Vodafone buys Irish mobile phone giant

Vodafone: Expanding east and west

Vodafone, the world's largest mobile phone firm, has continued its Christmas shopping spree by snapping up Ireland's leading mobile operator.

Vodafone is acquiring the market leader in Ireland... in an attractive mobile market with a high proportion of young people

Julian Horn-Smith, chief executive, Vodafone Europe

Vodafone, which on Wednesday completed the purchase of 15% of Japan Telecom, on Thursday announced it had bought Eircell in a 4.5bn euro (£2.78bn) deal.

The deal will add 1.2 million customers to Vodafone's worldwide subscriber figures, which had reached 65.8 million by the end of September.

Eircell claims a 60% share of Ireland's mobile phone market.

'Attractive market'

Julian Horn-Smith, chief executive of Vodafone Europe, said: "Vodafone is acquiring the market leader in Ireland... in an attractive mobile market with a high proportion of young people and a fast growing population."

Julian Horn-Smith: Boosting Vodafone in Europe

The purchase complements Vodafone's presence in Northern Ireland, and strengthens the firm's grip on the European market, Mr Horn-Smith said.

Eircom, the former state-owned Irish telecoms firm which owns Eircell, said the purchase would allow the mobile firm business to survive in an ever-more competitive sector.

"The combination of Eircell with Vodafone's global footprint will enhance Eircell's ability to meet its longer-term strategic challenges," Alfie Kane, Eircom chief executive, said.

The sale will allow Eircom to focus on the home market and its remaining e-commerce, multimedia and fixed line operations, the firm said.

Buying spree

The deal comes at the end of a year of acquisition for Vodafone.

Besides purchasing a stake in Japan Telecom, Japan's third largest mobile operator, Vodafone has increased its holding in Spanish operator Airtel, and in March completed its purchase of German rival Mannesman in a £112bn deal.

The 4.5bn euro offer for Eircell, which must still be agreed by Eircom shareholders, is below many analysts' estimates for the value of the business.

But the news failed to prevent a further slide in Vodafone's share price, which closed 11.25p lower at 234p in London on Thursday.

The shares have fallen 15% since a month high on 12 December, wiping more than £15bn off the firm's market capitalisation.

In Dublin, shares in Eircom fell more than 5% to 2.70 euros.

Bidder snubbed

In a separate statement on Thursday, Eircom rebuffed a bid for its fixed line operations by e-Island.

The board has informed e-Island that its proposal undervalues the fixed line businesses

Eircom statement

"The board has informed e-Island that its proposal undervalues the fixed line businesses," an Eircom statement said.

Eircom, which was formed in 1984, earned revenue of 1.95bn euros (£1.21bn) in the year to April.

The company was floated last year on the Dublin, New York and London stockmarkets.