The Government has agreed to make a special allocation of additional shares for any of Telecom Eireann's 8,000 pensioners who wish to take it up ahead of the flotation.

The move aims to compensate former Telecom Eireann employees who are not entitled to participate in the group's Employee Share Option Scheme (ESOP). Under the terms agreed yesterday, Telecom Eireann pensioners will be eligible to apply for two share allocations, buying the shares at the issue price. They are already eligible to apply for shares under the terms of the flotation and can now apply for a further allocation, up to a maximum value of £3,000. Spouses and children who are currently receiving pensions from Telecom Eireann will also be entitled to subscribe for extra shares on a pro-rata basis. A widow, for example, who is being paid 50 per cent of her husband's pension would be allowed to subscribe for an additional £1,500 worth of shares.

Some 1.2 million people have now registered to buy Telecom Eireann shares. Over the next couple of weeks, the Government will decide on the amount of shares that will be made available to the public. It is now expected to consider increasing the amount of shares it will sell in Telecom Eireann following the strong interest in the shares.

The Government, which owns just over 50 per cent of Telecom Eireann, is expected to consider raising the amount of shares to be sold from around 35 per cent to between 40 and 45 per cent. Flotations of this scale in other EU states have shown that a high proportion of those who pre-register their interest in buying the shares tend not to follow through by purchasing the shares. In most cases, anywhere between 15 per cent and 45 per cent of those who pre-register take up the shares. Given the strong interest in the shares here, some analysts suggest that up to 50 per cent of those registered will follow through with purchase orders.