Babcock & Brown stock may soar if Eircom splits

Last month Australian investment firm Babcock & Brown said it wants to split up its Irish telecoms operation Eircom, hiving off the retail and network arms into separate entities.

It’s a move that would pave the way for a sale of the retail arm, and one that has caught the eye of other carriers around the world, who perceive it be a useful way of extracting value from existing operations.

In the case of Babcock & Brown, the company wants to be in a position to generate a decent return from Eircom’s assets, having fully acquired the company in 2006. It had paid about €250m for a 12.5% stake in 2005. The following year it tabled a successful bid for the entire company, that valued Eircom at over €2.4bn.

It was still the days of cheap money, and Babcock & Brown borrowed heavily to pay for the deal – 20% of its offer was funded from equity, 80% through debt. At the time, Eircom had debt totalling €1.8bn – not something to take on likely in such a relatively small operation on an international scale.

Those debt levels continued to soar as Babcock & Brown refinanced existing borrowings and took on more. Within weeks of the acquisition, debt levels had risen to over €4bn. That’s a far cry from the position the telco was in prior to 2001, when its debt levels were negligible. When it was acquired by the Valentia consortium that included Independent News & Media’s Tony O’Reilly, debt climbed to €2.5bn – a figure that had fallen marginally to €2.1bn by the time it was sold again.

Chopping Eircom to pieces is how Babcock & Brown now obviously envisages making a return. During the summer it emerged that the company had also put its phone transmission masts up for sale, with a price tag in the region of €150m.

If Babcock & Brown was to sell Eircom’s retail arm, it could fetch as much as €1bn, while the mobile operator Meteor could be worth €800m.

Analysts are beginning to see much merit in the move.

This week Credit Suisse analyst Andrew Butterell substantially raised his 12-month price target for Babcock & Brown by more than 50% above its current trading price, to A$7.59. But he thinks the best could be yet to come.

Butterell says that if Eircom is successfully split, Babcock & Brown shares could be worth A$11.50 – almost two-and-a-half times their A$4.75 closing price on Friday 2 November.

Eircom chief executive Rex Comb thinks the chances of regulator Comreg and the government allowing Babcock & Brown to split the company is “50-50”, but he may be overly conservative in his odds.

The government’s Department of Communications, Energy & Natural Resources has said that Eircom is a private company and “how it organises itself on a corporate basis is primarily a matter for the company itself”. However, there may be regulatory issues that could prevent the proposal going through as smoothly as Babcock & Brown would hope for.

The question now is, who’ll come out of the woodwork to buy the retail units if Babcock & Brown puts them on the block? The fallout from the credit squeeze continues to hammer the markets. Anything that comes with the baggage of a big debt pile may find itself short of suitors. It will all come down to pricing, but Babcock & Brown will be forced to drive a hard bargain if it’s to get the sort of return it will need to please shareholders.

http://www.independent.ie/business/irish/eircom-seeks-approval-to-split-company-in-two-1116112.html

http://www.irelandoffline.org/2002/04/02/ibec-calls-for-eircom-split/

http://home.eircom.net/content/irelandcom/topstories/10865887?view=Eircomnet

http://archives.tcm.ie/businesspost/2006/03/19/story12661.asp

http://business.timesonline.co.uk/tol/business/industry_sectors/telecoms/article717032.ece

http://www.smh.com.au/news/Business/Irish-eyes-smile-on-Babcock-amp-Brown/2006/05/23/1148150250589.html

http://www.asx.com.au/asx/research/chartsSearchResult.jsp?asxCode=BCM&TimeFrame=D6&compare=index&indices=XJO

http://www.babcockbrown.com/

http://www.eircom.ie/cgi-bin/bvsm/bveircom/mainPage.jsp

Telekom still seeking buyer for Melly’s Etel

Back in April, just four months after acquiring Irish telco Etel for €90m, Telekom Austria was already looking to offload the eastern European network.

And it’s still looking for a buyer.

Founded by entrepreneur Sean Melly in 1999 (pictured, left, with O'Brien's Sandwich bar founder Brody Sweeney), Etel has about 250,000 fixed network customers in Austria, while it also has a small customer base in countries such as the Czech Republic, Hungary and Slovakia.

Institutional investors, including Dresdner Kleinwort Capital, Intel, Argus and Greenhill, had stuffed at least €80m into Etel before it was sold, and while they were probably not deliriously happy with their return, Melly and other shareholders did reasonably well from the buyout.

He received in the region of €10m from the acquisition, while businessman and former Central Bank director Bernard Somers realised a similar amount.

But Etel obviously hasn’t lived up to expectations for Telekom Austria. Last April, the head of the Austrian firm’s fixed network unit, Rudolf Fischer, said that the company wanted to sell Etel in order to slow the pace of revenue decline from Telekom Austria’s fixed-line network. It was speculated at the time that Colt Telecom, Verizon and Tele2UTA would be potential suitors for Etel.

