Vol. 466 No. 1
18 Mr. S. Brennan asked the Minister for Transport, Energy and Communications the change in plans, if any, he intends to make regarding the sale of 35 per cent of the shares in Telecom Éireann in view of his remarks in an interview that the two bids do not match the Government's evaluation of that company. [10914/96]
226 Mr. B. O'Keeffe asked the Minister for Transport, Energy and Communications his views on the strategy being adopted by British Telecom in re-entering the Telecom Éireann competition with a much reduced price offer. [10762/96]
I propose to take Questions Nos. 18 and 226 together.
The Government's position on the sale of up to 35 per cent of the equity of Telecom Éireann is a strategic alliance with one of the two parties in the process remains unchanged. It is open to bidders to specify the percentage they wish to purchase and the price and other terms they wish to offer in their final bids. My Department and the process advisers are continually in contact with, and available to, bidders to assist them in structuring proposals that best suit the interests of bidders, shareholders and the company.
It is the case that initial bids did not match the Government's expectations. It would be a surprise if they did. They did, however, form a basis for further discussion in the second phase to improve and strengthen the bids.
In the second phase there have been extensive discussions with both bidders and a thorough disclosure and due diligence process is being gone through to enable bidders to prepare their final offers. It is normal for bidders to seek changes in the Government's position and secure an advantage. Based on experience in other similar processes, changes up to the last minute can be expected in the composition of consortia and content of their proposals. My position must remain flexible within the overall terms of the Government mandate. It is open to both bidders to fine tune their offers in terms of consortium membership, strategic content, terms of sale and contractual elements to best position themselves to succeed.
On the question of any company re-entering the process, reports to this effect are entirely speculative. Any bidder who withdrew from the process prior to the submission of first round bids can re-enter the process, but only as a member of a consortium led by one or other of the two second round bidders. The possibility of submitting separate proposals does not arise.
Has the Minister asked his advisers on this project, Morgan Stanley, to assist one of the bidders to bring British Telecom back into the deal?
Absolutely not.
Will the Minister confirm and reassure the House that the figure mentioned in the media, £300 million, as being the maximum price offered by the two consortia is not acceptable to him on behalf of the nation? He said in a Sunday interview that the two bids "do not match our evaluation of the value of the company". May I take it, therefore, he will not sell it at the give-away knockdown price of £300 million?
What I stated was — I did not specify any amount, the figure mentioned by the Deputy is his own — that the initial bids did not match the evaluation of the value placed on the company by my Department and the Government. We did not expect them to. They were preliminary bids. We have entered into detailed negotiations and discussions. I am satisfied that when we reach a conclusion we will be in a position to put to Government a strong proposition in respect of the successful bidder.
We have argued long and hard over this issue and, probably, disagree fundamentally on it, but I am seriously concerned about what is happening. The Minister is planning to sell one-third of Telecom Eireann either to Teledanmark, the Danish telecommunications company, or a consortium of Swedish and Dutch investors. We have lost eight bidders and are now down to two. I gather that both bids are around £300 million although, by any independent assessment, the company is worth about £600 million. Is this still the right course of action? Will the Minister call it off at this stage? I have not had time to check this out, but it is my information that these companies are owned by financial institutions. The Minister, therefore, is planning to sell one-third of Telecom Éireann to a Dutch and Swedish bank for a knockdown price. We should debate this matter because what is going on behind closed doors is quite scandalous.
Regretfully, we cannot debate it now.
How can the Deputy say we are prepared to sell the company at a knockdown price when we have not reached conclusions? The negotiations we have entered in a positive and constructive manner are ongoing. I am pleased we have two strong bidders anxious to align themselves with Telecom Éireann. This is not, simply, about an equity injection, it is also about placing Telecom Éireann in a position where it will have access to a broad range of modern telecommunications services. It needs access to the best technology available to sustain it into the future and, above all, ensure that we will have a competitive national telecommunications network. The best way to do this is by forming a strategic alliance. I am satisfied we are on target to achieve this objective and look forward to bringing a decision to Government before the summer recess.
I appeal to the Minister who is about to make a decision on this issue before it is too late. We have had many rows across the floor, but this is a serious and major mistake. The Minister said this is not, simply, about money, but about technology. I do not believe Denmark, Sweden or Holland can offer Telecom Éireann any technology which it does not already have. This is not about bringing technology or access to international markets because Telecom has all that. The Minister says it is not about money. It seems we have discovered this is the wrong direction, yet we are sticking with it.
Ten people started the bidding but it is now down to two. It looks like this company will end up one third owned, indirectly, by financial institutions; one in Holland and one in Sweden. I am amazed the left wing parties in Government agreed to sell part of Telecom Éireann to foreign banks, effectively.
Has the Minister considered that there is about £200 million of Irish pension funds in foreign telecommunications? Irish workers have that amount of money in foreign telecommunications companies outside this State. Has the Minister considered allowing them to put some of this pension fund money through the Stock Exchange, for example, in one third of Telecom Éireann? Why is the notice "No Irish need apply" put up when it comes to shares in Telecom Éireann?
Hear, hear.
I do not know where the Deputy read the sign "No Irish need apply".
It is on the Minister's door.
No sell out by the Labour Party.
Let us hear the Minister's reply without interruption from either side.
The Minister is selling out to the banks. What the left wing says goes.
We agreed with the Deputy's party on it.
Deputy Brennan forgets that it was his former leader, the then Taoiseach, Deputy Reynolds, who proceeded to engage himself in consultations and discussions with Cable and Wireless.
They were exploratory talks.
He wanted to do a deal behind everybody's back without opening it up to the process.
That is what the Minister is doing.
The decision in principle for a strategic alliance was taken by the Deputy's party.
The strategic alliance is dead.
Through the inaction, incompetence and the ineffectiveness of my predecessor, many opportunities to form an alliance with some very strong international companies were lost.
The Minister is scraping the barrel now.
We still have two companies with very strong bids. They have a high reputation on the international telecommunications scene. We are looking for an alliance process designed to deliver real changes, which is what we want, in key areas such as international connection.
Through Denmark?
We need to connect in to the global network that these companies can offer, including operational support systems, human resources and the cultural change that is necessary for Telecom Éireann to involve itself in.
The Danes are coming again to change our culture.
They are heading for North Tipperary.
This will only come by forming an alliance with a company with the strength of KP Antilia or Teledanmark and other members of the consortia that they are putting together at the present time.
Telecom Éireann is better than both of them.
The Deputy should have discussions with the management and unions at Telecom Éireann. The Deputy is totally out of step with its requirements.
I am not. I predicted in this House that the Minister would lose millions of pounds and he did.
Please. Deputy Brennan. We cannot have this matter discussed across the floor.
Both management and unions recognise that this is the only way forward.
This is a financial scandal. No Irish need apply.
We have almost exhausted our time for Priority Questions.
