An Irish telecoms company has been sold in a complex deal valued at more than $120 million (£78 million). It will make two of the directors in the company, ITL, paper multimillionaires.

International Telecommunications Ltd was set up in 1993 and resells minutes to corporate and residential customers which it buys from Telecom Eireann at wholesale, or discounted, rates. It claims to have around 2,000 customers.

Earlier this year it merged with Netsource, a consortium which is being bought by Global Telesystems Group (GTS), a US-owned telecoms service provider. Former Telecom employee Mr Sean Bolger and Mr Gerry O'Connell, who worked in a related industry abroad, are ITL's major shareholders. Following the ITL/ Netsource merger, the two men now own almost 10 per cent. The complex deal means that GTS will offer to buy Netsource in return for 4,037,500 shares in GTS and $15 million in cash. There will be a further cash payment equal to the value of 712,500 GTS shares at the trading price at the day of settlement.

GTS shares are currently trading at around $27 but have traded considerably higher. It is expected that the deal will be wrapped up by the end of November, according to a GTS spokesman.

There are additional earn-out payments of up to $35 million in either cash or new GTS shares which will be made quarterly next year, if Netsource meets certain financial performance targets. Of this up to $4 million will be payable to Netsource management under an "incentivisation" scheme.

Netsource was founded five years ago and has around 28,000 business customers in Europe and 62,000 residential customers in Germany and Holland. It has offices in seven countries including Belgium, Sweden, Norway, Denmark and Ireland. It targets small- to medium-size companies.

To date ITL has built no infrastructure in Ireland. ITL shareholder Mr Gerry O'Connell, director of Carrier Relations, said there were no plans to build any at present.

The deal with GTS will give Netsource a stronger presence in what is considered to be a niche market. GTS provides a variety of telecoms services to businesses in Europe and Russia. It operates a fibre optic network through a subsidiary called Hermes Europe Railtel.

In a statement, Mr Sean Bolger, ITL's founder said the deal illustrates the success of ITL's philosophy "that the telecommunications market is all about providing services".

Mr O'Connell said ITL had kept a low profile in the market to date. He said its annual revenues were running at around £45 million, but this would more than double next year, as the telecoms market became fully liberalised.

He said ITL, which employs 53 people, would expand its services next year.