The board of the ESB is expected to give formal approval for a £50 million deal with British Telecom when it meets next Tuesday.
The joint venture will bring another major competitor to the marketplace to offer telephony services - initially to the business sector.
Sources said yesterday that the new venture should be able to roll out its services very quickly. The company will use the ESB's considerable network countrywide to build its telecommunications infrastructure.
The new company, backed by BT's considerable international muscle, will pose a serious threat to other players in the market, especially Telecom, Esat Telecom and Worldcom.
It is expected that British Telecom will target big multi-national customers first, before moving on to smaller corporate customers. "It will be a very rapid and aggressive rollout," said one source.
The aim will be to link business parks in large urban areas and large companies, using the ESB infrastructure to lay down a fibre optic network.
BT is also widely expected to bid for the third mobile phone licence, some details of which were issued earlier this week. The licence will cost £10 million, plus a one-off administrative fee of £1.5 million. However, it has been estimated that building the network could cost a further £100 million.
The ESB/BT development will be funded jointly. A new company - yet to be named - will be formed and will be staffed by employees from both groups.
British Telecom, although it has kept a relatively low profile in Ireland, already has a presence here and currently leases about 600 lines from Telecom Eireann and provides services to multi-nationals including Microsoft.
British Telecom and the ESB have already estimated that the joint venture could generate up to £100 million in annual revenues within three years.
It is understood that the board of BT signed off the deal in September. However, a series of events, conspired to delay matters. One was the stand-off over the incoming ESB chief executive, Mr Ken O'Hara's pay.
The board had agreed a Buckley style remuneration package with him, but implementation of the Buckley Report, which recommends substantial pay increases for senior semi-state posts, was postponed indefinitely when the Government took office at the end of July. The issue took some weeks to resolve.
A second complicating factor was British Telecom's bid for MCI the US-based long-distance carrier. It was trumped by WorldCom who bid $37 billion. The battle for MCI only ended last month, when MCI accepted the WorldCom bid.
Another factor is thought to have been the ESB itself. The company moved slowly and cautiously in reaching the deal, according to sources.
The deal is a good one for the ESB which is mindful of the fact that deregulation is looming in the electricity market. The company will need to find other sources of revenue to boost its income when others enter the market.
Interestingly, British Telecom will find itself back in competition in Ireland with the very company that snatched MCI from its grasp. WorldCom recently bought out the 70 per cent stake it did not already own in TCL Telecom, which provides services to the business sector.
However, it will be entering a fiercely competitive market. Both Esat Telecom and Worldcom especially are acknowledged as very good operators.
Telecom Eireann which is undergoing a series of restructurings is also performing strongly. It has set the bar for competitors this year by announcing a series of price cuts, both on inland and international calls.
BT however, is a highly-respected player, with good infrastructure around Europe and to the US. It retains strong links with MCI in the US through Concert.
In Ireland the company leases around 600 lines from Telecom Eireann to service its business customers, many of whom need links to their own private networks in Europe and the US.
