An Post has sold two international subsidiaries, which provide top-up services to mobile phone users, for €85 million.

Irish electronic payments group Alphyra bought the companies, which are called PostTS UK and PostTS Spain. It said yesterday's transaction consolidated its position as the biggest independent payments operator in Europe.

The deal represents a good return for An Post, which said it had invested about €16 million in the firms since it bought them from the Caudwell Group in 2002.

An Post said in a statement that the sale of the two international divisions was part of its overall recovery strategy, which may see 2,000 jobs go at the firm.

Derek Kickham, commercial director at An Post, said the sale price represented a massive return for An Post and would help to pay for the cost of severance packages and early retirement for An Post employees.

However, he said it would not be good business sense for An Post to use the proceeds of the sale to pay increases due to staff under the Sustaining Progress pay agreement with trade unions.

The Communications Workers Union (CWU) is locked in two disputes with An Post over its proposed recovery strategy and the firm's failure to implement pay increases due under the national agreement.

An Post, which posted an operating loss of €43 million in 2003, says it cannot afford to pay the increase.

Seán McDonagh, national officer at the CWU, said yesterday's sale would make it impossible for the firm to claim it couldn't afford to pay increases due under Sustaining Progress.

The CWU is also opposing An Post's plan to cut 1,450 collection and delivery jobs from the total of 5,000. In addition, An Post wants to reduce overtime levels and to do away with demarcation between post delivery staff, postal clerks and postal sorters.

Talks between the two sides at the Labour Court broke down last month and an expert group set up by the court is due to report back in May.

Alphyra said yesterday's deal consolidated its position as the biggest independent electronic payments provider in Europe. The firm, which provides mobile top-up and bill-payment facilities at its electronic terminals, now operates in 15 states and handles payments worth about €3.6 billion per year.

PostTS UK and Post TS Spain are both moderately profitable and hold 8 per cent and 20 per cent market share respectively, according to the Alphyra Group.

John Nagle, chief executive of Alphyra, said the firm was paying cash to An Post, which it was raising through bank debt.

He said An Post had got a "great price" for its two companies, which reflected the transformation of the electronics payments industry since 2002.

Mr Nagle said another big acquisition in Europe could persuade Alphyra Group to consider an initial public offering to raise funds. But this was unlikely to occur before Christmas, he said.