Up to £1 billion worth of Telecom Eireann shares are likely to be offered to the public when the company is floated on the stock market in late June or early July.
Launching the marketing campaign for the retail element of the share offering, the Minister for Public Enterprise said yesterday that at least 20 per cent of Telecom would be offered for sale.
But market sources said demand for the shares was likely to mean that the Government would sell up to 35 per cent of its 51 per cent stake.
It is expected there will be a heavy response to this biggest-ever privatisation of a State company. If only one in 10 of the public takes up the offer of shares, it will mean that the maximum allocation will be little more than £500 worth.
From today, a £3 million marketing campaign will get under way, beginning with a mail-shot to everybody on the electoral register - 2.8 million people - offering them the opportunity to register for an allocation of shares.
This registration does not involve any obligation to buy when the shares are offered for sale in June, but those who have registered will receive priority when it comes to allocating shares.
The Minister, Ms O'Rourke, said that the marketing of Telecom shares would be the largest public awareness campaign ever conducted in Ireland and reflected her determination to have the biggest possible involvement of the general public in the sale.
Analysts are currently valuing Telecom at €7 billion (£5.5 billion). Assuming that more shares are made available to private than to institutional investors, it seems likely that around £1 billion worth of Telecom shares will be offered to the public, with £900 million being sold to domestic and international institutions.
But the Minister has been strongly criticised by the Fine Gael spokesman on public enterprise, Mr Ivan Yates, who said that everybody who registers to buy Telecom shares should be guaranteed £3,000 worth.
"It will be politically unacceptable to Fine Gael that wealthy institutional investors in New York, Zurich and London will make a windfall profit over and above the prospects of Irish citizens," he said.
"Priority should now be given to those who wish to purchase in Ireland through the retail market. The only way to absolutely ensure this is by stating what registration now entails.
"In answer to my queries it seems the only assurance is that those who register will be ahead of others in a future mythical queue," he said.
The final value of Telecom shares and the price at which they will be sold will not be determined until an intensive marketing campaign aimed at Irish and international investors is completed in June.
But analysts believe that the current buoyancy in the telecoms sector, boosted further this week by the possible Deutsche Telekom/ Telecom Italia merger, will result in strong institutional demand for Telecom shares.
The institutions will have much fewer shares than they would like, and are likely to be strong bidders when trading begins.
Telecom itself will report its financial results at the end of May, and a rise in profits from last year's £230 million to around £280 million is expected.
If 35 per cent of Telecom is sold in the public offering, the Government's stake after the flotation will be just over 15 per cent, with Telecom's strategic partner, the Dutch telecoms group KPN, having 35 per cent and Telecom's employees having just under 15 per cent through a trust.
Editorial comment: page 17
Flotation likely to be heavily over-subscribed: page 18