The search by Telecom Eireann for a strategic partner, which began with such optimism, may yet become an embarrassment for the Government. Over the past 18 months the number of potential partners has fallen away alarmingly. At one stage, at least seven telephone companies were thought to be in the hunt, but when the deadline for bidders expired on Friday, only two remained: the KPN/Telia consortium representing Dutch and Swedish companies respectively and the Danish national operator, Tele Danmark.
The price that the Government is likely to receive from the sale has also been revised downward: initially, it seemed that the State would receive up to £500 million for the 35 per cent stake. But the Minister for Communications, Michael Lowry, said at the weekend that there was no basis for such an estimate and that the figure had been "plucked from the air". There are now weekend reports that the opening bid is to be as low as £200 million.
The Government had looked forward to a scenario in which several major international players in the telecommunications markets would be scrambling for a slice of Telecom; instead, it has to make do with a situation in which just one bidder - the Dutch Swedish consortium - is the clear favourite.
After the recent decision by British Telecom and Bell Atlantic, and the earlier decision of AT&T to withdraw from the bidding, the Government will, no doubt, be relieved that there are still two bidders left. But it might also usefully reflect on the lessons that can be learned from this episode. As the Fianna Fail spokesman on communications, Mr Seamus Brennan has noted, there must be something "fundamentally wrong" when so many of the prospective bidders, including the most attractive partners, withdrew from the race. Indeed, the Telecom sale might serve as a role model of how not to build a strategic alliance between the public and private sector.
Despite the rapid pace of change in the global telecommunications the Government, and indeed the previous administration, dithered and dallied. Although the proposed sell off was first mooted four years ago, the actual terms of the sale were only finally agreed last January.
Meanwhile, the restructuring of Telecom in order to make it more attractive to potential investors has also been painfully slow, only getting under way in earnest over the past year. The harsh reality, as both business and residential subscribers know to their cost, is that Telecom remains overstaffed and overpriced. And, while the company's financial performance has improved, it is still saddled with a debt of some £862 million - and it needs to invest some £1.2 billion in equipment to provide the range of services which industry needs.
Mr Lowry remains confident that the successful bidder will be in a "good position" to assist Telecom as it prepares for a fully competitive EU market. It is to be hoped that this optimism is not misplaced, not least for the several thousand workers in Telecom. But the omens to date are not propitious. The Telecom sale was intended to be an example of how Ireland's semistate sector could develop new links with the private sector. Instead, it has underlined the lack of firm direction from Government and the pressing need for more radical surgery in the semi state sector.