Eircom was being subjected to a "penal regulatory process" that was forcing it to hand over lucrative business to multinational competitors, the general secretary of the Communications Workers' Union, Mr Con Scanlon, has told its annual conference. He particularly targeted plans to allow access to Eircom's local fixed line networks and said the company's 500,000 shareholders would be "outraged" if they knew the company's assets were being opened up to multinationals.

The union would be seeking "an alliance with the thousands of people who are shareholders" and whose "assets were now to be given to the multinationals to make money for them and in the process inevitably put downward pressure on the share price".

Eircom staff own some 14.9 per cent of the company under the terms of an employee share option plan agreed before the former State monopoly was floated last summer. The stock has traded below its flotation price of A3.90 for much of the past year.

Mr Scanlon continued: "There are many people out there who have put a large chunk of their life savings into what they thought was a reasonably safe bet . . . The Government as a policymaker cannot walk away from them now."

Mr Scanlon asked how many shareholders realised, for instance, that "two-thirds of what Eircom gets from a customer for a call from its fixed network to Digifone's network is given to Digifone? Now the regulator wants us to hand over our local network to allow them to make even more money." He also criticised senior Eircom management for its "policy of crawling and appeasement" towards the regulatory regime. But the CWU members "are not going to be sacrificial lambs for anyone". The union would "stop this vindictive, destructive process. We intend to make an issue of this in every corner of the country."

An Eircom spokesman declined last night to comment on Mr Scanlon's statement.

Mr Scanlon warned that a similar approach to postal services would destroy An Post as a commercial operation "in 12 to 18 months".

The union president, Mr Ray Lawlor, told delegates at the conference in Ennis yesterday that Eircom "had to operate in one of the harshest regulatory environments that any incumbent operator in Europe has had to face".

The union did not expect Eircom to receive favourable treatment "but neither can we accept regulation that disproportionately restrains Eircom's ability to compete". Some competitors "have the entire might of some of the world's biggest telecommunications giants, such as MCI WorldCom and British Telecom funding their efforts."

But the strongest criticism came from Mr Scanlon. "There is absolutely no doubt in my mind that if Eircom was not such a strong company, if we had not made the changes, adjustments and sacrifices that we have made to date, the company would now be in serious trouble as a result of these penal regulatory processes."

The CWU had "actively supported the notion of an open, competitive market. We will not, however, continue to support a regime that is unreasonable, unfair and ultimately not in the best interests of this country.

"We cannot be expected to support the process that will bring about massive job losses in Eircom in every town in Ireland." Not alone the regulator but officials in the Department of Public Enterprise "appear to believe that their sole aim in life is to get rid of Eircom".

A spokeswoman for the telecommunications regulator, Ms Etain Doyle, said yesterday that the liberalisation of the market was important for economic development, especially in the high-tech area, and required by EU and national legislation. She said Eircom "has risen to the challenge in a number of areas".