment in the near future. One minute they were all swimming around happily, minding their own business, then Mannesmann gobbled Orange whole, Vodafone tried to eat most of Mannesmann, France Telecom had a chomp at Orange, and Deutsche Telekom and British Telecom hid behind the plastic plants at the bottom.
In the past, Irish observers could have enjoyed this fine spectacle, knowing that it would have little effect on business here. No more. Local heroes Eircom and Esat do not swim in some private aquarium of their own; they cannot avoid forever the attention of the bigger fish, and they may not even want to.
What every company in the sector needs now is scale. There are three ways to achieve this: Acquire, be acquired, or form a strategic alliance.
Strategic alliances once served a purpose, permitting incumbents to devise cross-frontier strategies, but they are now out of fashion. Nowadays, things move so fast in the telecoms sector that companies need speed of movement: difficult when every major decision requires the imprimatur of different sets of executives answering to different boards in different countries.
Deutsche Telekom had an alliance until earlier this year with France Telecom, but ditched it hastily when it saw the chance to buy Telecom Italia. In the end, Olivetti grabbed Telecom Italia; France Telecom responded by buying a stake in E-Plus, the German mobile operator that competes with Deutsche Telekom. In weeks, the former partners have become bitter rivals.
In theory, Eircom still has an alliance with two companies, the former Dutch state provider KPN, and Sweden's Telia. Between them, these hold the rights to 35 per cent of Eircom. But Telia is merging with Norway's Telenor, and the European Union has spotted that this would leave the merged Scandinavian company with a significant stake in Eircom and almost half of Esat Digifone, through Telenor.
The EU has told Telia to sell its interest in one or the other, and the company is almost sure to choose to keep its mobile operation here.
If the world of telecommunications were neat and tidy, Telia would simply sell its stake to KPN, and the Dutch company would just carry on as before. But the Dutch company is restricted under Eircom's flotation rules from buying the full Telia stake, or more than 29.9 per cent of the company, until 2001. There is, however, nothing to prevent Telia - soon to be a rival to Eircom's Eircell mobile phone operation - from selling to someone else.
But whom?
Clearly, anyone interested in buying Telia's 14 per cent of Eircom would want a strategic interest in the Republic's telephone market, and might not stop at a minority holding.
Perhaps Mannesmann, the German company that now owns Orange and is fighting off Vodafone. If Orange were to run Eircell, it could offer a seamless service across Ireland and Britain.
Or France Telecom, who might acquire Orange from a triumphant Vodafone as schemed last week, merge Eircell with Orange, and run Eircom's international business data services as part of its own.
Or Vodafone, or Olivetti, or even MCI Worldcom, for any number of reasons.
But the one analysts are quietly talking about, the one that looks the neatest fit, is British Telecom.
BT cannot be entirely happy with the performance of Ocean, its joint venture with the ESB. It has so far fallen short of its aim of becoming the second player in the Republic's market, and the greatest impact the company has had has been through the no-fee Internet provider Oceanfree, a loss leader. To make matters worse, Ocean earlier this year failed to obtain a wireless licence from the regulator.
Right now, Eircom could represent a juicy morsel for BT. The share price is low, so even paying shareholders a premium would not hurt too much. And for this, BT would be able to offer seamless residential, business and mobile services throughout Ireland and Britain.
Done swiftly, such a deal would have the added attraction of demonstrating to larger rivals that BT was not being left behind in the current scramble for scale, but was consolidating its geographical patch.
And in the month that saw Irish Life & Permanent chief executive Mr David Went move closer to Ulster Bank, the company he left, there would be a certain piquancy in the sight of Eircom chief executive Mr Alfie Kane in negotiations with his old firm, BT.
Of course, there would be regulatory problems. BT would clearly have to jettison its interests in Ocean, and its new dominance in cross-channel cable capacity could also come under the spotlight. But most analysts see these obstacles as far from insurmountable.
Meanwhile, Esat is also attracting acquisitive glances. Here is a firm with its own fibre optic network, well placed to capitalise on the burgeoning small and medium sized enterprise (SME) market, and half of a booming mobile provider.
One scenario already doing the rounds has the new Telenor/Telia buying Esat, keeping Digifone, and selling the fibre optic network to NTL.
Then there is MCI Worldcom; the US giant may covet Esat's corporate customer base. Or France Telecom, which already owns 25 per cent of NTL, and, if it does get Orange from Vodafone, could use both parts of Esat.
Then there is still the question of the Republic's third mobile licence. While the official line of both Meteor and Orange is that they will wait for the regulator's Supreme Court case in January, they could attempt to circumvent the event by proposing a joint bid.
Of course, no sooner would they have the licence than the speculation would start about further consolidation, and which larger players might take out what stake in the new company.
With all these interesting fish flurrying around the tank, it is easy, of course, to assume that Europe will be the centre of attention for some time. But the latest data from the Observatoire Mondial des Systemes de Communication (OMSYC) gives a more accurate insight into the future of the sector.
It reports that China Telecom has already become the world's biggest mobile phone network, with more than 23.5 million subscribers. China has a population of 1,200 million, so the company has some scope for expansion.
Sean Mac Carthaigh is on smaccarthaigh@irish-times.ie
