Eircom has put a network maintenance contract worth up to €20 million per year out to tender in a move to cut its costs further and boost profits.

The tender is likely to form part of a new drive by Eircom to reduce the cost of maintaining its telecoms network. Eircom currently spends more than €50 million every year maintaining its fibre-optic and copper networks.

Up to six firms have already submitted bids for the new maintenance tender for civil engineering work in the eastern and western regions in the Republic.

Swedia, Clarkes and a British firm called Enterprise are all thought to have submitted bids for the work and a decision is expected shortly from Eircom.

A company spokesman said last night that the firm was constantly looking to see where it could cut costs further.

Yet despite the cost-cutting drive, Eircom has renewed a controversial three-year framework network maintenance deal with a subsidiary called TE Services.

TE Services holds about 50 per cent of the estimated €50 million worth of contracts that Eircom issues each year to keep its telecoms network up and running.

It is understood that Eircom signed a new three-year agreement with the Dublin-based firm last month. TE Services, which was originally set up by Eircom to take advantage of opportunities in Britain, was used later as a way to persuade staff to leave Eircom and get off the firm's payroll.

Eircom owns 35 per cent of TE Services and its director of wholesale networks, Mr Herb Hribar, sits on the smaller firm's board.

It is believed that Eircom network business accounts for a large proportion of the firm's €32 million annual turnover.

The firm also carries out work for British Telecom, Chorus and Marconi.

Eircom's decision to renew its deal with TE Services follows the recent conclusion of a Competition Authority enquiry into Eircom's network procurement practices.

This enquiry focused on whether Eircom unfairly awarded contracts to TE Services.

Earlier this year, the Competition Authority decided not to pursue the complaint, taken by a Louth-based company called Network Splicing.

TE Services recently won a deal to provide network maintenance services to E-Net, the company chosen to manage the State's new fibre-optic network.