The announcement that Eircom is to re-enter the mobile phone market after it confirmed today that it would pay €420 million for Meteor has been given a guarded welcome by consumer groups.
The company will embark on a rights issue to raise the cash for the deal. It is expected that more than the purchase price will be raised for investment in the new company.
Today's announcement made as the Eircom agm got underway was expected after the other bidders pulled out . The company is expects to finish fundrasing by September and to seal the purchase by the end of the year.
Meteor has 10 per cent of the market but some analysts believe the price represents good value for Eircom as it is effectively buying a customer base at little over €1,000 per subscriber.
However, telecoms entrepreneur Dennis O'Brien and a consortium headed by Smart Telecom withdrew from bidding, believing the price to be too high.
Eircom's purchase of Meteor was given a guarded welcome by Fine Gael who said it remained to be seen if if Irish consumers would feel the benefit.
The Consumers' Association of Ireland said the sale should be good news for consumers.
"Amidst all the talk of shareholders and rights issues, there has been only a nod in the direction of Irish mobile users who have had to deal with the highest mobile costs in Europe," Fine Gael's Communications spokesman Bernard Durkan said.
"While Eircom's arrival in the market may see increased competition, the fact that the State's dominant landline operator is now a mobile player means questions need to be asked," he said.