Deputy Brennan protests too much. I have seen a statement by Mr. David Begg, General Secretary of the Communications Workers' Union, regarding the union's proposals for employee shareholding in Telecom Éireann. As the House is aware, the Government last year approved a mandate for the negotiation of an equity-based strategic alliance involving the sale of up to 35 per cent of Telecom Éireann to a suitable strategic partner. The Government also indicated that subject to certain conditions it was willing to consider setting aside up to 5 per cent of the share capital for an employee shareholding scheme.
The impetus for this mandate is that Ireland needs a first class telecommunications sector to underpin further economic development and job creation. It is the Government's objective to achieve a telecommunications sector for Ireland which is in the top quartile of OECD indicators of price competitiveness, quality and availability as soon as possible. Telecom Éireann, as the major player in the market, has a key role to play in the Government's strategy to achieve this objective. Telecom Éireann must complete its transformation from a domestic monopoly into an integrated customer-focused operator, offering the full range of advanced services in a competitive, global marketplace.
This morning I chaired a meeting of the customer service group in Telecom Éireann headquarters in St. Stephen's Green, at which details of the customer charter and all the internal responses necessary to ensure the charter is a reality were delivered by Telecom Éireann. The formation of an equity-based strategic alliance with a suitable Telecom operator is a key facilitator in the implementation of this strategy.
This transformation crucially involves Telecom Éireann staff, who have a key role to play in the future development of the company. It was in recognition of this role the Government decided in principle to contemplate an employee stake of up to 5 per cent, in the equity of the company. The strategic alliance process, which is based on the terms of the mandate, is now at an advanced stage involving detailed discussions with potential partners. The Minister, Deputy Lowry, hopes to be in a position to put proposals to Government on a strategic alliance before August. It is expected such proposals will include the principles which will underpin employee shareholding in the company. It is envisaged the details of such a scheme will be developed after the alliance is put in place.
The potential partners accept the concept of employee shareholding set out in the mandate. It is reasonable to expect the strategic partner will wish to play its part in co-operation with the company's staff in the development and implementation of an employee shareholding scheme. It will wish to explore and clarify the contribution that an employee shareholding scheme can make to the future development of the company.
The union's statement follows many contacts the Department has had with Mr. Begg in connection with the alliance process in the past few months. It was made clear to Mr. Begg at these meetings that the Government decision of July 1995 on the mandate for strategic alliance negotiations stood and that it was not possible to depart from it.
During most of these meetings, the general secretary's approach was of an exploratory nature. Specific details were not set out in respect of many of the more important elements of any employee shareholding plan. It was only last Friday week that share purchase proposals of a general and outline nature were first put to the Minister, Deputy Lowry, in writing. He has been giving careful consideration to Mr. Begg's ideas and has consulted Government colleagues. Mr. Begg was informed that important issues raised by this correspondence required detailed analysis and the Minister would revert to him as soon as that was done.
The Minister, Deputy Lowry has had many contacts with the general secretary of the CWU in connection with the alliance process. Mr. Begg has had open access to the Department's senior officials at all times since the launch of the alliance process. Furthermore, the Telecom unions have had extensive access to the alliance process since December 1995. There have been 16 meetings of a strategic consultative group in the company consisting of management and union representatives which have been fully briefed on all key aspects of the alliance process.
The ideas put forward by staff representatives will receive careful consideration. The Minister will seek to have a better understanding of what the employees have in mind, particularly in areas such as funding, shareholding rights and governance mechanisms. In a context in which company operations will require extensive restructuring through discussion with staff and unions, proposals in regard to employee shareholding must be carefully considered by all shareholders, including a strategic partner. For that reason, such detailed discussions should take place once the strategic partner is in place.
Telecom Éireann faces a rapidly changing environment, involving not only major technological developments and a more demanding customer but also the onset of full competition in the telecommunications sector. Already Telecom Éireann is subject to competition in some areas but when full competition arrives it will have to be in a position to effectively compete in the domestic and international sectors by offering cost-efficient services that meet the needs of the market. This will require completion of the transformation of its cost and debt structures, the further development of its range of services and the implementation of change in its business processes. There is only a short period of time for these changes to take place, given that full competition will be permitted by January 2000. It is in the best interests of Telecom Éireann staff, as well as the company, its shareholders and its customers, that these changes are made successfully. This can only be achieved in a spirit of co-operation, recognising that all parties have the same goal. The Minister is confident that the Telecom Éireann unions and staff will work positively with the Government, the company and the strategic partner to make the necessary preparations for the competitive marketplace. In this context the Minister is satisfied the best way to address employee concerns on shareholding is through discussion and by agreement with all shareholders.
The Dáil adjourned at 5 p.m. until 2.30 p.m. on Tuesday, 18 June 1996.
