Fidelity, the US investment group which is the biggest shareholder in Esat Telecom, has increased its stake in Esat by 462,150 shares to more than 6.1 million shares or 14.24 per cent of the total. Fidelity previously held 13 per cent of Esat shares.

The price at which Fidelity bought the additional shares and the exact timing of the purchase - whether it was before or after the hostile bid from Newtel - has not been disclosed.

Fidelity and four other major US investors - Investco, John Hancock, Henderson and Putnam - have a combined stake in Esat of more than 34 per cent in Esat and have a pivotal position in deciding the outcome of the hostile bid from Newtel, the Telia/Telenor bid vehicle.

Market sources believe, however, that there is no prospect of any of these five American institutions accepting Newtel at the current level and are certain to retain their shares in anticipation of a higher bid.

Meanwhile, Newtel has for the first time indicated that it might increase its $72 (€70) a share offer for Esat although it has no plans to do so. In a statement issued at the request of the Irish Takeover Panel, Newtel repeated its view that its offer for Esat is "fair and reasonable" even though Esat shares continue to trade well above the $72 offer price.

On Nasdaq yesterday, Esat shares were trading around $82.

Newtel also stated that it reserved the right to increase its offer in the future should circumstances justify such a move. There is strong market speculation that between now and the first closing date of the offer on January 7th, Newtel may bow to the inevitable and increase its offer towards $90 a share. Otherwise, the Scandinavian bidders may face a counterbid from some third party.