The Esat Telecom group lost £10.2 million in the three months to the end of September, but revenues and gross billings soared. The company expects to show an operating profit - before interest charges - by the end of 1999.

Esat's chief financial officer, Mr Neil Parkinson, said losses for the quarter were £10.2 million, a slight improvement of the £10.8 million lost in the same period of 1997. But also compared to the year-ago period, revenue jumped by 255 per cent to £9.8 million, while gross billings rose 165 per cent to £11.3 million, he said.

Much of the losses stemmed from heavy investment in infrastructure, Mr Parkinson added. The company has already laid some 563 kilometres of a fibre optic network which uses CIE's rail tracks as its backbone. It has also extended its urban network to 124 kilometres, mainly in Dublin but also in Cork, Waterford, Limerick and Galway, he added.

Selling, general and administrative expenses almost doubled to £5.5 million, the company said, reflecting the expansion of operations. In particular, the company said it invested £1.2 million in a new residential division.

"The costs incurred reflect the research, product development and other establishment costs to prepare for the provision of a service with effect from December 1st," Esat said.

The group owns 45 per cent of Esat Digifone, the Republic's second mobile telephone service provider. By the end of September, Digifone had secured 178,000 customers, Esat said, while the mobile network covered 98 per cent of the population and 92 per cent of the territory.

Esat Digifone contributed £2.76 million to the group's overall losses for the three months, according to yesterday's figures. This compares to just over £3 million of losses apportioned to the Esat group by Digifone for the same period in 1997.

The company welcomed the move by the Government to liberalise the Republic's telecommunications market, and predicted that a new interconnect rate with Telecom Eireann, due in advance of the December 1st liberalisation date, would help nudge the group towards profit.

"We look forward to receiving a positive decision this quarter from the EU with regard to interconnection so that Esat Telecom can compete on a level playing field with the state provider, Telecom Eireann," said Esat's chairman and chief executive, Mr Denis O'Brien.

The company said it was also involved in a number of corporate sponsorships including the Business Golf Challenge, the Business Through Tourism in Dublin awards, and the East of Ireland Open Tennis championship. The Esat group is also sponsoring the Irish Olympic team for the Sydney 2000 games.

Esat said the group's computer systems were generally new enough to be year-2000 compatible, and would, therefore, avoid the "Millennium Bomb" problem where programmes could not recognise the change of date to the new century. However, the company said it had initiated a group-wide sweep of its systems, and would perform a test early in 1999.

"The company believes any problem detected in such tests could be resolved on a timely basis", Esat said.