Eircom has made its first entry into the application service provision (ASP) market after acquiring a 49 per cent in Beacon Integrated Solutions, a Limerick software development company, for £1.3 million (€1.65 million). The agreement will allow the telecoms company to increase this holding to 67 per cent from May 2001, in a £2.2 million package.

ASP is a method of delivering software applications remotely to companies. Beacon provides an application known as SAP (systems applications and products in data processing), which is used by Eircom and other companies such as CIE, Ryanair and the ESB. Beacon's main competitor is i-Fusion, a Horizon-owned company. "What we intend to do is add other applications and other services to SAP," Mr Mike Davidson, Eircom's head of business development, said.

The deal is part of Eircom's move to position itself in the growing IT services sector as it faces diminishing returns in its fixed line business. Mr Davidson said the £2.2 million investment was "the green shoot" of a new investment area. At least £10 million would be invested in the wider ASP market over the next five years, he said.

Beacon, established in March, 1998, employs 21 people at the National Technological Park (NTP) in Limerick. It is in a Business Expansion Scheme until 2003, which was a factor in Eircom acquiring the 49 per cent stake now.