Eircom has sold its chain of 18 shops to 3G for €3.5 million. 3G is backed by the founders of the Sigma Wireless Group and the former head of Sigma's Person2Person mobile phone retail chain, Ms Josephine Conaghan.

The new chain will sell a range of communications equipment including mobile phones, fixed- line telecoms products and other electronic equipment.

The 18 outlets are spread across every major city except Cork and rebranding will begin in the next three months. It is understood 3G plans to open a greenfield Cork outlet when a site is located.

Eircom signalled last year that it wanted to sell its retail outlets as part of its rationalisation strategy. Although the deal with the 3G consortium was struck in August last year, a legal dispute with Vodafone delayed its official launch until this week.

The dispute centred around a non-compete clause signed with the Sigma Group when it sold the Person2Person mobile chain to Eircell/Vodafone. This €25 million deal was signed in 1998 and prevented Sigma's founders, Mr Tony Boyle and Mr Michael McGinley, from getting back into the retail market until May 2003.

Despite intensive discussions between Vodafone and Sigma's founders since September, no agreement was reached between the parties that would have allowed 3G to trade sooner.

It is understood the 3G chain has struck an exclusive three- year deal with Eircom to sell its products and handle its customers' telephone bill payments. It has also struck supply deals with mobile phone operators O2 and Meteor and, as the chain's brand name suggests, it will seek to specialise in the next generation of mobile phone handsets.

3G will immediately become one of the biggest independent Irish mobile retail chains and will compete against the likes of Carphone Warehouse and the mobile network operators' shops. 3G has been set up as an independent firm from the Sigma Group to accommodate Ms Conaghan's shareholding in the venture and to establish the independence of the retail chain.

Sigma is one of the biggest distributors of mobile phones and accessories to other retail chains in the Republic.

Meanwhile, in a separate deal, Meteor has outsourced the distribution of its mobile phones to Sigma Wireless for an undisclosed sum. The distribution deal covers about 100 independent retailers in the Republic.