Uncertainty over whether Esat and Eircell will carry their calls is understood to be a key factor in dissuading potential bidders from competing for the third mobile phone licence. Concluding a deal, known as a national roaming agreement, with the current operators will be vital to the third player. This is because it will enable the new competitor to offer what is effectively a full service, without having to invest in the infrastructure.

Eircell chief executive, Mr Stephen Brewer said last night that the issue was extremely complicated. He said they were prepared to conclude roaming agreements - and share mast sites - but only on a commercial basis.

Esat chief executive, Mr Barry Maloney also said it was a question of economics. "For us to look at it, it would have to be proven to be economically viable." Mr Brewer said the business was about "getting customers" and keeping them. He said that, while the issue might be clear for the third mobile operator, it was not clear for the current operators. He said Eircell would need extra capacity by 2000, but it was not certain when it would get this.

Both Eircell and Esat have been promised DCS-1800 licences - similar to the one which is currently up for grabs at a cost of £10 million - but it is up to the telecommunications regulator, Ms Etain Doyle, to decide when to grant them. She has said she will not do so until the feels it is justified in the marketplace, and not before 2000.

Mr Maloney also said the key issue was when the regulator would give them the DCS-1800 frequencies. The DCS-1800 system is a digital one, but operates on a higher frequency and is more suited to large urban areas. The successful applicant will start by installing this system, but has the option to provide a full GSM system (like that run by Eircell and Esat) eventually.

The regulator cannot force Eircell and Esat to reach roaming agreements (they can even set their own rates for carrying the calls) or indeed share their infrastructure with a new entrant. Potential bidders say such "imponderables" in the licence are a major barrier and are causing some to reconsider whether to apply.

Mr Brewer said he had every sympathy for the regulator, who was determined to grant a third licence, but said the roaming issue was very complex and had already proven to be a major problem in Denmark and elsewhere.

Potential applicants have submitted around 80 questions to the regulator's office, regarding the licence. Many of them relate to roaming agreements, site sharing and when the two operators will get DCS licences.

Sources said last night that there was growing concern among potential bidders about the viability of the licence. Both Eircell and Esat are winning customers at a phenomenal rate. Both are also seen as extremely strong competitors with well-established brand names.

Breaking into the Irish market is going to be very difficult. There is also the issue of winning approval to erect masts and install transmitters. It is expected to face fierce opposition from environmentalists, so sharing infrastructure could be crucially important.

Among those interested are in the licence are France Telecom, Orange, the DCS operator in Britain and the North, Western Wireless, a US telecommunications company, RF Communications, an Irish company.