Newtel has emphatically rejected suggestions that it will sell its mobile interests in Esat Digifone if its bid for Esat Telecom Group is rejected.

"We are sticking to our strategy of developing our business in Ireland," said Mr Terje Thon, Newtel executive vice-president.

Newly formed Newtel combines the interests of Swedish company Telia and Norway's Telenor, which is a 49.5 per cent shareholder in Esat Digifone. A further 49.5 per cent is held by Esat Telecom Group.

However, relations between Esat and Telenor executives on the Digifone board have been strained for some time and it is difficult to see how Telenor could remain in Digifone if the bid fails.

The High Court is due to hear an Esat request this morning for an injunction restraining Telenor executives from attending board meetings while Telia still has members on the board of its rival, Eircom. Telia confirmed it was selling its Eircom stake earlier this week.

Mr Thon said the court case was a separate issue and insisted the bid was not hostile, although it was first rejected by Esat group chairman and chief executive Mr Denis O'Brien and later by the Esat board. "We think it is a constructive and friendly bid," he said.

Mr Thon said the Irish market was "very interesting" and its investment here over the last three years had been very successful. "We consider Ireland's growth potential as being higher than the European average," he said. "Irish people have shown a very responsive attitude to new technology."

Apart from its telecoms interest Telenor owns two other operations in the Republic, a data services and a software company, which employ 160 people.

Mr Thon said the company was focusing on mobile and Internet businesses and dismissed suggestions that - as has been speculated - the company might sell off Esat's fixed line business to a company such as NTL, the US-based cable group which bought Cablelink earlier this year.

Industry analysts also said that it was highly unlikely that the company would sell off Esat's fixed line business. It is understood that Digifone will need the company's fibre optic backbone for its Internet services as they become more widely available through mobile phones.

Mr Thon said Esat's Internet strategy very much reflected Newtel's. "Data communications will converge with Internet Protocol strategy and there will be more of a fit between fixed line and ISP customers than there is today."

Mr Morten Sorby, chief financial officer of Nortel's mobile division, said a Newtel takeover would be good for Irish consumers, because the combined group would be able to introduce new products and services more rapidly.

Mr Thon said much of the ISPs were focused on the mass market, but there would be more focus on the corporate market. Newtel and Esat, he added, would be able to exchange technical know-how and expertise which would accelerate the development of both groups. "Technology is being developed in Ireland which can be be brought to Scandinavia," he said.

Dutch telecoms group KPN, Telia's joint shareholder in Eircom, announced on Monday that it was selling its shareholding (21 per cent) as did Telia (14 per cent). Asked why Newtel did not make a bid for Eircom through its Telia stake, he said it was too expensive. He also said that Eircom was concentrating on many businesses, whereas it preferred to focus on mobile, data and Internet.

Newtel said it was satisfied that it would be able to fund the acquisition through a combination of cashflow and bank borrowings.