ESB and BT consider new business link

A NEW telecommunications network for business being considered by the ESB and British Telecom could generate revenues of £100 million per annum by its third year of operation.

A 30 member project team examining the feasibility of the new structure expects telecommunications charges to business to drop significantly with the advent of competition.

It is understood that a drop of 5 per cent per annum for a number of years, or a single initial drop of up to 25 per cent, are among scenarios believed possible by those close to the negotiations.

The profit margins for companies operating in the sector are expected to be tight as a result of intense competition. The new venture would be scheduled to achieve profitability by year four or five at the latest.

The negotiations are understood to be going well but the crucial issue of the commercial viability of the venture has yet to be decided on.

ESB International, which is a limited company, is involved in the negotiations on behalf of the ESB and is the vehicle through which any deal will be done. The new venture would employ up to 200.

The companies are interested in using the ESB infrastructure to lay down a fibrcoptic communications network. In the first phase the network would link up with business parks in major urban centres, the IFSC and major companies, and give access to the global BT Consort services.

The ESB's line network, microwave infrastructure and ducts or pipe network would allow for the laying out of the new network, which would link up with the BT Telecom telecommunications system. The ESB has one of the most extensive telecommunications networks in the country which it uses for its own internal purposes.

BT has extensive expertise to bring to the project and has established similar joint ventures in Bavaria, Switzerland and Holland.

The first phase would involve a 50/50 investment of £50 million. The chief executive of the new company would be appointed by BT and the financial director by ESB. The two companies would have an equal number of board members.