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AT&T Eyes Eircom As Low-Tax Route Into Europe

AT&T Eyes Eircom As Low-Tax Route Into Europe
By: Sam Quest
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AT&T Inc. (T) is aiming to bid for the privately-held Irish telecom company Eircom Holdings, according to industry sources.

The Sunday Business Post reported that AT&T might be considering Eircom as a low-tax route into Europe, as the former’s senior management has been spotted at Eircom Ltd.’s Dublin headquarters over the past few weeks.

AT&T is currently awaiting approval from regulators on its DIRECTV (DTV) acquisition, and was expected to enter the European market by acquiring Vodafone Group PLC (VOD), after Verizon (VZ) bought 45% of its indirect interest in wireless business from Vodafone. But earlier this year, AT&T claimed that it did not intend to buy Vodafone anytime soon.

Equity in net income of AT&T affiliates – which include America Movil SAB de CV (ADR) (AMX), YP Holdings and Telemax – was $715 million in the fiscal year 2013, which represents a 12.3% year-over-year (YoY) decline.

Eircom had been struggling, but improved recently by aggressive cost cutting, debt restructuring, and infrastructure investment. It has two million customers, and group revenues of €972 million for the nine months ended March 31.

Eircom Broadband has been preparing for an IPO worth €3 billion, but the chances of that happening seem grim, as no pre-IPO process is currently underway. According to a report last month, Eircom fears that investors’ response to its IPO might be lukewarm, and that it is considering other options such as delaying the stock offering, or selling parts of the company’s business to foreign funds.

Goldman Sachs and Morgan Stanley will evaluate the strategic financing options for the company. According to rumors, groups like Apax Partners LLP, CVC Capital Partners, and KKR & Co. L.P. (KKR) have already approached the firm and hope to form a consortium.

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