Six months later and a sale hasn’t been finalised.

Others now in the frame for Etel include GTS Energis, which already operates in Eastern Europe, Mediatel, and Warsaw-headquartered Supernova Capital.

It’s all only of passing interest, no doubt, to Melly, who has already gone on to other things. After shifting Etel, he made a multi-million euro investment in Dublin-based medical device firm Vasorum. It could just lead to his next big payday.

http://findarticles.com/p/articles/mi_m0UKG/is_2000_April_3/ai_61601332

http://archives.tcm.ie/businesspost/2007/06/03/story24124.asp

http://business.timesonline.co.uk/tol/business/article1292578.ece

http://archives.tcm.ie/businesspost/2004/05/02/story220324404.asp

http://archives.tcm.ie/businesspost/2001/04/08/story41196928.asp

http://www.rte.ie/business/2001/1018/etel.html

http://www.etel.at/

http://www.gtsce.com/aboutgts/index.php

http://www.mediatel.pl/

http://www.forbes.pl/2006/12/20/02.html

Irishman to help clear Merrill mess

No doubt Stan O’Neal is coming to terms with being ousted from Merrill Lynch this week thanks to the whopping $161.5m worth of benefits and stock options he’ll take away with him. Oh, and the personal assistant for three years.

O’Neal (above) is most definitely one of the first major SIV-positive (former) executives – the tag dreamt up by Wall Street wags to describe the most unstable structured investment vehicles that have thrown the credit markets into crisis.

The head of the former General Motors boss was offered on a platter to investors after the company posted a massive $2.24bn quarterly loss – its biggest ever. The firm also booked a $7.9bn charge in the previous quarter following the credit fall-out, ($4.5bn related to sub-prime related products) and some analysts expect it could have to take a further $4bn hit in the next quarter.

Media-shy, O’Neal had encouraged more risk taking from its trading operations as interest rates sank over the past number of years. It expanded into areas such as private equity and structured products and commodity trading. It seemed to be going so well. Last year Merrill Lynch posted earnings of $7.5bn. Then the bottom fell out of the structured finance market.

For some though, there’s a silver lining.

Merrill Lynch’s Ed Moriarty has been appointed to the newly-created role of chief risk officer.

An Irish citizen, it will now fall on Moriarty’s shoulders to assume responsibility for market risk, and “re-evaluating parts of our risk framework,” according to Merrill Lynch. That’s code for “getting the hell out of Dodge”.

“Ed’s promotion reflects the importance of deeper and more comprehensive risk management discipline under a single senior executive,” added Merrill Lynch on the appointment.

For Moriarty, the task must appear monumental. Graciously exiting all its structured investments in an orderly fashion isn’t going to be easy. If Moriarty manages to pull it off, he may even attain a Cicero-type status as the man who helped save Rome, or at least Merrill Lynch. Such accolades will not be easily won though.

A graduate of Clinton, New York-based Hamilton College, Moriarty has been a lifer at Merrill Lynch. Just where his Irish pedigree comes from is unknown, but it could, of course, extend back as far as grandparents.

Moriarty gave New York’s current mayor Michael Bloomberg one of his first big breaks, when the now billionaire turned up at Merrill Lynch’s office touting a new computer system that would offer traders functionality not available elsewhere. A Merrill Lynch executive said the company could do it itself, so Bloomberg offered to put together the system in six months and put Merrill Lynch under no obligation to buy if it wasn’t up to scratch. Moriarty agreed to the deal.

The next year will be a busy one for Moriarty as he tries to clear up the mess at Merrill. One suspects he’ll be in line for a tidy bonus if he does. No doubt more than enough to buy a handsome spread in Ireland from which to plot his retirement.

Meanwhile, those being tipped as candidates to replace O'Neal, include Kelly Martin, chief executive of pharmaceutical firm Elan. He left Merrill Lynch in 2001 to take up the Elan position as the company came close to collapse.

http://www.reuters.com/article/inPlayBriefing/idUSIN20071030154144MER20071030

http://www.kenauletta.com/1997_03_10_thebloombergthreat.html

http://www.freep.com/apps/pbcs.dll/article?AID=/20071031/BUSINESS07/710310398/1002

http://news.independent.co.uk/business/news/article3112837.ece

http://dealbook.blogs.nytimes.com/2007/10/30/merrill-lynchs-32-million-man/

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article2774485.ece

http://www.nytimes.com/2007/10/12/business/12insider.html?ref=business

Bookies ready for the off

The annual rush to renew betting licences is well underway. Among those leading at the first turn is Deirdre Boyd, wife of former Fine Gael TD and Minister for Agriculture, the amiable Ivan Yates.

