Worldport Communications is closing its Dublin operations with the loss of 89 jobs just a year after opening a multi-million pound state-of-the-art facility here.

The firm, which provides web-hosting services for businesses, set up its European headquarters in Blanchardstown in October 2000.

At its height, it employed 127 people, many of them highly-skilled technology graduates. But it cut 15 jobs in July, saying it was eliminating duplication following an acquisition in the UK.

But sources said it faced increasing difficulties, partly because it was a pure web-hosting company with no other business to fall back on.

When it set up here, the firm said it selected the Republic as the location for the European operations centre because of its skilled workforce, telecoms infrastructure and national initiative to support technology-oriented business.

But the sources indicated it also found it difficult to compete here because of the lack of familiarity with the web-hosting concept in the Republic. It plans to maintain its operations in Britain, Sweden and Germany. The cuts will affect staff across the board. The shutdown is effective immediately.

No more than 20 people will be retained to assist with the migration of existing customers to alternative suppliers and to facilitate the sale of assets.

WorldPort has been operating in the European market since 1998 when it acquired Enertel, the second telecoms operation in the Netherlands.

The firm had intended to expand into other European markets from its Dublin base. While sales offices were to be set up elsewhere in Europe, technical and support services were to be provided out of Dublin.