STATE-OWNED enterprise Telecom Éireann was privatised in 1999 in a public flotation that was meant to serve as Ireland's introduction to a shareholding democracy.
Over half a million small and first time investors bought shares in the new company, Eircom. Less than three years later, however, Eircom was taken private and the company de-listed from the stock exchange following a successful bid from a consortium headed by Sir Anthony O'Reilly. Many small shareholders lost a third of their original investment.
Now it seems Eircom may yet undergo a further change of ownership - the fifth in nine years. The difficulties facing the State's largest phone operator have increased in that time as successive owners have failed to make the necessary investment in updating the network. Last week, the latest quarterly report from the Communications Regulator, Comreg, noted "a serious decline in performance" by Eircom in providing new phone lines and fixing faults.
The latest uncertainty over Eircom's ownership stems from financial problems facing its Australian parent, the investment group Babcock Brown. A 91 per cent fall in Babcock's share price this year has led to sweeping management changes, with the company set to sack a quarter of its 1,600 staff. This prompted speculation that Babcock was engaged in "informal" talks to sell Eircom. Last week, a company spokesman denied that report.
But given the major problems the Australian company is facing, it may find it has little choice in the matter. However, selling Eircom in the current financial climate would not prove easy. Global credit constraints have made it harder for potential buyers to secure funding for acquisitions; particularly to acquire a debt-laden company which requires substantial investment in order to maintain its dominant position in the domestic telecoms market. Eircom's limited financial appeal - its mobile phone division, Meteor, is its greatest asset - could be reflected in a disappointing sale price.
For the Government, doubt over Eircom's ownership represents an added worry at a time of serious difficulty for the economy. The slow rollout of broadband has reflected Eircom's excessive dominance of the market, where it has dragged its feet over local loop unbundling. Ireland - which is close to the bottom of the European broadband league table - has much ground to make up in restoring competitiveness in this area. But, given the prospect of uncertainty about Eircom's ownership, that task may well become more challenging.