The Wexford-based couple own Celtic Bookmakers, which became so much a part of Yates’ working life that he decided to quit the hurly burly of politics in 2002 to concentrate on expanding the operation. The dedication has paid off.

At the time he stood down from office, Celtic Bookmakers had less than 20 stores and was predicting turnover that year of €25m.

Founded in 1987, today it operates over 50 outlets and has also put a toe in the UK market. Yates wants to grow turnover to €250m within another two years.

In August he paid over €2.5m to buy eight Ubet shops in Ireland, while last year Yates forked out in the region of €5m to acquire another 10-store operation.

But it’s a tough business out there with lots of competition. Yates obviously believes he has to expand rapidly to stay in the running.

Two months ago British giant Ladbrokes said it would open an additional 80 outlets in Ireland (up to 30 in the Republic and 50 in Northern Ireland) over the next 18 months, bringing its total tally to almost 300.

Yates is also up against Paddy Power, which operates over 200 shops in Ireland and the UK, and Boyle Sports with 115. Last week, the latter reported a 25% increase in sales for the year to the end of June 2007 to more than €624m, with operating profits up 300% to €15.6m.

British bookmaker William Hill also has a decent footprint in the Republic, which all leaves you wondering who the casualties are going to be. Smaller, independent players, certainly.

Interestingly, among those last week seeking to renew licences for William Hill stores in Ireland, is James Henderson, of Gateforth, north Yorkshire, who on the face of it would seem to control just about all the William Hill outlets in the Republic, although the understanding was that all William Hill stores are company-owned.

Curiously, Henderson doesn’t show up as a company director in the United Kingdom, nor does he in appear as director of any Irish entities. If Henderson indeed had so many outlets under his belt, it’s hard to imagine some corporate structure hasn’t been set up to administer them.

http://www.independent.ie/business/irish/ladbrokes-targets-80-new-irish-shops-1055263.html

http://www.rte.ie/business/2007/0809/PRESSWATCH.html?rss

http://news.bbc.co.uk/2/hi/business/4550429.stm

http://celticbookmakers.com

http://www.paddypowerplc.com/

http://www.willhill.com/iibs/EN/sportsbook.asp

http://www.willhill.com/banners/irishshoplocator.html

http://www.boylesports.com/index.asp

Pirate of Prague still on Caribbean High Seas

Czech-born financier Viktor Kozeny has escaped extradition to the United States following a lengthy legal battle in the Bahamas.

Nicknamed the ‘Pirate of Prague’ and ‘Viktor O’Kozeny’, the businessman secured Irish citizenship in 1995 under the controversial and now defunct passports for investment scheme. He invested €1.27m in an Irish software firm.

Kozeny has been in the Bahamas for over two years, and was arrested there on foot of an extradition warrant from the United States. He languished in a tropical prison cell for 19 months before being released on $300,000 bail last May.

Kozeny is accused of stealing $182m from US investors including former Senator George Mitchell, who spearheaded the Northern Ireland peace process, and between 1997 and 1999 of paying millions of dollars of bribes to government officials in Azerbaijan between who were dealing with the privitisation of the country’s state-owned oil company.

He also gave gifts to the Azeri officials, including an 18-carat gold box inlaid with diamonds worth €340,000, claim US prosecutors, who also accuse Kozeny of money laundering.

Kozeny has also been accused by the Czech government of being involved in the embezzlement of property worth as much as €570m. Czech authorities are also seeking his extradition to face charges.

He has denied all the allegations and claimed he is an “innocent man” who has become a “negative hero in order to stop his creative activity”.

Last week a court in the Bahamas said that Kozeny could not be extradited to the US because he is not a Bahamian citizen, while the judge hearing the case also said that it has not been proven that Kozeny bribed any Azeri officials.

US officials are expected to appeal the ruling.

In 2003, after his Czech citizenship had been revoked, Kozeny announced his intention to stand for election in the Czech Republic as an independent candidate. He aimed to use his Irish citizenship to enable him to do so.

While it has been previously reported that his Irish citizenship is to be revoked, the Department of Foreign Affairs has yet not made any definitive moves to do so.

http://www.ceskenoviny.cz/news/index_view.php?id=278327

http://www.jonesbahamas.com/?c=45&a=14585

http://www.timesonline.co.uk/tol/newspapers/sunday_times/ireland/article576519.ece

http://www.belgrafix.com/gtoday/2007news/Oct/Oct20/Too-much-politics.htm

http://www.radio.cz/en/article/48045

http://www.bahamasb2b.com/news/wmview.php?ArtID=3994

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/04/02/ccluke02.xml&lubos_motl=reference_frame

http://www.internationalextraditionblog.com/2005/12/extradition-from-bahamasviktor-kozeny.html

http://www.internationalextraditionblog.com/2005/12/extradition-from-bahamasviktor-kozeny.html

http://en.wikipedia.org/wiki/Viktor_Ko%C5%BEen%C3%BD

http://www.cbw.cz/phprs/2005101007.html

Sunday Business Post Monster Mash

Much to my misfortune, I caught the remaining 15 minutes or so of Resident Evil: Apocalypse on TV3 last Sunday evening.

