Ownership of the Republic's fixed line telephone system is set to change hands for the fourth time in six years following an approach to buy the former State monopoly, Eircom, from a company controlled by the Swiss government, Swisscom.
Eircom, privatised by the Government in 1999, said in a notice to the stock exchange yesterday that it had received a "preliminary approach" from a potential bidder, later revealed to be Swisscom.
The development, which led to a steep increase in Eircom's share price, raises the prospect of a takeover battle for the former Telecom Éireann at a time of renewed consolidation in the European telecoms markets.
Eircom's shares gained almost 16 per cent to close last night at €2.40 a share. In contacts with Eircom that were initiated within the past week, Swisscom indicated a willingness to pay in excess of €2.40 a share to take control of the company, putting a value of at least €2.57 billion on the company.
Swisscom is not considered likely at this stage to pay any more than €2.50 a share.
The approach to Eircom from Swisscom follows tentative talks earlier this year between the two companies.
That dialogue was inconclusive and there was no preliminary offer at that time from the Swiss company, which has been searching for international expansion opportunities for some time.
Eircom has since acquired the third mobile phone operator Meteor since those initial talks stopped.
That purchase added considerable potential to develop the business of a company that already has lucrative fixed-line phone contracts with almost every household in the State.
Swisscom was named in a newspaper report last month as a bidder for Eircom, although the Irish company promptly issued a statement saying that it was "not currently in discussions with that company or any other".
The biggest beneficiary of any takeover would be the worker-controlled trust that owns 21 per cent of the company.
The company's flotation in 1999 ultimately left tens of thousands of investors nursing big losses after it was acquired in 2001 by a US-backed consortium led by the businessman Sir Anthony O'Reilly.
Sir Anthony stayed on as chairman of Eircom when it was floated on the stock exchange for a second time in March last year at €1.55 a share, a price that valued the company at €1.15 billion.
He no longer holds a stake in the company, meaning that he would not take a profit on the latest change of ownership.
However, former trade unionist and vice chairman Con Scanlon could realise a gain on his small shareholding in the company.
Other beneficiaries from a sale would include the Eircom chief executive, Dr Philip Nolan, its finance director, Peter Lynch, its commercial director, David McRedmond,and the managing director of the retail unit, Cathal Magee.
The Eircom board, which was apprised of the approach late last week, moved to inform the market of the development after an increase in its share price early yesterday.
The directors are likely to agree to a request from Swisscom to open its books for examination by the Swiss company's corporate finance advisers.
Such an examination, known as due diligence, is the next phase of the process by which Swisscom would make a formal bid for Eircom.
Swisscom's official spokeswoman declined to comment yesterday when asked about the statement from Eircom.
Confirmation of the move on the Irish company came only two days after the Spanish group Telefónica agreed a € 26 billion deal to acquire the mobile operator O2, owner of the second-largest mobile business in the Republic.
The deal to acquire that company, which has 1.5 million subscribers in Ireland, could take about 90 days to complete. Other offers for O2 may yet emerge.