NEW move at EU level to increase the pace of deregulation in telecommunications places another question mark over the terms the Government can demand for its stake in Telecom Eireann.

Last night in Brussels EU ministers out voted the Minister for Communications, Mr Lowry, in a move which may expose Telecom Eireann to greater competition in the home market two years earlier than had been expected.

The EU Ministers agreed to proposals from the European Commission to increase competition in voice telephony by insisting that telephone line providers allow interconnectability to rival services by 1998.

Ireland had been offered the opportunity to defer such liberalisation until 2003, and had been preparing for the liberalisation by 2000.

The exact implications for the Irish market are not clear, but the vote appears to increase pressure for an earlier deregulation of competition in voice telephony than the Government had planned.

Mr Lowry had said that Telecom would not be open to full competition until 2000, but by obliging Telecom Eireann to provide connections for competitors in the voice telephony home market by 1998, a significant part of this competition may now come earlier than expected.

The two potential strategic alliance partners which have lodged indicative bids for 35 per cent stake in Telecom Eireann will want details on the implications of the decision, as they will have based their bids on Telecom having a derogation until 2000.

Telecom Eireann is already subject to competition from companies such as ESAT Telecom, Cable & Wireless and TCL, which offers a range of services to business customers.