And as I watched, the scene shifted to a stream of urgent staccato television news reports detailing the rise of the zombies. Through some nifty, but unexplained, spin-doctoring on the behalf of the evil Umbrella Corporation (which created the zombies in the first place), the reports are eventually dismissed as hoaxes.

But all the while, running in the background of this news sequence, is some ‘We Have Something Important to Say’ incidental music. I knew I recognised it, but couldn’t think from where.

And then it hit me: it’s the same music used in the ‘We Have Something Important to Say’ television and radio adverts for The Sunday Business Post, when in fact it may not actually have anything of great import to impart.

The movie dates from 2004, but the SBP adverts have been on the go for much longer – too long, probably – with the same music. So, was the music devised initially for the adverts and pinched by Sony Pictures, or is it an off-the-shelf piece of filler available for purchase to anyone?

And the above is not what SBP editor Cliff Taylor looks like when he’s been scooped, although it might well be applicable to some others around town.

http://www.sbpost.ie

http://en.wikipedia.org/wiki/Resident_Evil:_Apocalypse

http://www.rottentomatoes.com/m/resident_evil_apocalypse/

Low tax, high fliers

Do a quick search for ‘aircraft leasing’ firms in Ireland and you’ll find 153 of them.

Mostly international operations based in Dublin and Shannon, the country’s 12.5% corporate tax rate has acted as an enormous set of landing lights, guiding in leasing companies from almost every continent. So much so, that Ireland is quickly becoming the de facto world centre for the business.

Among the latest to set up shop is Orix Leasing AAX.

Owned by the Japanese financial services group Orix, the newly-registered company is undoubtedly linked to the company’s decision this month to snap up a 10% share in Malaysia-headquartered AirAsiaX, the long-haul, no-frills off-shoot of AirAsia, which in seven years has become the top Asian low-cost carrier.

Orix forked out $35m for its stake in AirAsiaX, with Bahrain’s Perigon Capital paying the same amount, also for 10%. Even Richard Branson’s got in on the AirAsiaX party, paying $7m for a 20% shareholding back in August.

Orix is obviously be going to be playing more than just a passive investor role in the start-up, whose maiden flight, to Australia from Kuala Lumpur, will be made this week. It’s probable that Orix is also going to be supplying aircraft to the new operation as it spreads its wings to the Middle East, and Europe. Even the Dublin Airport Authority has begun courting AirAsiaX, which is being advised by former Ryanair director of operations, Conor McCarthy. He also helped mould AirAsia, while has also provided assistance to Qantas low-fares carrier JetStar (headed by Irishman Alan Joyce), as well as AeroMexico.

At times, it seems as if the Irish are taking over the world of air travel, with former Aer Lingus boss Willie Walsh now heading British Airways, while more recently, in the US, former Ryanair executive Charlie Clifton helped to launch no-frills carrier Skybus. It appears the Irishfication of the leasing business is next on the agenda.

The Irish aircraft leasing business has its roots in the recently deceased Ryanair founder, Tony Ryan. He founded Guinness Peat Aviation (GPA), in 1975. By the early 1990s, just prior to the first Gulf War, it was worth over $4bn. But an intended 1992 floatation proved a disaster when key US fund managers failed to support it. General Electric stepped in the following year to save GPA. Ryan said at the time that the company had been “raped” by GE.

“What do you expect when you walk around with no clothes on?” countered GE boss Jack Welch.

Despite that debacle, the aircraft leasing business in Ireland has boomed.

Last year Limerick-headquartered Genesis Lease floated in the US, raising $641m. It’s currently valued at $795m. The company is registered in Bermuda, and resident in Ireland solely to avail of the low corporate tax rate. Other benefits apply too, such as favourable VAT treatment and stamp duty exemptions.

Others located in Ireland include Babcock & Brown, Macquarie, GECAS, Aercap, Investec’s aircraft leasing arm, and BCI.

In a recent edition of the Seattle Times, one of Boeing’s former leading salesmen, Toby Bright, said that the tax incentives for aircraft leasing firms in Ireland are “pretty overwhelming”, and this is serving as an incentive for much of the business to set up shop in Dublin.

"Walk into a pub in Dublin and you can’t privately talk business,” Bright told the newspaper. “It's full of other leasing guys."

