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CASH PAYMENTS TO investors in Eircom shares have started arriving, but the stock’s poor performance since it was originally floated mean that punters are still shipping a loss.
Personal finance expert John Lowe of moneydoctor.ie said that the losses were so serious Revenue Commissioners had decided in January not to tax the income from the shares.
“(Investors) lost money and hence the revenue aren’t after them for capital gains tax…at one stage you were down to 33 per cent of the investment. It has gone back up, but it’s not brought it back to the level where they’re up on the deal.”
The cash payment was prompted by a decision from Vodafone-who became the ultimate owner of the Eircom shares-to sell out some of its US interests to cellular giant Verizon.
How did this happen?
Lowe said unfamiliarity with the stock market had led many rookie investors to make poor decisions.
People bought these shares as a gamble and even though they could have cashed out and made a profit, most chose to stay in thinking the share price would inexorably rise…the greed factor kicked in and they are left hoping they will rebound. Today that rebound has happened but it still has not made it a profitable exercise
The cash payments landing on investors’ doormats represented a total of 20 per cent of their holding, with the remaining 80 per cent now converted into Verizon shares.
“They can keep these (Verizon shares) or they can cash them out without stockbroking costs as per the original prospectus.”
A total pot of €64m will be shared among the original investors, fifteen years after Eircom originally went private, prompting mass investment by ordinary Irish people with no experience of shares.
Low said that this kind of once-off amateur investment in a single stock is a risky business:
“Individualising stock selection can be a mug’s game. Diversification, balanced portfolios, spreading your risk are all part of the strategy.”
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Once a great public company that employed 16,000 people and was in the black for €4 billion.
Once privatised sold its mobile phone license for no apparent reason and later re-entered the market with Meteor at a disadvantaged position. Since privatization cut 10,000 jobs and somehow ended up €4 billion in the red, a Debt which the taxpayer is now paying for.
Some people got rich from stripping down this company’s assets and be sure those that did were very friendly with Fianna Fail. Its absolutely scandalous.
And it’s exactly the way Irish water will go!
The reason it made money was it had a complete monopoly, was bloated and full of about 10k useless people. I bet only for the influx of competition we’d be paying through the nose for their snail’s pace ‘broadband’. How many people do O2, Vodafone etc employ?
There is a picture of the day of the Eircom floating in todays Indo;
“Charlie McCreevy, Bertie Ahern, Mary O’Rourke, Ray MacSharry”
In hindsight it is no wonder that so many Irish people got ripped off.
Well done Mary O’Rourke. Well done…
I haven’t heard Mammy Mary crowing of late. Keeping her head down. What’s the deal with her and all the RTE airtime?
If you can’t find anyone else with the brass neck to defend finna fail, Mary is always a phone call away.
She is the RTE equivalent of Seany Ryan on the Journal.
You can bet Mary O’Rourke and her chums did not have to take a punt in the shares for their old age. They feed off the the ordinary worker with their tax free lump sums and massive public pensions. And if they left a teaching job they have a pension for that too. They know how to look after themselves.
I thought losses on such investments could be written off one’s taxable income; if so it explains why Revenue are not taxing the dividend. Over the years people could claim back and create a lot of work for Revenue. Revenue just don’t give things away.
Great comparison,but poor Seanie is not a cute wh¥¥e
A joke of a company !
6 and a half weeks to get a phone line in ! A further 2 week on and still no broadband.
Easily 20 odd phone calls, and easily 8-10 hrs on hold. Cut off at least 6 times, and I suspect intentionally. No desire to help/talk to their customers. I will be pulling my business at the first opportunity, and have done so already at home.
Stripped bare over the years, and watertight employment contracts have destroyed what was a crap service at the best of times.
“Water tight employment contracts”, as crap and all as they may be, where did you get that gem from? The old P&T/Telecom Eireann contracts were being phased out when I worked there in 2001..
Phased out but not gone. I’ve “contacts” both on the ground and office based, and both environs riddled with unmotivated staff and no repercussions. Indeed both left, because the couldn’t take the ssslllooowww pace.
And please, this is not a public v private thing. My aim is squarely at Eircom.
@ Kevin if you run a business as you say, that’s a school boy error right there signing with Eircom why cheap out for such an essential service
I know a few people working in the phone line section, they receive nearly 70-90 calls per day and only get 12 euro per hour for it so i can see the reason why they could be unmotivated
@JR
An error for sure
This takes me back!! Remember the government telling us they were a dead cert!!
LOL – the same govt that were talking up the property market, telling us to get on the ladder quick, before we’d be priced out of the market? The same govt who were selling the success story of the Celtic Tiger to anyone who’d listen?
I bought the shares. Probably lost some money on them over the years. But its not a greed factor as the article suggests. It was a great company at the time and the future looked bright. The management of the company by the likes of Dick Spring and Alfie O’Kane was pretty clueless imo. They were running the company but had no plan B… in fact I now doubt they had a plan A either. Money written off years ago now so its a nice fillip to get some cash back now.
