Boston, MA -- (SBWIRE) -- 06/08/2012 -- The Irish telecommunications market continues to grow within expectations and we have needed to make only minor downward revisions to forecasts for the country's fixed-line, mobile and broadband sectors. Worsening economic conditions, internal and external in nature, are weighing more heavily on consumer and business spending than previously expected and we are less bullish regarding mobile growth over the next two years. At the same time, incumbent eircom seems to have reached another crisis point and could be sold, broken up or nationalised. This makes it difficult to predict how the market will respond.
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eircom's Singapore-based shareholders effectively walked away from the company in December 2011 as it became clear that none of the proposals to clear part of its mounting EUR3.7bn debt pile were going to be accepted by creditors. Although the company has until March 2012 to find a solution, eircom was put up for sale in late-January. It seems unlikely that a private equity group or another telecoms company will step in, given the complex nature of eircom's debts as well as the wider economic headwinds that discourage such risky investments. The fact that eircom owns the vast majority of last-mile infrastructure means its bankruptcy must be avoided at all costs and the only viable solution may be to renationalise the company. Yet, the state is in no condition to take on this additional burden. The way forward is uncertain at best.
eircom continues to lose ground to rivals such as UPC, Imagine, Digiweb, BT and Vodafone in the fixed-line voice and broadband markets, and its shrinking customer base and revenue is not likely to endear it to any white knight investors. Its mobile broadband unit, Meteor, continues to underperform and the likelihood that it will soon have to upgrade to 4G technology is yet another high-value cost consideration any saviours would need to budget for.
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