The ESB is set to team up with telecoms company Magnet Networks in a venture aimed at offering a broadband, digital television and telephony package to more than 700,000 homes.
The ESB will lease its national fibre-optic network for the next decade to Magnet, which will offer its products in Galway, Cork, Limerick, Waterford and Portlaoise.
The new arrangement is likely to provide competition for Eircom and Smart, but also for the two main digital television companies, NTL and Chorus.
Increasingly, telecoms companies are offering not just telephony services, but also broadband products.
Equally cable TV companies are investing more in broadband, although their networks often do not support high speed connections.
Up to now, Magnet has mainly targeted customers in new housing estates in the Dublin area. Working with developers, it has managed to connect fibre-optic lines into homes, but moving out of Dublin has posed a major challenge.
Under the new arrangement, Magnet's technology will be carried to the cities via the ESB's high voltage transmission lines which contain a fibre-optic capability. ESB will not be delivering the in-home product itself.
Depending on the package selected, consumers will be able to get between five and 20 television channels.
Magnet uses the Icelandic company Industria to negotiate content deals with the various television stations.
The value of the deal has not been disclosed, but it is understood to be worth several million euro to ESB Telecoms, the company which has completed the arrangement. It is a wholly owned subsidiary of the ESB group.
The precise cost of the new offering has not been announced, but in Dublin Magnet is charging €72.99 per month at present for digital television, telephony and broadband .
This includes more than 20 television channels, among them RTÉ One and Two.
Magnet, which is backed by wealthy US businessman Ken Peterson, hopes to use high speed ADSL2 technology, which allows it to offer a "triple-play" product to Irish homes - digital television, broadband and telephony.
A spokesman for Magnet yesterday confirmed the deal was going ahead, and said the company anticipated a major part of the new network would be complete during the first two months of 2006.
Mr Peterson, who is executive chairman of Magnet Networks, said the deal was a key one for the company.
"We are shaking up the market with our triple-play services and the deal with ESB Telecoms helps bring a genuine choice to consumers in cities outside of Dublin."
Niall Hogan, general manager, of ESB Telecoms, said it was one of the largest deals the company had done so far.
Magnet Networks is a fully owned subsidiary of US-based private equity investment company Columbia Ventures Corporation, which owns extensive telecoms interests.
In recent months it took over the Irish broadband wireless specialist Leap Broadband.
