Plan for Irish investors to make 20% of consortium

The  Norwegian company Telenor became involved in discussions with Mr Denis O'Brien in late April 1995, the tribunal has been told in a statement by Mr John Callaghan, a director of Mr O'Brien's company Communicorp.

Mr John Coughlan SC, for the tribunal, said Mr Callaghan has told the tribunal he joined the board of Esat Telecom in December 1994. Esat Telecom, which was owned by Communicorp, was interested in bidding for the second mobile phone licence.

Mr Callaghan said that in April 1995, he travelled to Paris to discuss France Telecom becoming involved in the Esat bid. Mr O'Brien had already had discussions with Deutsche Telecom and Southwestern Bell.

Mr O'Brien was frustrated with Southwestern Bell, and decided to try France Telecom. During the Paris meeting it was proposed that Irish institutional investors would take up 20 per cent in any consortium. A call was put through to Mr Kyran McLaughlin, of Davy Stockbrokers, who said such a placement could be achieved in the correct circumstances.

Mr Callaghan said Mr O'Brien engaged PA Consulting, who had experience and knowledge of other licence competitions. It advised that France Telecom had not got a good track record in mobile telecommunications and suggested a Nordic company. Telenor was named.

Mr Callaghan believes that was in late April 1995. Soon afterwards, some Telenor representatives came to Dublin to meet Mr O'Brien. A broad understanding was arrived at within days, and the 20 per cent placement with Irish institutions formed part of the plan.

On May 4th, 1995, Mr O'Brien sent a memo to a number of Communicorp directors saying Mr Per Simonsen of Telenor was going to present the proposal to his board, and that in the meantime Telenor was to send some people to Dublin to help prepare the Esat bid.

A handwritten memo from Mr Callaghan from the summer of 1995 recorded that Mr O'Brien was "strapped for cash" at the time and raised £3.2 million bridging finance from Advent International for his company Communicorp.

Mr Coughlan said the first record the tribunal had of the European Commission intervening in the GSM licensing process was a letter from the Competition Commissioner, Mr Karel Van Miert, to Mr Lowry in May 1995.

The letter raised the question as to the fee which would be charged to the winner of the licence competition, and whether the same fee would be charged to the incumbent mobile phone operator, Eircell.

Mr Coughlan read out a number of memos from the Department of Finance and the Department of Transport, Energy and Communications covering the debate over whether the highest fee possible should be sought, or whether the emphasis should be on opening up the market to competition which would bring lower call charges to the consumer. The commission felt that a high fee charged to the winner of the licence would be passed on to consumers in tariffs.