Telecom eyes up niche mobile market in UK

A £100 million Telecom Eireann acquisitions fund will be used to purchase foreign telecommunications-sector companies in the UK and other countries, which will then be operated as wholly-owned subsidiaries of the Irish company.

The British mobile market will be an initial target for what Telecom terms "niche market" acquisitions, but other regions, including the United States, are also under consideration.

"Quite clearly, Ireland will continue to be our prime focus, but as competitors attack our market we'll be doing the same in other markets and looking for new revenue streams," said a Telecom spokesman.

Ireland is a "finite market", he said, and with the arrival of competitors, revenues for traditional telephone services have fallen significantly. But the demand for traditional, land-based voice services is predicted to drop steeply in favour of mobile and high-speed data communications. Traditional services accounted for 95 per cent of Telecom's offerings two years ago, but by the year 2000 this is expected to decline to 40 per cent.

Telecom maintains small offices and has operator's licences in both Britain and America. Last month, Telecom began a recruitment drive in the UK, and in the past five weeks the number of employees has risen to 20. The company claims the office will employ 100 by year's end.

While Telecom says it will seek opportunities in the mobile sector, which it sees as one of its key areas of strength, it is unlikely to enter as a competitor in basic mobile services in the already crowded UK arena.

"Obviously, we're not going into the UK to take on BT," said the spokesman. Instead, likely acquisitions would include companies which offer data communications and networking services. Telecom also wishes to service directly its multinational accounts, which either have UK offices or need connectivity in the UK. Until now, Telecom has partnered telecommunications companies in the UK to provide this service.

Telecom's American office, based in Stamford, Connecticut, is primarily focused on seeking and servicing call centre accounts, but it is understood that the office is likely to broaden into other areas. Telecom's new chairman, Mr Bill Thompson, is an American with many years' experience in the American telecommunications sector. Telecom will need broader telecommunications capabilities to compete effectively in the increasingly diverse telecoms market. It is also understood that a beefier data and networking portfolio would increase Telecom's attractiveness as its flotation approaches later this year.