Esat's founder, Mr Denis O'Brien, has indicated he is prepared to increase his offer for Eircom's non-mobile business, The Irish Times has learned.
As part of a revised bid, Mr O'Brien is seeking to acquire Eircom's Internet and directory businesses as well as the fixed-line operation he initially sought to buy. An announcement to the Stock Exchange could be made today.
A new bid may speed the way towards the complete break-up of the former State monopoly, increasing shareholders' prospects of securing a return on their investment.
The latest approach by Mr O'Brien's eIsland consortium could end more than three months of stalemate over the value of its original offer. That bid valued Eircom's fixed-line business at €2.25 billion (£1.77 billion) but was rejected by its board.
Eircom has agreed to sell its mobile subsidiary Eircell to Vodafone, although significant difficulty still surrounds elements of that deal.
eIsland's latest approach is thought to have been considered at length at an Eircom board meeting yesterday. Advisers are thought to have met in recent days and the process is now described as "real".
Mr O'Brien's original bid was worth €1 for each of the 2.2 billion Eircom shares in issue. The price per share in the latest offer is thought to be in the region of €1.10 (87 pence), indicating the new offer is worth about €2.42 billion (£1.91 billion).
It is unclear whether Eircom's directors would accept such an offer.
The fixed-line business is seen as an attractive investment with a secure subscriber base in almost every household in the State. Plans to float Eircom's Internet businesses were put on hold when it entered talks with Vodafone and eIsland and meantime Internet stocks have fallen out of favour.
However, the largest elements of Eircom's multi-media operations, Eircom.net and Indigo, are linked tightly to its fixed-line phone business and have large subscriber bases. Its directory business - which operates the 11811 service - has only one competitor, Conduit.
Eircom's stock, which has traded below the €3.90 (£3.07) flotation rate for many months, closed yesterday at €2.56 (£2.02).
Mr O'Brien made £250 million last year when British Telecom bought Esat, which has never reported a profit. Some of his former colleagues on Esat's board are involved with eIsland. They include Mr Leslie Buckley, Mr Massimo Prelz Oltramonti, Ms Lucy Gaffney, Mr Padraig O hUiginn and Mr O'Brien's father, Denis Snr.
The impetus created by a new bid by eIsland could strengthen the bargaining position of the Eircom unions in seeking compensation for Eircell employees who have to leave the employee share option trust (ESOT) in their transfer to Vodafone.
Eircom unions and management are to meet tomorrow over compensation due to 1,200 employees. Their premature exit from the ESOT is estimated to cost them around £45,000 each in foregone shares.
Industrial action to disrupt the Eircell network is thought unlikely today, despite earlier warnings by the Eircom unions who are now likely to await the outcome of the talks.
