Telecom Eireann shares should prove a good buy for ordinary retail investors when the Government floats at least 20 per cent of the company on the stock market later this year.

Most analysts believe the flotation is likely to prove a success and they are also bullish on the long-term outlook for the company.

"I would prefer to own Telecom rather than AIB or Bank of Ireland going into the next millennium," says one financial adviser. "The banks have performed very well but how much growth is left in that sector? The telecoms industry is where it's at."

In addition to operating in a "hot" sector, Telecom provides investors with exposure to other parts of the Irish economy.

"It's a play on the Irish economy, particularly sectors that are growing strongly such as financial services and the high technology sector," says Mr Scott Rankin, analyst with Davy Stockbrokers.

Most observers expect the flotation will be a success with the shares priced at a discount to the level at which they should trade in the market. Mr John Conway, analyst with BCP Stockbrokers, believes Telecom shares could be floated at a discount of as much as 17 per cent to fair value and recommends that people take as many shares as possible in the initial offering.

"They stand to make an 18 per cent potential gain in the medium term, while over the long-term it could be even better. The stock has very defensive qualities, good growth potential, it's reasonably strong and ultimately could be a takeover target," he says.

Individual investors are also likely to be favoured over institutional investors when the shares are allotted, leaving fund managers with a healthy appetite for the stock post-flotation as they attempt to bolster underweight positions.

The major risk for the flotation lies in a major catastrophe in world equity markets, something that can never be ruled out. Goldman Sachs, for instance, had to postpone its flotation last autumn after the Russian crisis caused share prices around the world to fall sharply.

At present, the situation in the Balkans retains the potential to destabilise global stock markets but analysts point out that this is the name of the game and anyone investing in equity markets must be prepared for bad times as well as good.

Meanwhile, views are mixed on whether people should borrow to fund the purchase of shares but most agree this is a risky business.

"Borrowing to buy shares means you have both debt risk and equity risk," says Mr Ciaran O'Neill, analyst with NCB Stockbrokers.

Additionally, with share allocations expected to be heavily scaled back as demand outstrips supply, those borrowing could find that the shares they are given do not deliver gains sufficient to cover the cost of funding the debt.

For example, an individual bidding for £20,000 may find they are allocated only £2,000 worth of shares and the gains they make fall far short of the costs they have already incurred servicing the debt.

Others note that now may be a riskier time to borrow to fund investments than at the time of the Norwich Union float when equity markets were not trading at their current heady heights.

"Borrowing to buy shares is dangerous at all times but when markets are the way they are at present it is particularly so," says Mr John Crowe of accountants KPMG.

Much depends on the lending rate that individuals can negotiate with their financial institution.

But if you decide to borrow, advisers warn that you should make sure you can comfortably support the borrowing in the event that things go wrong and markets turn down.

Borrowers should take a longterm view and not rely on covering their costs over the short-term.