Eircom is to spin off its Internet businesses and float them on the stock market in a move that should generate considerable funds for future development. Market analysts are putting a value of at least 600 million (£470 million) and possibly up to 1.2 billion on the combined Internet service provider (ISP) businesses, Eircom Net and Indigo.
How a flotation will be engineered has yet to be decided, but the group has taken a policy decision to de-merge some or all of its the multimedia operations, according to chief executive Mr Alfie Kane. The flotation is expected to take place in the second half of the year. The move is aimed at raising funds for the group, creating "currency" in the form of shares for ongoing acquisitions and mergers to develop the multi media operations and to increase the visibility of its multimedia brand, he said. Eircom is following a successful strategy already undertaken by other European telecoms companies.
No decision has yet been taken on whether to float the whole multimedia division or just the ISP operations. No target amount to be raised from the flotation has been set.
"We will look to our advisers on how we can best achieve our aims. There are still a number of issues to be decided," said Mr Kane.
With just over 200,000 dial-up customers the Eircom ISP companies, Eircom Net and Indigo could be merged to make an attractive market offering. Eircom is likely to sell off a significant minority stake in the operation initially. Internet operations are valued mainly according to their numbers of subscribers, with the higher values ascribed to companies with more of the higher margin business subscribers than the residential or domestic subscribers.
While Internet company valuations are volatile, the £115 million (146 million) take-over last year of IOL/PostGem by Esat gives some indication of the possible values. But strong increases in Internet shares since then could indicate a price of 3,000 to 6,000 per subscriber, according to ABN Amro analyst Ms Jemma Houlihan.
