Eircell unions set to consider industrial action over loss of compensation on shares allocation

Eircell's unions will consider industrial action if they are not compensated for the loss of Eircom shares when Vodafone buys…

Eircell's unions will consider industrial action if they are not compensated for the loss of Eircom shares when Vodafone buys the mobile company, it is understood.

The mobile company's 2,200 staff stand to receive five allocations of Eircom shares as part of the employee share option plan (ESOP) agreed before the former State monopoly was floated last year.

But their outstanding stake, worth more than £40 million on current prices, will not be allocated if the company is taken over by Vodafone.

It is understood the trust that manages the ESOP is very concerned that no detailed discussions have been held on this or any other element of Vodafone's proposed acquisition.

READ MORE

Separately, the trust has entered discussions with Esat's founder, Mr Denis O'Brien, who has submitted a £2.2 billion bid for Eircom's fixed-line business.

The trust holds 14.9 per cent of Eircom, the second-largest stake in Eircom.

It believes many crucial issues surrounding the takeover remain to be resolved. There is concern also about the effectiveness of the strategy taken by Eircom's management in the talks.

It is thought that more than £40 million would be required to compensate workers for their outstanding stake.

While the ESOP arrangement was constructed in a tax-efficient manner there is a fear that workers would incur an increased tax liability if it was changed.

The trust has been advised that the liability on the £40 million might reach £25 million, it is understood.

The general secretary of the Communications Workers Union, Mr Con Scanlon, would say only: "We are disappointed with the level of engagement on these issues to date. We are not overly confident of a good result unless there's a major change in the company's approach."

Eircom is expected to conclude an agreement with Vodafone in the next 10 days.

The company is understood to believe the ESOP's concerns can be addressed further in the sale process.

It is understood the company is thought to regard concerns about the future allocation of Eircom shares as "not particularly problematic".

Such details as remain unresolved include the separation of Eircell property from the core company and other legal matters. Agreements on the use of licences and networks also remain to be concluded.

Vodafone has agreed to buy 15 per cent of Japan Telecom, Japan's third largest telecommunications operator as part of a strategy to take majority control of J-Phone, JT's fast-growing mobile phone subsidiary. Vodafone would pay approximately $2.5bn in cash for the holding.