FF and PDs to rethink Telecom alliance deal

FIANNA Fail and the Progressive Democrats are committed to an "urgent re examination" of the Telecom Eireann strategic alliance deal and to reopening talks with employees on their demand for a 5 per cent stake.

The parties have promised to negotiate a "better deal" with Telecom's partners, KPN and Telia, although sources say the signed pact is legally binding.

Sources have confirmed that if as expected, Fianna Fail and the Progressive Democrats form the new government, they will immediately examine all the files on the pact. They also say the parties are committed to publishing the full details of the deal, "subject only to the genuine requirements of commercial confidentiality."

Fianna Fail was strongly critical of the Telecom alliance deal, under which KPN of the Netherlands and Telia of Sweden bought a 20 per cent stake for an initial payment of £183 million. The two companies got the share in Telecom for a "bargain basement price", according to a statement from the party leaders, Mr Bertie Ahern and Ms Mary Harney, just before the election.

Following the deal announcement last year, the Fianna Fail spokesman, Mr Seamus Brennan, insisted repeatedly that the stake was sold too cheaply by the former minister, Mr Michael Lowry, while Mr Bobby Molloy of the PDs was also strongly critical.

However, the Rainbow Government has said that when an option to buy a further 15 per cent and pay a top up on the original amount is taken into account, KPN and Telia are likely to contribute a total of almost £500 million.

The full details of how the deal would work have never been published. The KPN and Telia payments depend on Telecom reaching profit targets, which have not been revealed.

Mr Ahern and Ms Harney said they would publish full details, although it is not clear to what extent they will be free to do so given confidentiality pacts which may have been agreed.

The two leaders also said they "will seek a better deal for the Irish taxpayer from KPN/Telia". A Telecom spokesman would not comment on this yesterday.

The new government is also likely to try to restart talks with Telecom's unions, which are seeking a 14.9 per cent stake in the company through an employee share holding scheme. Negotiations broke down recently.

Telecom employees are guaranteed a 5 per cent stake as part of a restructuring plan. However, negotiations on the remaining 9.9 per cent sought by the unions have proved difficult. At issue is how the employees are to pay for the additional shares, the form in which they will be held as part of the employee shareholding plan and the resulting say they will have in running the company.