Eircom looks set to return to the stock markets in Dublin and London within a matter of weeks following confirmation yesterday that it will proceed with its mooted flotation.
The shape of the 13-member board that will oversee the company has started to emerge. There will be six non-executive directors and a non executive chairman which complies with current corporate governance standards. Executives of the company and representatives of the Eircom ESOP trust, which owns just under 30 per cent of the firm, make up the balance.
Four of the non-executives are drawn from the ranks of the Republic's business establishment and their appointment should reassure those concerned about the short-term thinking that appears to have dominated Eircom's actions in recent years.
Although it is no longer a state company, Eircom cannot escape its public service obligations. They are spelt out in its licence and are implicit in its role as the principal provider of telephony services in the Republic. While the directors' responsibility is - as it should be - to the company's shareholder, Eircom cannot be blind to the long-term strategic needs of the State.
Details of the flotation will emerge next week when the company publishes its prospectus. It is already clear that the banks and individuals who bought Eircom in November 2001 stand to make a substantial profit.
Three shareholders - who own around 70 per cent of the company - plan to exit via the flotation. Their combined stake could fetch up to €800 million, representing a very handsome return on the €460 million or so they invested a little over two years ago. Their profits are in addition to a €280 million share of the dividend paid by the company last year on foot of its refinancing.
The size of the profits made by those departing will inevitably reopen the wounds inflicted on shareholders during the company's previous ride on the stock market roller coaster between mid-1999 and late 2001. The collapse in Eircom's value, as sentiment towards the telecommunications sector reversed, left more than 400,000 small stockholders nursing significant losses by the time the company was bought out by Valentia. Unpalatable as this may be, there is little to be gained by dwelling unduly on it. It was a sharp and rather painful lesson about the realities of the stock market.
It should not detract from the fact that the coming flotation of Eircom is to be welcomed on a number of fronts. It will add a new name to the shrinking roll-call of companies quoted on the Irish stock exchange. More importantly the pension funds and insurance companies that will be its new owners will take a longer-term view, and hopefully one that is more closely aligned with the telecommunication needs of the State. But ultimately they too will look for a return on their investment.
The arbiters of this conflict will be the board of the company and specifically the non-executive directors. Eircom's customers should watch with interest.