INDEPENDENT Newspapers is likely to face more intense competition in its effort to expand its Australian radio interests, following the expected move into the market by a consortium involving the Daily Mail and General Trust.

Daily Mail has linked up with an Australian broadcaster, Mr Paul Thompson, to set up a new commercial radio network, DMO, to bid for new FM broadcasting licences in Australia's larger cities, which are due to be auctioned by the government next year.

At least £8 million per licence is expected to be the minimum asking price for the FM licences in Independent's radio interests Australia are held through its 25 per cent associate, APN, which, in turn, owns 50 per cent of Australia Radio Network. The other 50 per cent of Australia Radio Network is held by Mr Lowry Mays's Clear Channel Communications one of the biggest American radio station operators.

Independent and its partner have been extremely successful in building up a strong commercial radio presence in the major Australian cities, and industry sources have suggested that any well financed operator such as DMO could mount a major challenge to ARN's strong position in the Sydney, Brisbane, Melbourne and Canberra markets.

Independent's APN associate first diversified into commercial radio in 1994 when it paid £54 million for Wesgo, the second biggest broadcasting chain in Australia.

Shortly after that deal, APN paid £7 million for the Gold 104FM station in Melbourne and later paid a further £29 million for three more stations in Sydney, Melbourne and Canberra.

But in a separate development, APN then brought in Clear Channel as a partner in its expanded radio network, with Clear Channel paying £46.7 million for a 50 per cent stake in the network, which was rechristened Australia Radio Network. Clear Channel had been an underbidder when APN first bought into commercial radio.

Since then, ARN has had to divest itself of six of its radio stations because of Australia media ownership rules. Independent's APN associate has, however, signalled that it might bid for the 13 stations owned by the state owned Radio New Zealand.