Retail investors will be able to subscribe for more than £30,000 (€38,000) worth of shares in Telecom Eireann, The Irish Times has learned. However, the share issue is expected to be heavily oversubscribed and share allocations will be severely scaled back.

The maximum subscription level will surprise some observers, as it is higher than expected. The minimum share application amount will be £250.

Meanwhile, the Government has decided to give retail investors in Telecom Eireann one loyalty share for every 25 shares they hold for a year.

The commencement of the share offer, which is expected to raise well in excess of £1 billion, is expected to be announced next Sunday week. Irish Life and Irish Permanent are among the companies who have given loyalty shares to investors who held their shares for a specified period after the flotation. More recently, Deutsche Telekom announced it was offering a bonus allocation of one share for every 10 held after a 12-15-month holding period.

The decision to give the loyalty shares was taken on Monday by a Cabinet subcommittee which is overseeing the flotation process. The scheme is aimed at persuading small investors to hold their Telecom shares rather than sell them into the market after flotation to take a quick profit.

Public Enterprise Minister Ms O'Rourke has already emphasised that she and the Government are anxious to increase the shareholder base to encourage small investors to take part in the flotation.

Approximately 1,175,000 people have registered for shares and international experience shows that 15-45 per cent of such registrations follow through. It is thought that this figure could be surpassed in Telecom's case.