Seamus Brennan
Question:20 Mr. S. Brennan asked the Minister for Transport, Energy and Communications the current situation in the proposed sell off by the Government of 35 per cent of Telecom Éireann. [5022/96]
Ceisteanna—Questions. Oral Answers. - Telecom Éireann Sell Off.
The strategic alliance approach had been formulated and adopted by my predecessor. It was then and still is the right approach. When I took over the process just over a year ago I quickly realised that I had inherited a sorry state of affairs as far as implementation was concerned. I saw no evidence of concern about this nationally vital transaction. In short, there was no effective progress on a deal at a time when similar transactions were commonplace elsewhere. From the time that Cable & Wireless submitted its proposal in February 1994 nothing of any substance had happened until I took office and made this one of my top priorities.
What matters to this Government is jobs, the competitiveness of Irish industry and the critical influence of telecommunications development in the 21st century.
The Government is pursuing the strategic alliance process rather than a flotation approach because financial considerations or the size of the cheque has never been the overriding consideration. Against this backdrop "the flotation for cash" philosophy does not address the crucial long-term strategic issues. The strategic alliance concept seeks to enhance Telecom Éireann's strengths in addition to addressing those areas of relative weakness in the company. Much of the work required to allow the alliance to proceed has been done.
British Telecom's withdrawal from the process is related to the company's traditional antipathy towards participation in equity-based strategic alliance processes with national operators. That company has chosen to withdraw or not participate in other processes, most notably and recently in the case of Belgacom. I am satisfied, given the players remaining in the process, that a satisfactory agreement from the Government's perspective is necessary and achievable.
Telecom Éireann continues to be significantly out of line with most of the EU in terms of both debt burden and poor productivity.
While derogation can give some breathing space to Telecom Éireann, in reality competition has effectively started already. The withdrawal of British Telecom from the alliance process foreshadows the emergence of that company as a serious potential competitive threat in the marketplace which reinforces rather than reduces the need for a strategic alliance.
The House can be reassured that the timetable I have laid down to complete the strategic alliance process will be adhered to. Preliminary bids will be received from interested parties on 15 March. I will advise the Government of the line up for phase 2 of the process before Easter. This second phase is a negotiating process. It will commence in mid-April and conclude by end July, at which point I will recommend the choice of a partner to Government.
Is it true that a report from Monitor Consultants some time ago stated that British Telecom were unsuitable partners and that those remaining in the list are also unsuitable?
When I took over this process no action had been taken on finding a strategic partner or putting in place the necessary legislative policy or regulatory changes. There was no mandate and no legislation. There were no regulatory principles, no advisers and no structure in place to manage this process. In short, there was no effective process.
Since then a number of steps have been taken to get the process moving and everything is on schedule. In just over a year I have put in place the key enablers. The negotiation mandate was agreed, advisers were appointed and a management structure put in place to bring the process to a conclusion. Vital decisions have been taken and agreed at Government level on the future regulatory structure, which will mean there will be independent regulation of the telecommunications sector in the summer of this year.
On a point of order, the Minister is simply repeating his earlier statement. I asked a straight question.
I am not repeating——
The Chair has no control over the Minister's replies.
Only the Labour Party has control over the Minister's replies.
I am putting the background to the Deputy's question in context. Much work has taken place and it is ongoing. We still have a competitive situation and I look forward to bringing the process to a conclusion in mid-summer.
I understand all that. Does the report from Monitor Consultants, which the Minister had on his desk as soon as he took office, state that British Telecom would not be a suitable partner? The answer is a simple "yes" or "no".
Details of any reports I have are confidential. No prospective partner has been ruled out or ruled in. The background and detail of the process is clear, precise and available to all the interested parties. I have not been told by anybody in the telecommunications sector at any stage that any partner would be unsuitable. A number of key players are interested in becoming a strategic alliance partner with Telecom Éireann. The process is well under way and I look forward to bringing it to a successful conclusion.
A final question. Let us not forget the time factor for dealing with Priority Questions. I cannot dwell unduly on any single question.
The Minister has been in office for over one year. There were ten starters in this race. Seven have left and we are down to three. British Telecom, AT&T, Cable and Wireless, US West, Ameritech, GTE and Singapore are gone and only three groups are left. Will the Minister accept that this process — because of the Minister's total inactivity in this area as he appears to have gone to ground in recent months — has, in effect, collapsed? Will the Minister do the decent thing and call the process off? To spend £4 million on consultants to pick one player from the remaining three is a farce. The Minister knows that only one of the three is a serious player and it now has the Minister and the Government where it wants them. Will the Minister call off this farce rather than let it proceed in the silly manner he plans?
The Deputy's comments are farcical and silly. The Deputy is obviously not aware of the fact that it was his Government's policy to form the strategic alliance. The Deputy's party's inaction and ineffectiveness in Government meant that opportunities were missed. This process should have been concluded three or four years ago. Every day Fianna Fáil wasted in Government by delaying the strengthening of Telecom Éireann with an alliance partner——
Will the Minister stop sniping and give a straight answer?
——has meant that other options and opportunities were made available on the international scene to prospective strategic alliance partners.
Will the Minister answer the question?
This process is in the best interests of Telecom Éireann, its employees, the national economy and the telecommunications sector in general.
So the Minister will not cancel it?
The process is under way and will be concluded successfully.