ESAT Telecom, the private telecommunications group, has urged that Telecom Eireann be obliged to give up its monopoly over voice telephone now that it has secured its strategic partners.
"Now it has its partner, Telecom Eireann doesn't need any more protection - the derogation until 2000 is not needed any longer," said Mr Mark Roden, the director of sales and marketing at Esat.
"This deal requires the approval of the European Commission if Telecom Eireann continues to delay full competition until 2000. You cannot reinforce your dominance while also pulling down the shutters to competition," he said.
Esat competes with Telecom Eireann in the provision of long distance and international phone services to business customers. However, the company is not allowed to use the Telecom Eireann network for any voice telephony as the company has a monopoly over voice telephony until the end of the decade.
This is two years after the 1998 deadline set by the European Commission for the full deregulation of European markets.
The Government has maintained that the strategic alliance with KPN and Telia, announced this week, will not affect Ireland's derogation from the 1998 deadline.
However, industry sources have said that the Commission may now seek some concessions towards further liberalisation of the market in exchange for approving the deal.
This could involve forcing Telecom Eireann to sell off its Cablelink subsidiary or allowing private operators such as Esat to compete in other areas of voice telephony.
Tele Danmark, the Danish state phone company, has described the Government's decision to announce its choice of strategic partners as "an unexpected procedure".
"The Dutch consortium was chosen on a short term and final bid, before Tele Danmark - according to schedule - had presented its binding offer on the 35 per cent of Telecom Eireann's stocks put up for sale", said Mr Hans Wurtzen, the managing director and chief executive officer of Tele Danmark.
Although KPN Telia is understood to have put pressure on the Government to make a quick decision, a spokesman for the Minister for Communications, Mr Lowry, denied that the decision had been taken before the deadline for Tele Danmark to bid had expired.
Market sources in London said last night that Tele Danmark would have offered more than the £183 million being offered for an initial 20 per cent by KPN Telia.
However, Tele Danmark would "probably have sought a greater level of rationalisation at Telecom Eireann than the winners.
