‘Peep show’ French­man be­hind sur­prise Eir move

The Irish Times - - Business Today - Joe Bren­nan

France’s rich­est tech­nol­ogy bil­lion­aire knew sex would sell on the in­ter­net even be­fore the World Wide Web was in­vented. Xavier Niel learned the art of com­puter pro­gram­ming as a teenager in the 1980s af­ter his fa­ther gave him a Sin­clair ZX81 – a ma­chine with enough mem­ory to store a short email to­day.

Us­ing Mini­tel, France’s fore­run­ner of the in­ter­net, the bud­ding en­tre­pre­neur set up adult web chats, known as “Mini­tel rose’ while still at school, be­fore in­vest­ing in peep shows and the like.

In 1993, Niel founded WorldNet, France’s first in­ter­net ser­vices provider, three years be­fore in­cum­bent France Tele­com got in on the ac­tion. He went on to sell it in 2000, on the eve of the burst­ing of the dot­com bub­ble, for the equiv­a­lent of ¤58 mil­lion.

First triple-play pack­age

Two years later, he launched Free, the world’s first triple-play pack­age of phone, in­ter­net and tele­vi­sion for a cut-throat ¤29.99 a month.

He rat­tled the French mar­ket in 2002 with the un­veil­ing of Free Mo­bile, of­fer­ing un­lim­ited calls and data for ¤19.99 and woo­ing cus­tomers by goad­ing those on pack­ages cost­ing as much as ¤65 at ri­vals that they were lit­tle more than “suck­ers” or “milk cows”.

It worked. Free Mo­bile has al­most 13.2 mil­lion cus­tomers and its Paris-listed par­ent com­pany Iliad’s value has surged by 80 per cent in the past five years to ¤13.2 bil­lion. Niel holds a 52 per cent stake.

Now Niel has de­signs on Eir, Ire­land’s dom­i­nant telco al­most two decades af­ter it was pri­va­tised by the State.

This week, we re­ported that Niel was in talks with a group of New York hedge funds and a Sin­ga­porean sov­er­eign wealth fund that took con­trol of Eir in re­cent years. This could lead to the Parisian tak­ing a ma­jor­ity stake in the Ir­ish com­pany.

Could this spell a new era of com­pe­ti­tion in Ire­land’s phone mar­ket?

Eir has been around the block. The group racked up ¤4.1 bil­lion of debt amid five own­er­ship changes be­fore it was forced into the State’s largest-ever ex­am­in­er­ship fil­ing in 2012 – re­sult­ing in ¤1.8 bil­lion of its bor­row­ings be­ing writ­ten off and a band of its most se­nior lenders, led by US in­vest­ment gi­ant Black­stone, seiz­ing con­trol of the busi­ness.

Var­i­ous own­ers had used the com­pany as an ATM, strip­ping hun­dreds of mil­lions of euro as they loaded it with bor­row­ings and scrimped on in­vest­ment.

An­chor­age bought out Black­stone in 2015 and has been sup­port­ive of Eir as it in­vested heav­ily in fi­bre in re­cent years. It had lit­tle op­tion; it was the only way to reboot rev­enues that had been flag­ging for al­most a decade.

Could Niel pro­vide funds to cut Eir’s re­main­ing ¤2.3 bil­lion debt and help line up fi­nances for a pos­si­ble con­tract un­der the Na­tional Broadband Plan – rather than fund a par­tial exit for the com­pany’s cur­rent share­hold­ers? That would be quite a de­par­ture for Eir.

Aside from tele­coms, Niel co-owns French daily Le Monde, hav­ing par­tic­i­pated in a res­cue of the news­pa­per in 2010, much to the frus­tra­tion of the coun­try’s then pres­i­dent, Ni­co­las Sarkozy, who was given to de­scrib­ing Niel as “peep show man”. He also con­trols the rights to karaoke clas­sic “My Way” (im­mor­talised in English by Frank Si­na­tra, but orig­i­nally com­posed in French).

The 50-year old’s colour­ful past in­cludes an ar­rest in 2004 for al­leged in­volve­ment in a pros­ti­tu­tion racket linked to his part own­er­ship of a French adult shop chain. Charges were ul­ti­mately dropped but he re­ceived a ¤250,000 fine and a sus­pended two-year sen­tence for em­bez­zling funds.

“I’ve done a lot of stupid things in my life,” he has said.

Here’s hop­ing he won’t have to write off his Eir ex­pe­ri­ence as one of them.

Moy Park

Poul­try gi­ant Moy Park, one of the North’s big­gest pri­vate sec­tor em­ploy­ers, has found it­self pro­cessed and repack­aged by its Brazil­ian par­ent this week just like one of its breaded chicken nuggets.

Em­bat­tled Brazil-based par­ent JBS put the busi­ness on the mar­ket in June to ap­pease cred­i­tors and rat­ings firms af­ter the value of its bonds tum­bled.

Brothers Wes­ley and Joes­ley Batista, who con­trol the Sao Paulo firm, had con­fessed to brib­ing gov­ern­ment of­fi­cials. JBS had only bought the firm from Brazil­ian ri­val Marfig two years ago for $1.5 bil­lion (¤1.25 bil­lion).

It emerged this week that JBS had found a buyer – US chicken com­pany Pil­grims Pride, in which the Brazil­ian group has an al­most 78.5 per cent stake, for $1 bil­lion. It’s es­sen­tially a trans­fer of funds from the US to Brazil, where JBS has agreed to pay its banks 80 per cent of the pro­ceeds of any as­set sales.

Moy Park’s cred­it­wor­thi­ness thus re­mains tied to the junk-sta­tus rat­ing as­signed by agen­cies such as Stan­dard & Poor’s to JBS, where de­vel­op­ments took a turn for the worse this week as CEO Wes­ley Batista was ar­rested by Brazil­ian po­lice prob­ing in­sider-trad­ing al­le­ga­tions.

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The 50-year old’s colour­ful past in­cludes an ar­rest in 2004 for al­leged in­volve­ment in a pros­ti­tu­tion racket

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