EIRCOM, the Irish fixed-line phone company, has lined up Goldman Sachs, Citigroup and Morgan Stanley to lead a €1.1 billion (£751 million) flotation of the privately owned group next month.

The company’s shareholders, who are led by Providence Equity, a private equity group, and include Sir Anthony O’Reilly, the chairman, believe that the recovery in telecoms stocks will allow a listing in both Dublin and London.

A successful float would generate a handsome profit for Providence and its partners, who hold a stake worth about €700 million. They are expected to place their entire stake.

The shareholders’ original investment was about €700 million, but they have already taken back €350 million after a successful bond issue last summer. Providence holds about 46 per cent of Eircom, while Sir Anthony, who is expected to remain chairman, has just over 5 per cent.

The float process is expected to begin at the end of next week after Eircom finishes consulting its bondholders, who have to consent to the plan. Nobody believes that the bondholders will put up any opposition.

A spokesman for Eircom said: “We are considering a flotation, but we are currently seeking the consent of our bondholders first.”

Private investors will be excluded from the offer, in an effort to avoid a repeat of the severe losses suffered by ordinary investors the last time the telecoms carrier was listed.

Eircom was sold off by the Irish Government in 1999, near the height of the telecoms bubble.

The shares were actively marketed to the Irish public, and 600,000 people took them up — only for the stock to collapse over the next two years.

The company sold its mobile phone arm to Vodafone, and the residual fixed line business was taken private by Valentia — the consortium led by Providence — for €3.1 billion in cash. They then refinanced the deal with debts totalling €2.4 billion.

Valentia owns 70 per cent of the company and in addition to Providence its other shareholders are Soros Private Equity, which holds 19 per cent, and Goldman Sachs, which holds less than 1 per cent.

The remaining 29.9 per cent of the business is owned by a staff trust — which hopes to offload its stake to 15,000 past and present employees in a special tax-free distribution.

The expectation is that Eircom will have an enterprise value of between €3.5 billion and €4 billion at the time of its listing.

Stripping out the debt, that would value the group’s shares at between €1.1 billion and €1.5 billion.

Eircom does not publicly release financial information, but the company is thought to be operating at about break even after interest costs.

It has about 80 per cent of the Irish fixed line market, and 1.6 million customers.

Confidence is gradually returning across the telecoms sector, which has been demonstrated in a string of recent and planned equity deals.

NTL, the cable operator, completed a $1.4 billion (£762 million) rights issue last autumn, while Belgacom, the Belgian national carrier, is expected to float in the next two months, with a value of about €10 billion.

• SURGING demand for mobile phones in emerging markets helped to boost the number of handsets sold in 2003 by 20 per cent to 510 million, according to data released yesterday.

  The growth, which has been fuelled by low-cost handsets sold in China, India, Russia and Brazil, is expected to continue this year. It is expected that 560 million phones will be sold.

  Ben Wood, an analyst with the market research group Gartner, said that 2003 was a “phenomenal year”, in which unit growth came despite a sharp second-quarter slowdown, following the outbreak of the Sars virus.