TELECOM Eireann is confident that an EU review of cable companies will not force it to divest its majority stake in Cablelink, Telecom's chief executive, Mr Alfie Kane, said yesterday.

He also predicted that cheaper mobile phone costs are on the way and promised a better service from Eircell, adding that the company already compensates customers for dropped calls.

Mr Kane said it was highly unlikely that Telecom would have to sell, its 75 per cent stake. Telecom has often been accused by rivals of buying the stake purely as a defensive measure and has regularly spoken about making a major investment in Cablelink.

Mr Kane said when the strategic alliance with KPN/Telin was going through at EU level, Telecom had explained its plans for the cable operator. It had also promised to make the service available to other users as a multimedia platform and to invest in the network.

"What is clear is that Cablelink cannot be allowed to trundle on as a basic cable network," Mr Kane said.

He promised that Telecom would invest up to £150 million in the network and make it available to others. At present the company, which employs around 300 people, is completing a £4 million upgrade which would bring an extra 10 television channels onto the network.

On the issue of Eircell's service, which has been heavily criticised, he said the company plans to build another 100 base stations, but planning; permission has been a delaying factor. He admitted the service was not 100 per cent.

Asked if the company was planning to introduced compensation for dropped or interrupted calls, he said Eircell already did this. (Its rival, Esat Digifone, introduced compensation when it launched its service in, March).