Still, the collegial atmosphere wasn’t enough to lure Bright to the capital. He has been working with San Francisco-based aircraft leasing firm Pegasus, which was acquired earlier this year for $5.2bn by Terra Firma Capital Partners. Terra Firm owns AWAS leasing (which it bought in 2006), based, unsurprisingly, in Dublin, and will combine Pegasus with the former. That means shifting the California operation to Dublin. Bright was invited along for the ride, but declined.

So, just how effective is the Irish tax regime? Look no further than the latest set of accounts filed in Ireland for GE Commercial Aviation Funding.

With assets in Ireland of more than $14bn, in the period from mid-November 2005 to the end of 2006, it recorded income of $443.3m and a pre-tax profit of $415.3m. It paid Irish tax at the reduced 10% corporate rate that by now has reverted to the standard 12.5%. That incurred a tax liability of $41.5m during the period. However, it claimed group relief of almost $41.3m. The final tax bill? A mere $242,000.

No wonder leasing firms are jetting in.

http://archives.tcm.ie/irishexaminer/1998/06/09/bhead.htm

http://www.expertguides.com/default.asp?Page=10&GuideID=162&CountryID=44

http://www.reuters.com/article/innovationNews/idUSN1125118220070511

http://archives.seattletimes.nwsource.com/cgi-bin/texis.cgi/web/vortex/display?slug=sundaybuzz28&date=20071028&query=Toby+Bright

http://www.awas.com/contact/corporate_locations.asp

http://www.genesislease.com/corporate_management.cfm

http://www.gecas.com/

http://www.rte.ie/news/2007/1003/ryant.html

Kaiser chief still banking on Latvia?

Spare a thought, if you can bear it, for billionaire financier Dermot Desmond.

Nicknamed the ‘Kaiser’, Desmond paid an estimated €100m for a 33.1% stake in Latvia’s fourth-largest bank by assets, Rietumu Bank, back in 2005.

Ranked 746 on Forbes’ list of the world’s richest people, Desmond rarely puts a foot wrong and has his fingers in more pies than Dandy comic's Desperate Dan. But one wonders if this time his Latvian investment will play out as intended.

Latvia, Estonia and Lithuania all joined the European Union in 2004, and the good times were set to keep on rolling. Latvia’s GDP growth has powered ahead, early Celtic Tiger style, for the past decade, with a mere blip in 1999. Last year, it was close to 12%.

So at first glance, everything looks tickety-boo. Membership of the European Union will pump money into the Baltic economies, while so many of their citizens have left to find work elsewhere in Europe (14,000 Latvians in Ireland alone, according to the CSO), that the unemployment rate has dropped to 6.5%, compared with 8.6% in 2003, and 8.8% in 2004.

But something’s not quite right.

Latvia’s inflation and current-account deficit are soaring, and its overheating economy is causing concern that a meltdown would trigger a domino effect amongst its closest fledgling European Union members.

By September this year, Latvia’s inflation rate was a horrific11.4%, while banks have continued to open the vaults to borrowers.

The capital, Riga, is in the midst of a property price boom, although recent stamp duty changes have sought to calm it. According to figures from global real estate group Frank Knight, house prices in the city soared 61.2% in the 12 months to June 2007, compared to an average worldwide rise of just 9.6%. Riga’s been hot-to-trot for Irish investors too, keen to splurge on anything anywhere that has foundations.

And no more than elsewhere, there’s a concern that if hard-pressed and stretched borrowers begin to default on their loans, Latvian banks (which are mostly foreign-owned) could suffer big headaches, leaving shareholders, including, Desmond, reaching for the Panadol.

Latvia’s currency, the lat, is pegged to the euro, but there’s a feeling abroad that devaluation may be the way forward.

That currency peg, notes Edward Lucas, writing last week in The Economist, means that Latvia can’t raise interest rates to dampen demand.

It’s not all doom and gloom though. Lucas points out that the Latvian central bank has enough reserves to redeem every lat in circulation, while the country has “little foreign debt and a strong credit rating”.

How uneasy might Desmond be over his Latvian investment now? Perhaps not in the slightest.

Rietumu is headed by Tipperaryman Michael Bourke, who once worked for the Irish central bank, and he has steered a steady path for the Baltic institution, which is primarily aimed private banking facilities and financing for SMEs. All this has a whiff of a nascent Anglo Irish Bank.

Because it's not doling out mortgages to the masses, Rietumu would be partly sheltered from any collapse or stagnation in the local housing market. But any fiscal policy that would aim to tighten lending could have an adverse impact. Just how much though, is conjecture.

Last week Rietumu announced a net profit of €38m for the first nine months of the year, while assets rose to €1.4bn. Total 2006 profit was €41.5m, a rise of 15% on 2005. It’s likely that the full-year 2007 figure will come in ahead of last year, but by very low double-digit growth.

For Desmond, Rietumu is undoubtedly a long-term play. Last year he sold London City Airport for €1.1bn, having bought it a decade earlier for just €35m.

