The bandwagon for the biggest privatisation in the history of the State began to roll yesterday as Telecom Eireann launched the marketing campaign for its flotation in mid-June. In all, at least 20 per cent and possibly up to 35 per cent of the company - with a total estimated market valuation of about £5.5 billion - will be sold off, the largest share offer by the Government to date.
The shares will be traded on the Dublin, London and New York stock exchanges. In the coming weeks, information about the share issue will be issued to some 2.8 million citizens and the public will be offered about £1 billion worth of shares. But this is less impressive than it appears. In truth, the opportunity for ordinary members of the public to acquire a significant parcel of shares is very limited.
With the flotation expected to be hugely oversubscribed, the average member of the public - whose taxes supported Telecom in the bad old days while being forced to live with very high prices from a communications monopoly - can expect no more than about £500£1,000 in shares. By contrast, Telecom's 11,000 employees will gain 14.99 per cent of the company's valuable stock, by any standards an extremely generous offer. No fair-minded citizen would begrudge the workers their due, but the manner in which the customer has been treated is, to put it at its mildest, disappointing.
Telecom itself appears to be in very good shape for flotation. The company has been dramatically turned around in the past decade and has adjusted remarkably well to a more competitive environment. It is also the case that Telecom has weathered the storm over the departure of its former chairman, the experienced American communications executive, Mr Brian Thompson, who resigned because of a potential conflict of interest. There is little evidence to date that the embarrassing nature of his departure, or his replacement by Mr Ray MacSharry, has dampened demand from potential investors.
The Telecom flotation should provide a windfall of at least £1.5 billion for the State, further strengthening the already buoyant Government coffers. There has already been some debate on how the proceeds should be spent but with some £47 billion of investment required to bring our infrastructure up to modern EU standards, the case for spending it on transport or other infrastructure is clear-cut.
The success or otherwise of the Telecom flotation will have a significant bearing on the Government's approach to a range of other projects. At present, the possible sale of several State assets including Aer Rianta, Aer Lingus and Coillte is under consideration, while the Minister for Finance, Mr McCreevy, recently signalled his intention of floating a merged TSB/ACC bank on the stock market.
In all of this, the Government has an opportunity to learn from the unhappy British experience of privatisation where senior executives gained excessive cash windfalls from the disposal of public assets. To her credit, the Minister for Public Enterprise, Ms O'Rourke, has said that no such special arrangements will be made for senior executives and board members at Telecom. That is as it should be. Telecom is a State asset and no small group should gain excessively from the flotation at the expense of the taxpayer.