Esat has won a €2.5 million (£1.97 million) contract to supply advanced telecoms services to Microsoft between the software firm's corporate headquarters located in Sandyford and Eircom's internet data centre at Citywest business park.

Esat will supply Microsoft with a very high capacity telecoms circuit called an STM4, which is about 20,000 times faster than a typical ISDN line.

The 620-megabyte Esat circuit, which forms a metropolitan area network contract, will replace narrowband services which had previously supplied by Eircom to Microsoft.

Microsoft is set to use the circuit for provision of the local portion of its internal Europe, Middle East and Africa corporate backbone.

The contract follows Microsoft's announcement that it would use Eircom's facility in Citywest rather than Metromedia Fiber Network's data centre to host its dot.net project.

Mr Nick Tanzi, chief executive of Metromedia Fiber Network - a US internet infrastructure firm with significant Irish assets - resigned last week from the firm.

Metromedia, which has a $75 million (€85 million) internet data centre in Dublin, said Mr Tanzi had resigned for personal reasons. Mr Mark Spagnolo, who became president and chief operating officer in October, will assume the title of president and chief executive.