Eir is Ireland's largest telecoms company. Since its flotation in 1999 as Eircom, it has had no fewer than seven controlling shareholders and Eir may now be about to acquire an eighth, if the likely bid of US hedge fund Anchorage Capital proves successful. Few major Irish companies have had a more chequered history than the former State-owned phone group. It was sold for €6.3 billion in Ireland's largest privatisation, nearly double its estimated value last June.
For the public – strongly encouraged by ministers to buy shares in what was then a profitable, debt-free company – Eircom proved a disastrous investment for most of its 500,000 small shareholders. After five changes of control, the company had debts of €4.1 billion by 2012. It was forced to file for examinership, the largest in Irish corporate history, to secure protection from creditors. This gave it time to restructure debts and recover.
If small investors lost heavily on their Eircom investment, private equity groups and others did far better. One, Sir Anthony O'Reilly's Valentia consortium which included legendary investor George Soros, exited the company in 2004 with a large profit. Members of the Eircom employee share ownership trust have been well rewarded for their investment, helped by large company payments and by uniquely generous tax benefits.
Eircom made many mistakes: selling its profitable mobile business to Vodafone was one; failing to make adequate capital investment in its fixed line business to meet growing demand for broadband was another. As a privatised company, its preoccupation with enhancing shareholder value was reflected in its priorities: a greater concern for short-term profit than for longer term investment in the company's future. That was bad for the company, reflected in the many ownership changes, and bad for the economy. It deprived the State of the infrastructure – via adequate national broadband provision – needed to support an increasingly knowledge based economy.
The Eircom experience suggests the development of key infrastructure may be safer in State hands.