The sharp fall in the value of the Vodafone offer for Eircell and the absence of a cash alternative for shareholders were among the main issues dominating questions at Eircom's special meeting yesterday.

Chairman Ray MacSharry spent around two hours fielding questions from 23 of the 770 shareholders who turned up for the meeting. In a session marked by flag-waving, booing and a round of slow hand-clapping, he also dealt with the fate of the fixed-line business, the company's multi-media investments and the performance of management.

Top of the list of shareholder concerns was "the devastating fall", as one shareholder put it, in the value of the Vodafone deal from €4.5 billion when it was first negotiated last year to €3.3 billion yesterday.

"It's a bad deal for shareholders, a bad deal for the company, a bad deal for employees and a bad deal for Ireland," said another shareholder, Mr Denis O'Donovan. He added that after the sale, the Republic's entire telecoms infrastructure would be in the possession of foreign interests.

His view that the deal was not a good one for Eircom shareholders was echoed by others, including Senator Shane Ross who declared that "this deal is not what it's painted out to be, not what it was" before waving a white flag of surrender in front of the board.

Mr MacSharry responded testily that "we are not here for showmanship" before remarking that there must be an election coming up.

His later comment to Senator Ross, that "to try to run the company down as you do is nothing short of a disgrace", was greeted by a chorus of "rubbish" and prompted some slow hand-clapping from the floor.

Also worrying those present was the failure of Eircom to negotiate a cash alternative for small shareholders and the prospects for the Vodafone shares they will get from the sale of Eircell.

Mr MacSharry defended the structure of the deal, saying it was an all-share transaction to make it tax efficient for the company and for shareholders.

But reassurances from the chairman that Vodafone had one of the best management teams in the world and that several leading international investment firms rated Vodafone shares a buy, and had price targets of up to £3.45 sterling for them, cut little ice with some shareholders.

The future of the fixed line business, the rump that will be left after the demerger, also exercised small shareholders.

One shareholder noted he would like to see a sign up on the door saying the fixed line business was not for sale. "Let's have a bit of optimism for the future. We have a company, let's keep it."

Mr MacSharry declared himself constrained by stock exchange and takeover rules in what he could say but stressed that the fixed line business had not been put up for sale. However, he said Eircom had been approached by three different groups and in the interests of shareholders, the board was considering these developments and any new proposals that might emerge.

Mr MacSharry conceded the company had been affected by the troubles afflicting the dot.com sector although less so than many rival firms.

He said losses arising from Ebeon had totalled £20 million while the company lost a further £20 million as a result of its stakes in Flexicom, Viasec, Nua and Local Ireland.

Despite the best efforts of Mr MacSharry and the board to bring the shareholders present around to their way of thinking, the motion to demerge Eircom was defeated by a show of hands when it was put to the floor.

However, when all votes were counted it was approved by 99.5 per cent of shareholders.