Dublin City Council will begin exclusive negotiations with Esat BT this week to finalise a deal for the management and operation of its 170 km telecoms network.

Esat BT beat off competition from, among others, State gas company Bord Gáis and Canadian-based firm Axia, which is also bidding to manage the Government's 19 regional networks.

It is understood that Esat BT was bidding with the services arm of its parent firm, British Telecom.

Although no figures were provided, it is expected that the deal will be worth several million to Esat BT over a number of years.

The firm will be paid a fee for managing the local authority's telecoms network, which extends across much of the city and into the Digital Hub in the Liberties.

The city council will offer excess capacity on its network - which currently carries mostly traffic signalling data - to small and medium-sized businesses and telecoms companies in Dublin.

The extra revenue generated from the network would pay for its maintenance and running costs, and may provide additional cash for Dublin City Council.

The initiative should promote greater competition for high-speed internet services in the city and could ultimately reduce broadband costs for end-users.