The auction to buy mobile phone group Meteor entered its final stage last night with Eircom, Smart Telecom and Denis O'Brien all submitting bids for the operator.

The sealed bids are expected to be worth up to €400 million and will be evaluated by Deutsche Bank, the company running the auction process for Meteor's US parent Western Wireless.

A preferred bidder for Meteor is expected to be chosen sometime in the next four weeks.

Analysts believe that buying Meteor is an attractive option for Eircom, given its ability to offer consumers both fixed and mobile services. But Eircom's large debt burden, at €1.9 billion, could cause the firm to balk at paying more than €400 million.

In a note, Merrion Stockbrokers said last night that Eircom would need to raise additional financing unless the price paid for Meteor was at the bottom of its estimated range, which is between €270 to €370 million.

The London firm New Street Research also called into question whether Eircom would be able to continue to pay its lucrative dividend to shareholders if it concluded a big mobile deal.

Smart Telecom's bid is reportedly backed by three wealthy individuals: the Glen Dimplex founders Martin Naughton and Lochlann Quinn, and Kingspan director Brendan Murtagh.

The final bidder is Denis O'Brien, the founder of the Esat group in the Republic, and now a principal shareholder in the Caribbean mobile operator Digicel.

He is reported to have teamed up with the private equity company Permira to make a bid for Meteor, which now has almost 400,000 mobile subscribers.

Western Wireless is selling all its international mobile operators following its merger with Alltel, another telecoms firm that operates solely in the US.