ESAT Telecom's share price rose further yesterday on the back of reports that the Scandanavian consortium Telia/Telenor may be considering a bid for the Irish company.

The shares - which are quoted in Dublin - and on the Nasdaq were a dollar off their all-time high of $55 1/4 at $53.69 late yesterday.

Esat's share price has been rising slowly but steadily in recent weeks, a combination of speculation about the company's future and a general feelgood factor towards telecoms.

Sources close to Esat said last night that talks had been taking place in recent weeks, between Esat and Telia/Telenor the Swedish/Norwegian group which has recently merged. Telenor is a 49.5 per cent shareholder in Esat Digifone, the mobile arm of Esat, while Telia is a 14 per cent shareholder in Eircom.

Any deal involving Telenor will be difficult to conclude. Esat and Telenor have a particularly strained relationship. "There is a view among both parties, that the issue will have to be resolved once and for all," said another source.

A report in Business & Finance suggested that NTL, which bought Cablelink earlier this year for £535 million (€679 million), would buy Esat's fixed-line business from Telia/Telenor, once the deal was completed.

Sources said last night that NTL needs a fibre backbone to carry its traffic around the State, because it will have to offer cable and telecoms services to make its business plan viable.

It would be logical for NTL to buy the fixed-line business from the Scandanavians if it pulled the Esat deal off.

"They [Telia/Telenor] are very interested in buying Esat," said one source. "Talks have been taking place in recent weeks. . ."

The source said it would make sense for NTL to become involved at some stage, although it was unlikely the company would form part of any initial joint bid. An NTL spokeswoman said the company did not comment "on market rumour or speculation".

There is a feeling within Esat that the fixed-line side of its business is undervalued. Some sources suggested that the company may be trying to talk up its value, by floating the possibility that it is being pursued. An Esat spokesman was unavailable.

Meanwhile, Eircom's biggest single shareholder KPN was at the centre of speculation yesterday that it will be taken over by Mannesmann, the German engineering and telecoms group.

KPN, a Dutch telecoms group, is a 21 per cent shareholder in Eircom and may increase this stake to 29 per cent, if Telia sells its 14 per cent shareholding as expected. Interestingly, Mannesmann's chairman is Lars Berg, former Telia CEO and a key architect in the KPN/Telia strategic alliance with Eircom.

Mannesmann itself is at the centre of rumours that it will be taken over by British mobile phone group Vodafone Airtouch. It was thought that Mannesmann may want to buy KPN to foil the Vodafone bid.

However, the likelihood of a bid for KPN appeared to recede late last night when Mannesmann chief executive, Mr Klaus Esser, said he did not expect his company to make a major acquisition in the next 12 months.