Esat Group said it would make 38 staff redundant yesterday and warned further job losses could not be ruled out as it continues to integrate its operations with its parent, British Telecom.

Some analysts believe this integration process and market weakness could result in hundreds of redundancies at Esat as British Telecom strives to reduce its debt burden of billions of pounds.

An Esat spokesman said he could not rule out further job cuts yesterday. "We will be continuing to review the situation. It is no secret that in general telcos face tough trading conditions," he added.

Esat, which employs 1,300 people in the Republic, is implementing a voluntary redundancy scheme for 38 staff and said it would offer a severance package.

"Following a review of our operation we have decided reluctantly to take this step," said an Esat spokesman.

Last month the company denied it would make people redundant at its business division as part of its integration with BT Ignite.