AIB and Merrill Lynch are to get a significant share of the £40 million set aside in the government's estimates for the sale of shares in Telecom Eireann.

The £40 million, under the Public Enterprise vote, will be divided between AIB and Merrill Lynch as the lead bankers and advisers as well as a number of smaller institutions and businesses.

Sources close to the deal say that the bulk of the money will go to AIB and Merrill Lynch, with about £20 million earmarked for commission on the sale of the shares and up to £12 million in fees.

The marketing is expected to come to £7 million, including printing and design and advertising. PR advisers will receive more than £800,000.

There had been intense competition to win the very lucrative contract.

It has not yet been decided how much of Telecom will be sold off, but it is likely that it will be about 25 per cent or 30 per cent initially. Depending on market conditions that is likely to bring in between £700 million and £1 billion to the Exchequer. The Government currently holds 51 per cent of the company.

A spokesman for the Department of Public Enterprise insisted that the £40 million provision allows for different eventualities, including the sale of 25 per cent or a little more of the company. "It is based on commercially negotiated rates for work of that nature," the spokesman added.

"It also includes money for a PR contract and a large printing bill for at least half a million prospectuses."

He pointed out that while the sale was due to go ahead next summer, bad market conditions could put that back. "This provision allows for all eventualities."