Private equity leveraged buyouts in European telecoms: The case of Eircom

Dónal Palcic and Eoin Reeves

Telecommunications Policy, 2013, vol. 37, issue 6, 573-582

Abstract: Highly leveraged buyouts (LBOs) of former state owned telecoms operators by private equity groups have occurred in a number of countries in recent years. This paper examines the case of Eircom in Ireland which has experienced five changes in ownership since full privatisation in 1999, two of which were LBOs. Enormous increases in Eircom’s debt levels as a result of the LBOs resulted in the company’s bankruptcy in 2012. This paper argues that this outcome was largely attributable to the short-termist strategies adopted by the private equity groups that assumed ownership of the enterprise. These strategies included high leverage, cash extraction and underinvestment in the fixed-line network which contributed to the demise of the enterprise and had wider economic and social effects. The Eircom case demonstrates the risks attendant to ownership of important network infrastructure by private equity groups and the need for regulatory safeguards to protect the public interest.

Keywords: Private equity; Leveraged buyouts; Privatisation; Broadband investment; Eircom; Ireland (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0308596113000037
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Private Equity Leveraged Buyouts in European Telecoms: The Case of Eircom (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:telpol:v:37:y:2013:i:6:p:573-582

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/30471/bibliographic
http://www.elsevier. ... /30471/bibliographic

DOI: 10.1016/j.telpol.2013.01.001

Access Statistics for this article

Telecommunications Policy is currently edited by Erik Bohlin

More articles in Telecommunications Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().