C&W eyes stake in Irish phone monopoly

CABLE & WIRELESS, the telecommunications group that owns Mercury, runs the risk of provoking a political storm in Ireland over speculation that it is about to take a stake in Telecom Eireann, the Irish state-owned telephone monopoly.

C&W confirmed yesterday that it was discussing a possible strategic alliance or joint venture with the Irish company. A spokewoman said: 'We are talking with TE at the highest level, but these discussions are at a very early stage.'

It is understood that C&W is interested in taking a minority stake in TE - perhaps 25 per cent. The Irish company is estimated to be worth about pounds 1bn.

But a spokesman for the Labour ministers in the Irish coalition government said that they would oppose the sale of any state assets.

He said such sales did not form part of the programme for government agreed between the Labour Party and its Fianna Fail coalition partner.

'We accepted that the part privatisation of Irish Life and Greencore would be completed, but that no other assets were for sale,' he added. The issue had not been discussed in cabinet and the deputy prime minister and Labour leader, Dick Spring, had not heard that talks were taking place.

But he said there was nothing to stop the company talking to other telecoms groups. He expected the issue to be raised at the weekly cabinet meeting tomorrow.

An industry source said that if C&W's talks led to the telecoms giant taking a stake in the Irish company it would not necessarily amount to privatisation.

'The fact is that these strategic link-ups and joint ventures are the way the international telecoms market is going, and Telecom Eireann needs to be part of that direction,' the source added.