The Government has taken the first step towards the £2.5 billion-plus flotation of Telecom Eireann next year, with a public tender for the various financial and legal advisers who will advise on the flotation.

In a simultaneous move, the Government has put the sale of cable television operator Cablelink in train, with a public tender for management consultants to advise a steering group on the sale of the company, which is 75 per cent owned by Telecom Eireann and 25 per cent by RTE. The public flotation of Telecom next year will be the biggest on the Irish stock market, with a listing also likely to be taken in London and also possibly in New York and continental Europe. Given the scale of the flotation and the likely multiplicity of market listings, it seems likely that consortiums of advisers will be comprise Irish and British stockbrokers, Irish and British investment bankers, as well as legal advisers in the various countries where a stock market listing will be sought.

It seems that the Irish broker appointed will come from the ranks of the big four - Davy, NCB, Goodbody and ABN Amro. Telecom will appoint its own set of advisers, enabling those brokers who lose out in the Government tender to bid separately for the Telecom brokerage.

Immediately prior to the flotation, the Government's stake in Telecom will stand at 50.1 per cent, with strategic partners KPN and Telia holding a combined 35 per cent and the staff employee share option plan (ESOP) holding 14.9 per cent.

Market sources believe that, to provide marketability in the shares and to make the flotation attraction to international investors, the Government will sell at least half its 50.1 per cent stake, realising upwards of £700 million. June 1999 is seen as the most likely time for the Telecom flotation.

The timescale for the sale of Cablelink will involve final tender bids by the end of September. Although Telecom and RTE will retain the proceeds of the sale, it is clear the Government will have a major input into the decision on the successful bidder.

The statement yesterday from the Minister for Public Enterprise, Ms O'Rourke, indicated that the amount of cash offered would be only one element in deciding who would buy Cablelink.

Cablelink's chief executive, Mr Kevin Windle, has previously stated that around £120 million would be required to upgrade the network and this is the level of capital investment the Government is likely to demand from a successful bidder, over and above the estimated £140 million cost of actually buying the company.