AN Athlone-based telecoms company is seeking an injection of up to £5 million (€6.34 million) in an effort to tap into the small business market. It is understood that the company has already attracted an investment in excess of £1 million from venture capital company Delta Partners and a smaller amount from Yeoman International, who have taken a minority stake in the company.

Jupiter Telecommunications Services was established three years ago by Mr Chris Armstrong, the company's founding director, and has been in business for over a year, according to industry sources. The company offers customers a service which it says will find them the cheapest rates when making calls.

A device is installed on the phone lines which will automatically route the calls via the carrier offering the cheapest rates currently available, according to Mr Armstrong. Every day, the latest information on the cheapest rates is downloaded, he said.

Mr Armstrong acknowledged that he had been talking to the venture capitalists, but said no deal had been finalised. Although Yeoman International declined to comment, sources said it had taken a minority stake in Jupiter, but had invested "considerably less than £1 million".

Mr Armstrong said the company was looking for up to three venture capital investors, and had also been talking to investors in the US and Britain. He said the investments should be finalised by the end of April.

The liberalisation of the telecoms market means that resellers like Jupiter, who have no infrastructure, can negotiate favourable deals and interconnect rates with national and international carriers. Mr Armstrong said the company would use Telecom Eireann for part or all of the call, depending on the rates. Certainly, Telecom would be used for part of the call's journey, he said.

Jupiter charges customers £2 per month for the service and also gets a margin from the carrier - which could be Cable & Wireless, MCI/WorldCom, for example - depending on the amount of billable minutes it sends through their networks. It also charges £1 for an itemised bill.

Mr Armstrong claimed the company now had about 5,000 customers and was currently sending two million minutes of billable traffic per month through carriers. He said the company was concentrating on businesses with 1-10 phone lines, rather than the large corporate market. Too many people were chasing the large corporates, he explained, and in some cases the rates were uneconomical from the carrier's viewpoint.

Mr Armstrong said Jupiter was currently organising a number of franchises in areas such as Clare and Galway. The company registered the names Clare Telecom, Galway Telecom, Kerry Telecom etc. No list of directors or accounts for Jupiter has been filed in the Companies Office. Mr Armstrong said the company had been concentrating heavily on the research and development aspects of the business. He said a number of small investors, mainly Irish-American, had put up the seed capital. He claimed the company had the capacity and potential to eventually handle up to 200,000 customers.

Asked if the company would challenge Esat's residential service, Mr Armstrong replied that it would take business from anyone, as long as they were prepared to pay £2 per month.

Industry sources said last night that the practice was well-known in Britain and the US, where such companies are known as LCRs (least cost routes). However, one source said he doubted that such companies could grow substantially in Ireland as the market was too small for them to gain the number of minutes needed to achieve significant reductions from the major carriers.