Rietumu is unlikely to post such an eye-popping return in 10-years’ time, but Desmond will most probably have found some real eastern promise, even if in the short-term things look a tad precarious.

http://edwardlucas.blogspot.com/2007/10/latvia-devaluation.html

http://www.rte.ie/business/2005/0829/desmond.html

http://www.rietumu.com/

http://www.iiu.ie/page1.htm

http://www.forbes.com/lists/2006/10/JLN3.html

http://www.knightfrank.com/ResearchReportDirPhase2/11177.pdf

http://en.wikipedia.org/wiki/Economy_of_Latvia

https://www.cia.gov/library/publications/the-world-factbook/geos/lg.html

http://www.thisislondon.co.uk/news/article-9440349-details/The+luck+of+the+Irish/article.do

Yo, ere me now!

Esat founder Denis O’Brien continues his march through the Caribbean, this time rattling the cages of Guyana incumbent CG&T.

O’Brien’s Digicel mobile operator, whose footprint now extends across the Caribbean from its Jamaican base, with over 5.7m subscribers, has claimed it will become Guyana’s leading mobile telecoms provider within six months. O’Brien said that Digicel already has almost a 50% share of the market in the South American country, which is bordered by Venezuela, Suriname (where Digicel also operates) and Brazil, and that it is poised to become the dominant player.

O’Brien has criticised CG&T, which has a monopoly on international calls in the country, saying customers are being “ripped off” by the prices they’re paying.

CG&T’s chief executive Joe Singh has dismissed O’Brien’s comments, saying that the Irish entrepreneur is "blissfully unaware that GT&T has consistently articulated its preparedness to work with [the] government to realise sector liberalisation".

The criticism is unlikely to deflect O’Brien, who in just seven years has swept across the tropics like a hurricane, battering all in front of him and continually harrying Digicel's competitors.

While the awarding of a GSM licence to O’Brien’s Esat Digifone consortium in 1995 by Minister for Transport, Energy & Communications, Michael Lowry, remains a controversial and contentious issue, Digicel has been hard, but rapid graft all the way.

It's an empire created from inauspicious beginnings.

When Irish middle managers first arrived in Kingston, Jamaica, in 2000 to establish the business, they were afraid to go outside their hotel during their free time due to the level of violence in the capital.

Despite its relatively small population of 2.7m, Jamaica is a world murder capital. In 2001 there were over 1,300, mostly gang-related murders. And you thought it was bad in Ireland.

Those Digicel managers had a tough time of it. One was mugged at knifepoint on the island days after arriving, while another group of Irish staff returned to where they were staying to find they had just missed seeing their landlord being shot dead. Miami soon became the destination of choice for Irish lobsters keen to avoid becoming nasty Jamaican statistics. The Irish staff initially found it difficult to deal with their Jamaican counterparts too.

"We’d ask: 'Can you do it?'" remembered one Irish Digicel executive. “They’d say: 'No problem, I can do it.'”

“Then they do something which isn't right or more likely, they just do nothing because they are not sure what to do."

But obviously the lines of communication eventually improved.

While a flotation of Digicel had looked on the cards, O’Brien instead raised money this year by selling $1.4 billion worth of bonds, buying out minority shareholders and in the process netting himself a cool $800m. He now has full control of the group. Others to benefit included former Fianna Fáil press secretary and election spin meister, PJ Mara.

Digicel has also extended its reach into the Pacific, while it has previously eyed the US market and O'Brien has also had tilts at licences in Lebanon and Saudi Arabia. And the rampage isn’t finished yet.

Digicel has just launched in El Salvador, and O’Brien believes there is further markets to be exploited in the Caribbean, such as the Bahamas, and the British Virgin Islands.

O’Brien, meanwhile, has moved his residency status from Portugal to Malta – boring, but tax efficient, no doubt.

Can you ere me now?!

http://www.digicelgroup.com/group/

http://www.stabroeknews.com/index.pl/article_business?id=56531309

http://www.cellular-news.com/story/26892.php

http://archives.tcm.ie/businesspost/2007/02/18/story21110.asp

I found what I was looking for, thanks

As U2 band members Bono and The Edge try to push through a major refurbishment of the Clarence Hotel in Dublin’s Temple Bar, it seems the owner of the Holiday Inn on Pearse Street also has designs on the historic quarter.

John Moran’s recently established Inn@Temple Bar is likely scouting for a location to open up a new premises at a time when the dwindling number of hotel rooms in the capital is causing concern amongst both tourism and business bodies.

Jurys sold its Berkeley Court Hotel and Jurys Ballsbridge sites to developer Sean Dunne for €379m in 2005, and while Dunne has plans to construct a new 220-bedroom hotel on the adjacent sites, it will be some time before that ever comes to fruition, especially since Dublin City councillors are incensed at his ambitious masterplan.

