News of negotiations between Eircom and Vodafone on the sale of the former's mobile phone subsidiary Eircell is being viewed as positive news for disappointed shareholders, with most analysts advising that you should hold onto the stock for now.

Cork-based stockbroker, W&R Morrough, has issued a hold recommendation this week advising shareholders to wait and see how negotiations progress. It explains that it would not be hard to divide Eircell from its parent as the two have been operating separately.

"In the right shape, such a deal would make strong strategic sense for both companies," according to the brokers. Clearly Eircell would complement Vodafone's strategy of creating a panEuropean mobile phone company. For Eircom a sale of Eircell would be a catalyst to realise the true value of the share that it feels the market is currently not recognising.

The obvious points of pressure on such a deal would be whether Eircom would retain a holding in Eircell and if Eircom sold all of Eircell whether Eircom could then bid for a new mobile licence.

"Our initial opinion is that the best situation for Eircom's shareholders is a full sale of Eircell at a strong price and to use the capital for a greenfield third generation licence bid."

It adds that, strategically, Eircom would have huge problems if it did not have a substantial business in the mobile telephone market. "Either way the hype and perhaps even a deal is good news and will make the market think about the value it should put on Eircom. It also demonstrates that Eircom's management is busy trying to improve the lot of its grumpy shareholders."