Esat Telecom Group incurred net losses of £11.05 million in the first three months of 1998, up from losses of £8.14 million in the comparable period in 1997. The latest results follow losses of £40.1 million in 1997.

Losses are forecast to continue for the foreseeable future as the group continues to develop its telecommunications infrastructure, expand its customer base and until it receives "an appropriate interconnect rate", according to Esat. The chief financial officer, Mr Neil Parkinson, said he expects an adjustment in the rate before the end of the year.

The group - made up of Esat Telecom, Esat Net (formerly EUnet Ireland), the internet service provider, and 45 per cent of Esat Digifone, the GSM mobile phone operator - increased gross billing by 69 per cent to £5.9 million. The number of customers increased from 2,391 to 3,776. Billable minutes grew from 18.2 million to 41.2 million. This is attributed to the addition of new customers and the introduction of in bound leased line traffic. This, however, was partially offset by a 26 per cent decline in gross billings per billable minute to 14.2p. This was due to lower rates in response to price reductions by Telecom Eireann and a higher percentage of lower priced and lower margin ILD (inland long distance) traffic. Construction of Esat Telecom's national fibre optic network, using CIE's network continues. The laying of the cable between Wexford and Britain's Land's End has started and when complete, Esat Telecom said it will be able to offer international leased line circuits to other carriers and to end users. Local fibre optic rings in Cork and Waterford are expected to become operational before the end of the year. Commenting on the results, the chairman and chief executive, Mr Denis O'Brien, said the group is continuing to implement its strategy as a competitive local exchange carrier in the Irish market. In March, it launched Integrator, its portfolio of integrated services. EUnet Ireland, acquired last November, was re-branded as Esat Net. Esat Home, the pre-paid residential phone service launched in December, is said to have been well received. The group, whose shares are quoted on the US Nasdaq, had £74.9 million cash or near cash in its balance sheet at the end of March 1998. It estimates its capital requirements for operations and its share of Esat Digifone capital calls in 1998 will be some £78 million. The company said it has adequate financing facilities to fund its estimated capital requirements for 1998.

Esat Digifone requires around £187 million to construct and fund its cellular operations which will be funded by capital contributions and bank borrowings. It has agreed a project financing facility with AIB/ABN Amro for £112 million, so it will require about £75 million from its shareholders. Esat Telecom had paid £30.5 million of its share of £33.75 million by the end of last March. Separate figures for Esat Digifone show a drop in the net loss from £9.56 million to £5.29 million in the first quarter of 1998. Revenue rose from £230,000 to £21.8 million. The number of subscribers increased from 105,000 in December 1997 to 130,000 in March 1998.