Mobile phone operator Meteor has reached an agreement with rival O2 which will see it use the O2 network to give coverage in areas it currently does not reach.

The move was immediately welcomed by both ComReg, the telecommunications regulator, and the Minister for Communications, Mr Ahern, who said it should help drive competition and lower prices in the Irish mobile market.

Meteor said the deal would allow it to offer its customers national coverage before it completes the rollout of its own network.

Under a roaming agreement announced yesterday, Meteor customers will be able to make and receive calls on the O2 network in counties Donegal, Mayo, Cavan, Sligo, Leitrim and Kerry, as well as parts of Galway, Limerick, Cork, Clare, Longford and Roscommon.

Meteor's parent, Western Wireless, recently announced financial results and said that the mobile operator, which was last into the Irish mobile market, now had around 222,000 customers.

Meteor had been anxious for a long time to conclude a deal with one of the other two operators, O2 and Vodafone. The agreement announced yesterday will run for 30 months, from the beginning of September. O2 will receive a share of each call made.

Meteor said yesterday that the roaming services would be phased out as Meteor completes its own network.

ComReg chairman Mr John Doherty said the agreement had the potential to increase competition in the mobile market as it would provide Meteor's customers with greater coverage than has been available on Meteor's network.

"ComReg believes that there is potential for further competition in the mobile market and will continue to promote such competition wherever possible," Mr Doherty said.

O2 chief executive Ms Danuta Gray said the agreement was a commercial arrangement which "will deliver clear benefits to O2."

She added that "a number of safeguards" had been incorporated in the agreement to ensure that the "quality of service to O2 customers remains unaffected".