TELECOM Eireann hopes to be able to invest around £100 million in overseas opportunities within three years, its chief executive, Mr Alfie Kane, said yesterday. However, he warned that major cost reductions, including staff cuts, are still needed to curb the semi state's £700 million debt.
Mr Kane declined to put a figure on the job reductions needed. A programme currently in place aims for total savings of £110 million between 1995 and 1999.
Mr Kane, who was speaking at official introduction of Telecom's strategic alliance with Dutch group KPN and Swedish phone company Telia, said there was a need to reduce cost and an "inescapable need" to reduce staff. "It is difficulty to come up with a specific number," he said.
Mr Kane said the new alliance for which KPN and Telia are paying £183 million for a 20 per cent stake initially would help Telecom to prepare for full international competition in three years. He said Telecom will be looking for investment opportunities outside Ireland, perhaps with one or both its partners.
Telia has already invested in projects in India, South America, South Africa, China, the Philippines and Hong Kong. Mr Kane indicated that Telecom will be looking to similar emerging opportunities.
"The vast majority of the world still has no telephone," said Mr, Kane. "There is no way the big companies can supply everywhere, despite their size," he said.
Mr Ben Verwaayen, chief executive of PTT Telecom (KPN), said Telecom has enormous potential for growth, but sometimes achieving such growth was not easy, but "painful
Mr Verwaayen said chief executives do not create jobs. "Jobs are made in the marketplace," he said. "Making products and services that people want is the best form of job guarantee."
Both Telia, which is owned by the Swedish state, and KPN, which is 4 per cent owned by the Dutch government, have undergone major restructuring in their own companies. They have an option to buy a further 15 per cent of Telecom Eireann for £200 million in three years. Both Mr Verwaayen and Mr Lars Berg, chief executive, Telia, said they intended to take up the 15 per cent option and expect a return on their investment within three, years.
However, all parties declined to be drawn on what profit levels are needed. Under the terms of the deal the alliance partners will have to pay a further sum to the Government, if Telecom grows sufficiently in value.
Asked if the total value of what they will have to pay could reach £500 million, Mr Verwaayen said the figure was not anything like that. It was a figure mentioned by politicians at the time, he said.
Mr Berg said he was confident that the Irish market had very good growth potential, given its very strong economy. He said that in Sweden the mobile phones sector had undergone major expansion. This is an area on which it will be helping Telecom to focus.
In Sweden almost 28 per cent of the population have mobile phones, compared to just 7 per cent in Ireland. "There are great opportunities in both mobile and fixed markets in Ireland," he said.
Telecom is also linked to Unisource through its new partners, each of which has a 25 per cent stake in the group. It is a global alliance which in turn is linked to giant telecommunications company, AT&T, and will help Telecom in its efforts to provide cheaper call charges.
