Since the loss by Telecom Eireann of its monopoly in the Irish telecoms sector, it has battled hard to reinvent itself.

Though its shift in focus, primarily into the datacommunications field, has been quite gradual, there are few Internet-related ventures that Telecom Eireann hasn't held in its sights.

Now as it readies itself for flotation, the new-look Telecom Eireann bears a passing resemblance to a modern day telecommunications company. In just two years it has worked hard to achieve this by targeting everything that moves in the Internet space.

The first and most obvious step was the acquisition of Internet service provider (ISP) Indigo in late 1997. For just £2.75 million (€3.49 million), Telecom purchased a customer base of 9,000, and after teaming up with its own modest Tinet service, overnight became the second biggest ISP in the Republic.

Through this move Telecom effectively became a competitor of its own customers, who were other service providers relying on Telecom for their technical infrastructure. Its dominant position meant that not only did it retain its revenue from its large service provider customers, but it had expanded its offering to a huge residential base.

This core base emerged as central to Telecom's long-term Internet strategy when it paid £4 million for a 90 per cent stake in Local Ireland last year. Though initially unclear what the investment benefit to Telecom Eireann might have been, in the longer term Local Ireland's aim to harness local Internet activity through local community structures could prove extremely lucrative for Telecom Eireann.

If successful, the broad-based Local Ireland infrastructure will provide Telecom Eireann - through which all of the Local Ireland traffic will pass - with an extensive directory and critical mass of data traffic users.

Mr Aidan Finnegan, Telecom head of interactive services, says: "Local Ireland is aiming to be the place for Irish communities on the Web. This amounts to a lot of eyeballs, and eventually it should create a space of interest to advertisers."

Telecom is taking the view that primary revenues from the Internet will flow from advertising and shares of e-commerce transactions. It can't be long before Telecom aligns itself with a major online shopping initiative in order to capitalise on online sales.

Meanwhile, Telecom has worked assiduously to flex its muscles in the Internet networking space. Industry observers say Telecom has come under pressure recently from its advisers to cultivate a profile as a company geared to handle the future data and Internet market.

The first indicator of a push into this space came with Telecom's £8.5 million acquisition of LAN Communications in April. That month it also paid £4 million for the Northern Ireland telecoms equipment supplier, Atlas Communications. Both were timely strategic moves for Telecom, particularly when LAN represented the last indigenous network integration company of scale available for purchase.

The deal provided Telecom with expertise and service capability in local area network services. Primarily aimed at the corporate market, Telecom is keen to demonstrate it can walk in the door of any company and cater for all its network requirements.

The corporate offering was expanded further last month when Telecom paid £10 million for a 51 per cent share in Trinity Commerce, a subsidiary of the Trinity Technology Group. Its focus on development of ecommerce enabling applications opens another market layer to Telecom.

"Trinity Commerce gives us greater reach into the systems integration area, providing more customer points of contact. It adds to our goal of being an end-to-end solutions provider. Through organic growth and acquisitions we are offering a `soup to nuts' service," says Mr Finnegan.

A year and a half and £29.25 million later and Telecom has managed to cobble together a reasonably compelling data communications portfolio, although industry analysts suggest there is a lot more work to be done.

"Telecom definitely needs an e-commerce strategy before credibly presenting to institutions. The companies it is looking at are providing services to people - not historically a telecommunications company's business. Telecom has scrambled around a bit to buy its way into this market, because it knows this is how it can generate more traffic on its network," says one analyst.

As flotation day rapidly approaches, it can be safely asserted that Telecom has its sights set on further strategic acquisitions. According to Mr Finnegan: "There is a significant budget set aside. Recent public comments made on the cash available to Telecom following the Cablelink sale have given us something of a war chest."

Expected targets of Telecom include Horizon Computer. Last month it was reported the trade sale could be worth more than £60 million. Horizon is one of the State's largest independent providers of computer services and information technology products, with a strong growth record.

Donegal-based Inflo Communications has also been earmarked as a potential buy. It specialises in developing and marketing Internet and network security products.

Criticism has been levelled at Telecom's robust push into the datacommunications market. It has been suggested its market dominance in the telecommunications sector has put it in a position where it is effectively "replacing one monopoly with another in data traffic infrastructure".

According to Mr Scott Rankin, telecoms analyst with Davy Stockbrokers: "The issue of a data monopoly won't register on the political agenda yet, but who controls the access may be an important issue going forward. However it's not exercising the minds of politicians right now, and once Telecom becomes a private company investors are less likely to complain."