ESAT Digifone, the proposed second mobile phone operator, will introduce its service before the end of March, the Esat chairman Mr Denis O'Brien has insisted.
The company, still awaiting planing permission to finalise a deal with the gardai to use its infrastructure to operate its mobile phone network is almost fully "geared up" for the service, Mr O'Brien said yesterday.
Discussions with the three Government departments concerned with the planning process are now at a "very critical stage" he said. Mr O'Brien refused however to further discuss the matter, saying he didn't want to "pre-empt these discussions."
Mr O'Brien confirmed that Esat Telecom Holdings, the company which owns 40 per cent of Esat Digifone, has raised $85 million (£53 million) through a 10-year bond issue sold to US institutions.
Around £13 million of the funds raised, he said, will go to Esat Digifone, to finance the development of its network and new products and services.
The remaining £40 million will be channelled into the holding company's other subsidiary, Esat Telecom, which operates an international call service. Esat Telecom is 100 per cent owned by Esat Holdings. These funds will be used to invest in new switching platforms and new services.
Mr O'Brien, along with other senior management colleagues, has been marketing its loan stock throughout the US for the past three weeks. Having originally set out to raise $70 million, Mr O'Brien said it had subsequently decided to raise the issue to $85 million on the back of strong investor interest.
The loan stock, which is fixed for 10 years, offers a relatively high yield of 12.5 per cent. Subscribers for the loan stock include American institutions such as Fidelity, Merrill Lynch Asset Management, Prudential and Putnam.
In total 45 institutions subscribed to the loan stock issue offered through New York-based investment bankers, Donaldson Lufkin Jenrette.
Mr O'Brien said Esat Telecom Holdings now has "sufficient" funds to implement its business plan over the next two to three years. It will however, return to the US market to raise more money, possibly another $50 million (£31.2 million), to fund new investment opportunities, he said.
The holding company has reported losses of £7.5 million in the nine months to the end of September last, prompting US analysts to assign a low rating to its latest fund raising issue.
Mr O'Brien said that up to half of these losses were incurred as part of the start-up costs of Esat Digifone, with a just over £3 million attributable to Esat Telecom. These losses, he stressed were in line with the company's business plan.
Mr O'Brien firmly rejected speculation that Esat Digifone is running into financial difficulties due to the delays in finalising the Garda deal. "We had always anticipated losses and planning difficulties" he said yesterday.
Mr O'Brien said he believed there was a better understanding of telecommunications businesses in the US than in Ireland.
"In the US, if you're not losing money at an early stage you're not doing your job properly." Esat Holdings has raised $140 million (£87.5 million) over the past 12 months.
Its shareholders are a company owned by Mr O'Brien (29.4 per cent), US venture company Advent (27.2 per cent), and institutional investors John Hancock Mutual Life Assurance, Metropolitan Life Insurance, Credit Suisse and Soros Capital.
