Dutch telecoms operator, KPN, has formed a joint venture with US telecommunications company, Qwest Communications, to launch a major fibre-optic network in Europe. KPN is a 12 per cent shareholder in Telecom Eireann and has an option, with Swedish telecoms group, Telia, to buy a further 15 per cent of Telecom next year.

KPN and Qwest said yesterday that they would invest $700 million (£473 million) installing the high-capacity fibre-optic network, based on the Internet Protocol. KPN and Qwest said that they expected the venture's 1999 sales to total $400 million and to grow about 40 per cent per year.

They will invest $500 million in the first two years. The network will be linked with Qwest's data, picture and voice network in the US. It is expected to come on line in January 1999.

In the Netherlands yesterday KPN's chairman and chief executive Mr Wim Dik said KPN had invested $2 billion in ventures outside the Netherlands. Its Telecom Eireann investment was "an important part of our profits".

The joint venture plans to build a series of fibre-optic "Euro-rings" which will link more than 30 cities in western, central and Eastern Europe. Ireland is not included in these plans at present.

Mr Josephe Nacchio, chief executive of Qwest, said the new network would play a leading role in the convergence of voice and data, although the new network was not directed at supplying local telephone services at present. He said "if you are in Internet country, you need to be linked to the US". Meanwhile, Telecom Eireann announced last night it had won two multi-million-pound contracts to supply broadband services to the Dell Corporation and Ericsson. It will supply the two companies with ATM (asynchronous transfer mode) which allows for high-speed transfer of digital information.

It said it would be installing further ATM facilities over the next three months in Carlow, Belfast, Dundalk, Letterkenny and Tralee.