"LIFE is about finding ways forward", says Telecom Eireann chief executive Mr Alfie Kane. He is confident that the strategic alliance agreement with KPN and Telia is a good deal for both sides. "We have found a good partner, a good strategic fit and the deal is cemented with equity," he says.

It means that having made considerable progress in what he calls a "constructive obsession" to lower Telecom's debt burden and restructure its finances, Mr Kane is now turning his mind to expansion and growth.

The way the deal was structured "bridged the gap" for both sides, according to Mr Kane. KPN Telia had a limited amount of cash to spend, while the Government wanted to be able to benefit in a few years time from the enhanced value of a restructured Telecom.

To achieve the aims of both sides a complex financial structure was developed, involving an initial cash payment of £183 million for 20 per cent of Telecom and a possibility of more being paid, if certain financial targets are exceeded. KPN Telia also has an option to buy a further 15 per cent at a price of £200 million.

Mr Kane believes that, given Telecom's growth prospects, there is a "very, very high probability" that this option will be exercised. Again, KPN Telia will pay more if the value of this 15 per cent stake at the time is more than £200 million. Under the deal, 60 per cent of the excess will go to the Government and 40 per cent to KPN Telia.

The Exchequer and the new partner will both gain from the deal if Telecom can continue to improve at its current rate, he says. With the benefits of the alliance, he is confident that "we can do better".

The formula is a "deal maker" - allowing the agreement to be struck - says Mr Kane, and means both partners have a strong vested interest in ensuring that Telecom prospers. It also secures one of Telecom's key goals of getting £220 million to benefit its balance sheet.

Telecom's debt is now falling rapidly, freeing cash to allow the company to turn its attention towards investment and expansion. This year, the company plans to invest £270 million in its existing business, up from £190 million last year. It must also pay higher taxes as its finances improve and reward its shareholders - the Government and KPN Telia - with dividends.

But even after the bills are paid, Mr Kane believes that in about two years time Telecom will have enough cash to invest in expansion into new areas in Ireland and overseas.

Its new partners have a similar philosophy to Telecom, he says, and the company can build on their contacts and experience in jointly seeking out expansion opportunities.

There is no reasons he says, why, in a few years time, Telecom Eireann could not take a stake in, say, the second or third telecommunications operator in another country. With Telecom set to face competition in its own markets from the turn of the century, this would represent "doing to others what they will be doing to us

Telecom could also be part of a consortium winning licences in the next wave of mobile telephony, he says, while there will also be numerous niche opportunities in markets of developing countries.

Telecom's first task with its new partners is to boost the quality and range of services to its Irish customers. Mr Kane is in no doubt that KPN and Telia have the expertise to help make this happen, not only in advanced telecommunications services, but also in areas such as mobile phones and cable TV.

KPN Telia brings with it a link to a global network through its membership of the Unisource consortium of European operators which is, in turn, linked to AT&T. It also has expertise in developing an advanced telecommunications network capable of bringing a much wider range of services to Irish corporate and personal customers.

Ireland must be up with the best internationally in providing such services, he says, which, in the future, will offer much wider use of facilities such as voicemail and billing information, as well as complex software support programmes.

Telecom also aims to keep pace with the newest technology in developing the Cablelink network - in which it owns 80 per cent. It also wants to position itself in new areas such as the Internet and "multimedia" the use of telecommunications to deliver media entertainment into people's home through media such as cable TV. How such businesses will develop is not yet clear, says Mr Kane, but Telecom Eireann must use the alliances to help build the core expertise to allow it to take advantage, whatever happens.