Earlier this year they blocked a draft area plan for Ballsbridge that would have permitted high-rise elements, apparently scuppering Dunne’s blueprints which embrace high-rise construction. Dunne needs a big return on his pricey investment, and top-loading the parcel of land in the prime location is the way to do it.

The proposed €150m Clarence make-over is constroversial, although it’s acknowledged that the quays should be a strong focal point for the city. The plan involves demolishing a number of protected building facades and structures. The co-owners – developer Paddy McKillen (who build the Jervis Centre), Bono and the Edge, have threatened that the hotel could be sold if the plans aren’t approved by the council next month. The hotel was acquired in 1992 and has lost €12m since then.

Fianna Fáil supporter John Moran seems unperturbed by such a track record and could soon end up a close neighbour. Temple Bar no doubt appeals as a location for a new Holiday Inn, its pedigree far removed from the existing Holiday Inn’s unromantic location on Pearse Street.

This week, Holiday Inn brand owner Intercontinental launched what is believed to be the most expensive global corporate rebranding ever, costing $1bn (€700m). Each Holiday Inn hotel franchisee will be expected to spend a minimum of about €143,000 upgrading each premises. Perhaps Moran sees the rebranding as an opportune time to make a move into the capital’s heart.

Just where he’ll get space is the big question.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/10/24/bcninter124.xml

http://www.archiseek.com/content/showthread.php?t=6427

http://www.holidayinndublin.ie/

When they met, it was GPS

If you’re old enough to recall the cheesy Hart to Hart series that aired in the late seventies to mid-eighties, then the name Stefanie Powers should ring a bell.

Powers (as Jennifer Hart, left), fought crime with her “self-made millionaire” husband, Jonathan. As the butler, Max, used to point out, “Mrs H is one lady who knows how to take care of herself.”

And indeed she does. Now firmly out of the Hollywood limelight, Powers has reinvented herself not only as a conservationist, but more interestingly, as a savvy businesswoman. And now she’s popped up on the board of a London-based telematics firm, Astrata, co-founded by Tony Harrison of Northern Ireland.

Astrata has developed a system that can be installed in vehicles such as security vans which can detect, for example, when a pre-determined route has been altered. If the on-board system receives information that the vehicle has been hijacked, it can be remotely slowed to 5mph, or stopped altogether, while windows can be jammed to hinder escape. The electronic box is about half the size of a cigarette pack, so can be easily tucked away in the recesses of a vehicle. The system comes at a time when fear of terrorist-related attacks are rife, and Astrata hopes to capitalise on that. Customers signed up to date include Shell, Group 4 Securicor, and the government of Singapore, which uses it on trucks transporting hazardous materials.

Powers also sits on the board of mutual funds operated by Los Angeles-based Capital Research and Management, having been introduced to the firm’s vice chairman, Jon Lovelace, in 1984. Powers wanted a “simplistic” investment approach, and Lovelace thought that most people were probably thinking along the same lines. Powers even went on to make a seven-part television series sponsored by Merrill Lynch about managing finances.

Tony Harrison worked with electronics and defence firms including Racal Electronics and Thales before establishing Astrata (Racal is now owned by Thales).

Still a minnow, Astrata is quoted on the more loosely regulated OTC board in the US, and has a market capitalisation of just over $16m.

Seems that Powers still has a penchant for those self-made millionaires. Or at least, soon-to-be ones.

http://www.astratagroup.com/

http://www.btinternet.com/~highestpub/99092416.HTM

http://query.nytimes.com/gst/fullpage.html?res=9903E4DE1431F931A25754C0A96E958260&n=Top/News/Business/Companies/Merrill%20Lynch%20&%20Company

You don’t get owt for nowt

Next time you hear any business person dismiss the Republic of Ireland market because it “has a population smaller than Greater Manchester”, tell them to fire their entire marketing department.

The latest example of this was on (yes I’ll admit I was listening), RTE’s Marian Finucane show a couple of weeks ago. Some dimwit, and I can’t recall who, repeated this outdated gem of marketing drivel.

It only takes a moment to confirm that the population of Greater Manchester is 2.5 million – about 60% that of the Republic’s. If marketing departments believe 2.5 million isn’t far off 4.2 million, I’d hate to wonder how some chief executives think their businesses are doing.

http://www.gmep.org.uk/ccm/content/agma/vision-and-themes.en;jsessionid=515AFF608C6241F7CBD6DBDFC686195C

All Blacks - pass the Kleenex

Just as South Africa dispatch England at the rugby world cup, despite some buttock-clenching moments where it seemed “Sweet Chariot” would be all over the 10 o’clock news, spare a thought for the Kiwis.