What percentage of your investment did you get back?
Why is it the “greed factor” when small investors try to make some money? I heard Kenny interviewing Wilbur Ross this morning about his profit on the BoI deal – didn’t hear him asking how much money is enough for the wealthy elite!
I remember some blurb at the time to hold onto them for a year and then you get more shares. A lot of people held on to them for this reason if they didn’t need the cash. The price bombed in the interim.
The whole country was sold this as a win win. I only ever lost lost.
Eircom was a great company to invest in however mismanagement and also profiteering by it’s many owners since privatisation left the company crippled with debt.
Ireland has gone from having one of the best telecom infrastructures in the worst to one of the worst through under investment.
I was in secondary school at the time Eircom floated and even I knew that it was a good idea to sell the shares shortly after it floated as they weren’t likely to go up in value,
So as a secondary school 3rd year student who was doing business study’s I seemed to have more cop on then so many other people that held on to these dead duck shares, ‘
Even these investors didn’t understand that value of shares can go up as well as down (like they did) then they had no place buying shares in the first place.
Your great
” It’s still with the engineers “
Investors lost money, so Revenue were nice not to tax the income from the shares…. That’s nice of them!.
I might just become a rookie investor and lose all my money maybe revenue will go easy on me with Taxes.
Unless you are a bank, forget it.
Income from the shares (dividends) are liable for income tax if anyone bothers to declare it! This is a sale of the shares and if there was a gain would be liable for capital gains tax. As there is no gain there is no liability.
Anyone that has Eircom and lives in Dublin
What are you playing at, shame on you
What about all the shareholders who lost almost 100% of their investment owing to the bank collapse? Where is their break?
They are getting the exact same deal. They are paying 0% tax on their bank share profits.
€0 x 0% = 0
There is also the huge question mark over Computershare’s dealings on this share transfer transaction for Irish shareholders. Many people have reported that they sent their letter of intent to Computershare UK (there was no Ireland postal facility) and Computershare have said to a lot of people that the letters were not received on time. Some people reported sending the letters over 1 month prior to the deadline date which was 20th Feb. Computershare are telling shareholders that had this problem to take up their issue with An Post and/or Royal Mail.
How many people used the freepost envelope provided to return the forms. When checking the address that the form said they were to be returned to I noticed the address was the same as the envelope but the postcode was different. I wrote my own envelope with the postcode on the form, sent it in thee days before the deadline and there were no problems. Got a letter yesterday telling me the sale value ( for what it’s worth :( ) would be lodged in my bank account. Although I don’t think this can explain why someone whose forms were posted in January did not meet the deadline.
He said it right at the end. Diversify, diversify, diversify.
Irish equities have never been very trustworthy, have they
Vodafone bought out the then mobile arm of Telecom Eireann which was Eircell
I bought original Eircom shares, but lost them and changed my address. Anyone know where or if I can get new ones?
Same happened to me. You need to contact computershare to begin the process. It takes some time and effort but they will sort it. They are probably holding dividends and will pay you now but they charge for new share certificate and paying arrears. It will be worth it in the end
Please correct me if I am wrong – but as Eircom shares were sold just before the market was opened up for competition, were buyers informed that this was due to happen?
Usually if you are going to invest in a company you would check the market position, Eircom had 100% market share before the competition was introduced, so of course they were stable, but as soon as cheaper calls became available everyone went with the savings, reducing eircoms profit, and their worth.. If people weren’t told that a) other companies would be coming and using eircoms infrastructure for free b) due to eircoms dominant position they would be forced to maintain higher prices than their competitors in an effort to allow other companies get established and generate more choice in the market. Then they were flat out misled by those selling the shares. Not that this would come as a surprise..
Thanks to Mary O Rourke almost all Irish investors lost money in Eircom!
In the UK the government is getting abuse for selling off Royal Msil on the cheap. In Ireland it would seem the government got maximin value for the taxpayer when selling a state asset, selling it for more than it was worth – and they’re still criticised. You can’t win.
Various statements in the article imply that “rookie” once-off share deals are high risk(and they are) and that what did the investors expect (a profit ? )
Reality check, – does no-one remember the hysteria and and totally inappropriate hype that the government of the day created and it was fuelled further by all media coverage,- leading ordinary joe / josephine public to believe that anyone who doesn’t invest their life savings in eircom must be a total idiot.
Im not speaking as a bitter victim, i had no inclination to gamble my savings at the time, .. I did not fall for it.
There is a big difference between gambling and investing. Problem is, most people ( used to) like to think they can believe what they are told by their leaders, so when people like Bertie Ahern, charlie mcreavy, and was that ray burke on the right ? Tell their “followers” that this is a ” once in a lifetime opportunity to make a serious investment in their future financial security ” Then gullible people will fall for it. Times have changed since then though. Now-a-days, ( most if not all) people dont believe a single syllable uttered by our politicians. Not a word, not a grunt, not even a letter ! And correctly so.
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