A consortium led by a Limerick-based property developer, Tiernan Properties, has been selected as preferred bidder for a contract to manage the State's €170 million telecoms network.

The Government is negotiating with the consortium to decide costs and detailed specifications for its proposed telecoms "management services entity".

This body will manage the State's new fibre optic networks, which are being built in 19 regional towns. It is expected the Government will also extend these networks to about 88 towns over the next few years.

The successful consortium is being led by Tiernan Properties' telecoms subsidiary, eNET. It also includes a spin-off from Eircom, called TE Services, and Swedish company Swedia.

The consortium beat off competition from Canadian telecoms firm Axia and Irish technology firm Data Electronics to become the preferred bidder.

The decision by the Government will be a major disappointment for Axia, which has spent considerable time and resources targeting the Irish market.

Tiernan Properties is a well-known property development firm, which has built a shopping centre in Limerick and other large projects.

TE Services builds telecoms infrastructure and maintains networks for Eircom and a number of other firms in the Republic and in Britain.

The firm, which spun off from Eircom in 1998, has expanded rapidly and has annual turnover in excess of €30 million.

Swedia is a spin-off from the incumbent telecoms firm in Sweden, Telia, which still owns 49 per cent of the company. The company manages several municipal telecoms networks in Sweden. Its Irish subsidiary employs about 60 employees.

The contract to manage the State's telecoms assets is believed to be worth several million euros over a 10-year period.

Provided that eNET can conclude the negotiations as a preferred bidder, the Government will announce the contract within the next two months.