Favourite to win, despite having not won for 20 years, the New Zealanders were unceremoniously dumped from the competition by France at the Millennium Stadium in Cardiff. So shattered is the team’s collective ego, that they’re now being offered grief counselling - something that should be on the menu for Irish rugby team member and fan alike.

The New Zealand Rugby Union chairman, Jock Hobbs, has revealed that the unusual steps to restore confidence are already in place, adding that it is “imperative” that members of the side are “able to move on mentally”.

Skills coach Gilbert Enok is handing out the tea and sympathy in Auckland, and says that the counseling will be available for “as long as it takes”.

Cher once said that men should be like Kleenex: soft, strong and disposable. Seems the All Blacks have achieved all three.

http://www.nzherald.co.nz/topic/story.cfm?c_id=476&objectid=10471160

Do you want fries with that?

As with running any new business, operating a franchise is never straightforward.

You don’t have to tell that to dozens of O’Briens Irish Sandwich Bar franchisees. A number of years ago they felt, well, disenfranchised, by their parent firm, which was established by the gregarious Brody Sweeney (who ran at the last election as a Fine Gael TD in Dublin North East, but failed to get elected).

About 40 of the franchisees were irate that O’Briens intended to link rents to store turnover – paying more rent, the better their businesses performed. They were also miffed at what they perceived was a lack of brand marketing. So incensed were they, that legal action was threatened. They were ultimately placated, as Sweeney and his crew worked hard to win back their trust.

While a perception that enough money isn’t being directed towards marketing your franchise may be bad, even worse the scenario in Australia.

The Sydney Morning Herald reports that a number of franchisees with different firms are alleging that those companies have sometimes been selling franchises knowing that the businesses will probably fail due to poor locations.

“Each time the franchisee spends up to $450,000 buying what he or she believes is a viable business and ends up paying another agreed amount (usually about $50,000) to the franchisor for marketing fees,” says Kristen Le Mesurier in the SMH.

The franchisor sits back and watches the business fold, alleges Le Mesurier, then reclaims the site for a nominal price and resells it to another franchisee who inevitably fails a year or two down the track. The business failures are blamed on a lack of ability on the franchisee’s part, rather than on a poor location.

The alleged practice has finally perked up the ears of the Australian Competition and Consumer Commission, which is apparently investigating the claims, which are being firmly denied by franchisors.

Among the businesses at whom the finger is being pointed is Howards Storage World, a chain that sells everything from fridges to bookshelves, although there's no proof the company has engaged in anything untoward.

Earlier this year, it emerged that a former business development manager at Bank of Ireland Private Banking, Olive Donovan, had secured the master franchise for Howards Storage in Ireland and that eventually 25 of the stores could open on the island. Donovan reportedly spotted the chain while visiting a relative in Perth.

Steeled, no doubt, with enviable business acumen, Donovan will certainly have cut a sharp deal and will make an assured play to make sure the Howard’s Storage outlets here are in prime locations to serve householders whose homes are bursting at the seams. A few rattled Ozzie franchisees are surely unlikely to deflect her, are they?

http://smallbusiness.smh.com.au/growing/management/major-franchise-brands-accused-900007700.html

Stick out your tongue, Mr Sipowicz

With so many Polish people now living in Ireland (over 63,000 according to the 2006 census), it’s hardly surprising that a number of Polish-orientated businesses have sprung up in Dublin and elsewhere in the country. Indeed, enough critical mass seems to have been reached that it looks like a major healthcare operator from Poland is poised to establish its first foreign franchise here, an experiment which will do doubt offer a prognosis on whether the concept could be expanded to the UK, where there’s an even greater number of Polish ex-pats busy making a living (around 150,000).

Maria Stenka, a 45-year-old Polish dentist working from Dublin’s Dorset Street appears set to spearhead the launch of the first Lux-Med clinic in Ireland, and it’s an interesting play. Of the entire Polish community living in Ireland, almost one-third, or over 19,600 of them, live in Dublin city and county, making the prospects for Polish-speaking doctors and dentists seem rosy. Lux-Med may sound like a package holiday firm, but it’s big business on its home turf (http://www.luxmed.pl/en/page.php?sid=97 ).

The company operates 17 clinics throughout Poland, offering state-of-the-art medical facilities, and undoubtedly the service doesn’t come cheap. Lux-Med even likes to boast how during the summer a 50-strong team of its doctors looked after Rolling Stones concert-goers in Warsaw. No mean feat, and no doubt added to the 50 who were surely looking after the crumbling band members.

Lux-Med was acquired earlier this year by London-headquartered private equity firm Mid Europa Partners, which will certainly want to inject growth hormones into the business before it undoubtedly sells it on in a few years’ time. Part of that growth now looks like it will come from franchises set to cater for a burgeoning ex-patriate population in cities such as Dublin.

http://www.cso.ie/census/census2006results/volume_4/vol_4_2006_complete.pdf