ITG Payphones reported a pre-tax loss of €400,000 in the six months to June 30th on revenues of €2.2 million. With net assets of €5 million, it has 1,975 payphones throughout the Republic with a further 700 in stock awaiting rollout.

Alphyra shares surged by 17 per cent yesterday after it agreed to sell its ITG Payphones business to Smart Telecom for €2.4 million.

The disposal would allow the company to concentrate on the implementation of its pan-European electronic transactions strategy, it said.

The shares closed at €1.52 last night, a gain of 22 cents on the day.

Alphyra, which sold its telecommunications and computer interests in January, said it no longer considered any of these businesses to be a core part of the group.

"The disposal of this business to Smart Telecom allows us to concentrate on our core activities while at the same time facilitating the future growth of this payphones business and protecting the continuity of service to our customers," Alphyra chief executive Mr John Nagle said.

Alphyra said the proceeds of the disposal would be used to fund growth in its core business and to strengthen working capital .

Analysts said the sale, which had been flagged at the half-year stage, was a positive outcome for Alphyra.

"It's not a business with huge growth potential for them given the level of mobile phone penetration," said Mr Neil Clifford, an analyst with Goodbody Stockbrokers.

Meanwhile, Smart Telecom said the acquisition, funded through a mix of equity and debt, would contribute around €600,000 to group cashflow this year and boost its turnover to €17 million.

"We see this as a major step in the growth and diversity of Smart Telecom's business," chief executive Mr Oisín Fanning said.