The future of 180 jobs at WorldCom's Irish operations and the firm's ability to provide telecoms and data services to 6,000 customers here are in doubt, following its disclosure of a $3.8 billion (€3.85 billion) accounting scandal yesterday.
The US firm, which is struggling under a $30 billion debt mountain, faces a host of regulatory and criminal investigations over the disclosure and most analysts expect it will have to file for Chapter 11 bankruptcy protection.
But even before the accounting disclosure yesterday, WorldCom was in trouble, and one senior executive said this week some 10 per cent of staff here would lose their jobs to cut costs. Most analysts believe the firm will now either be sold or slip into liquidation, in a similar manner to its European competitor, KPNQwest.
Customers of the failed Dutch firm KPNQwest in the Republic began moving to competitors Eircom and Esat soon after the firm's demise last month. And industry figures said yesterday it was almost certain a similar migration would begin among WorldCom's customer base here.
"WorldCom was a very big seller of data services in the Republic and had maybe 5 per cent market share," said Mr Enda Hardiman, director of consultancy Hardiman Communications. "If it goes into liquidation, it opens the possibility for Eircom and Esat to pick up customers," he said.
WorldCom is the third-biggest data and voice service provider to Irish business customers and it serves about 34 of the top 100 Irish companies. It has carved out a specific niche among US multinational firms that locate here and counts software giant Microsoft among its corporate clients.
The fallout from yesterday's disclosure will probably hit competition in the Irish marketplace. Several firms, such as Spirit Telecom, have exited the market recently, and many large infrastructure companies, such as Global Crossing, are having problems trying to sell their assets.
A pull-out by WorldCom would be a significant blow to the sector here and would come at a time when several other significant telecoms companies are teetering on the brink of bankruptcy.
Energis, a 50 per cent shareholder in the Irish telecoms firm Nevadatele.com - which targets the business sector - recently said it would sell or close its European businesses amid a cash crisis at the firm. And the British firm is currently the subject of takeover speculation and may be taken over by its banks, recent reports have said.
Esat Group, the Republic's second-biggest telecoms provider, made 200 staff redundant this year and doubts linger about its commitment to the residential and small- business market.
Figures supplied by the telecoms regulator's office show total job numbers in the Irish telecoms industry fell 2 per cent over the past four months to 16,300. Further reductions are likely as industry confidence is shaken by the revelations at WorldCom.
The company entered the Irish market in January 1996 when it took a 30 per cent stake in a small start-up firm, TCL, which was founded by telecoms entrepreneur Mr Sean Melly. In October 1997 WorldCom bought out the remaining stake in TCL to take control of the company.
