THE Minister for Communications, Mr Lowry, has said he is confident Ireland's derogation from introducing full competition in the domestic telephone business is safe, despite EU Ministers pushing through a decision which he voted against. Meanwhile, Mr Lowry's Department officials are considering the initial bids for a 35 per cent stake in Telecom Eireann, with Tele Danmark's higher bid understood to be not far short of £300 million.

A statement from Mr Lowry about Thursday's meeting of Communications Ministers said reports that the derogation granted to Ireland from introducing full competition had bean dismantled are not correct".

Most EU telecommunication markets are to be liberalised in 1998 but, under the derogation Ireland has until 2003 to introduce full competition. Mr Lowry has previously set 2000 as the target date. According to the Minister, EU Commissioner Mr Martin Bangemann said that Ireland's derogation would be formally confirmed in a new interconnection directive.

However, Mr Lowry is understood to have argued strongly against one aspect of Thursday night's decision on telecommunications interconnections. The Ministers voted for a text which only (formally writes in Ireland's derogation in relation to international telephone connections. Mr Lowry's statement said he would have preferred "in the interests of clarity" if this had been extended to domestic connections.

The Irish fear is that excluding domestic calls could open to the door to unintended liberalisation of the market ahead of the 2000 target date. The vehicle through which this might happen would be in circumstances where another telecommunications company set up a network to provide an interconnection service for domestic calls to the second mobile phone provider, Esat Digifone.

It may not be clear for some time if this can happen under the directive.

The derogation is one of the attractions for the two bidders for a 35 per cent stake in Telecom Eireann KPN/Telia and Tele Danmark. KPN/Telia is understood to have made an initial offer of between £200 million and £250 million probably in the £230 million to £240 million range while Tele Danmark is offering close to £300 million. The Danish company is trying to strike an alliance with a major international network.