Eircell lost £82.5 million and more than 36,400 customers to Esat Digifone between 1996 and 1999 after a deal with a phone retailing agent went sour, the High Court heard yesterday. The deal, between Eircell and Commercial Communications Sales Ltd, trading as Cellular World, began in 1993. However, after a major investment was made by Eircell in Cellular World in 1996, fears were expressed that the latter company was not meeting targets for phone connections to the Eircell network.
Eircell claims that, shortly after Cellular World was taken over by Esat Digifone (Eircell's main rival in the mobile phones market) in August 1998, staff were told in a memo to charge customers £30 more for an Eircell connection than a Digifone one.
Eircell yesterday applied for an order to discharge a decision of the Master of the High Court directing Eircell to pay £245,266 to Cellular World. Cellular World had claimed the money was due under an agreement with Eircell.
During yesterday's hearing, Mr Justice O'Neill was told that under a number of agreements Cellular World, of Stillorgan Industrial Park, Dublin, had acted as an agent for Eircell in retailing mobile phones.
By March 30th last year the company estimated it was owed £493,747 by Eircell. However, it acknowledged in turn that it owed Eircell £239,005, leaving a balance owing by Eircell of £254,742. Eircell then discharged a sum of £9,475, leaving a sum of £245,266 due.
Under the alleged agreement between the companies, it was said that Cellular World had promised Eircell it would deliver 15,000 connections in the first year, with 17,000 and 18,0000 connections to follow in the second and third years. After three years it was to repay Eircell £12 for each connection to the Eircell network.
However, according to an affidavit from Mr Diarmuid Hayes, Eircell's business development manager, Cellular World soon fell behind in the level of targeted connections.
In October 1998, two months after its takeover by Esat, Cellular World staff were instructed to charge £30 more for an Eircell connection than a Digifone one.
As a consequence of Cellular World's activities, Eircell was at a loss of approximately 36,441 customers over the three-year period, Mr Hayes said.
Mr Justice O'Neill will deliver his judgment on the issue today.