The flotation of Telecom Eireann on the stock market in 1999 is the next step in the company's development according to its chairman, Mr Ron Bolger. He believes it is likely the Government will include a scheme whereby customers can buy shares as part of the flotation. The Government is to sell up to half the company next year through an Initial Public Offering (IPO) on the stock market, most likely between next June and December. He said the value of Telecom is likely to be "considerably ahead" of its current £1.9 billion valuation.

Mr Bolger was speaking to The Irish Times following the publication of Telecom's annual results, which showed an increase in after-tax profits from £127 million in 1996 to £155 million last year. He said the company had managed to reduce its debt burden from £1 billion five years ago, when he became chairman, to its current £172 million.

At one stage Telecom was paying £100 million in interest charges every year and this was now £19 million, he said. Last year's strategic alliance with KPN/Telia had provided a cash injection of £150 million, which helped reduce the debt burden.

Now, he said, the logical move was the IPO. He predicted a strong interest in the flotation. Although he stressed that it was not Telecom's "call", he said it was likely the Government would devise a scheme whereby customers would be encouraged to buy shares in the company.

In other countries, customers were encouraged to invest through loyalty schemes, where they would get bonus shares if they retained their original shares for a specified period.

"It will be a real populist flotation," he said, adding that it would reach "every corner and boreen in Ireland, because that's where Telecom goes."

Mr Bolger said Irish financial institutions and pension funds would also be very supportive, describing them as "very mature and stable" in their approach to such investments. He also predicted the sheer size of Telecom meant many funds would be very keen to invest.

Mr Bolger defended the Government's decision to cede 14.9 per cent of the company to the employees. This comprised 5 per cent for changes in work practices and 9.9 per cent in exchange for a notional £190 million. The deal is complex, but entails the employees paying £90 million through loans and Telecom contributing £100 million to the Employee Share Option Scheme (ESOP). In return employees will contribute to their own pension fund and waive overtime bonuses. The transformation deal - for the 5 per cent - entails radical changes in work practices and a series of voluntary redundancies.

Telecom is steadily reducing its workforce - last year 740 people left - but is also recruiting in some areas. In 1997 the company took on 350 new staff.

Mr Bolger said the deal involved hard and tough negotiations, with the Government insisting on fair value for the stake.

"I think both sides were a little bit dissatisfied with the final outcome, which is probably a sign that it was a good deal," he said.

Mr Bolger said it clears the way for Telecom to create more shareholder value and be fully competitive. "There has been a whole change in attitude and mindset in Telecom," he said. "People want to get on with the job and ensure Telecom is a winner in the competitive environment."

There has been some criticism - chiefly from Telecom's competitors - that Telecom does not publish separate results for its related companies, especially Eircell. Some have argued that Telecom may be subsidising Eircell. Mr Bolger emphatically denies this. He said Telecom does not cross subsidise the mobile operator. "The EU regulators can look over our shoulder at any time," he said.

Mr Bolger said the Irish Telecommunications Regulator, Ms Etain Doyle, has requested Eircell's accounts and they have been submitted. Asked when Telecom would publish the accounts separately, he said: "When we have to."

Meanwhile, Telecom has made a £50 million provision in its accounts for restructuring over the next 12 months.