The British mobile phone group Orange was talking confidently this week about its prospects if it is the successful bidder for the third mobile phone licence. Orange is competing for the licence with Meteor the consortium made up of RF Communications and Western Wireless.

But is this a licence worth winning and can the winner carve out a profitable part of a market which will be heavily dominated by Eircell and Esat Digifone by the time the third licensee is up and running in the first quarter of 2000.

NCB, for one, has serious doubts about the ability of a third licensee to make a success of the venture. To cover the £150 million estimated cost of setting up a brand new mobile phone infrastructure, NCB estimates that the third operator will need 180,000-200,000 subscribers one-third of all new mobile phone subscribers from 2000 onwards.

If the licensee is able to deal with Eircell or Esat to share their infrastructure or some third-party deal like Esat's with the Garda, then 130,000-150,000 subscribers would be a break-even level.

NCB expects the mobile phone penetration rate 13.7 per cent or 497,000 subscribers at the beginning of the year to reach 31 per cent of 937,000 by the end of next year.

The Esat experience shows that the number of subscribers switching from one mobile company to another is quite low in Ireland, indicating that the new operator will have to get most of its business from new subscribers.

NCB estimates that the third licensee will need to gain 33 per cent of new subscribers to break even, and notes that in Britain, One 2 One

the latest licensee is getting just 10 per cent of new subscribers.

On top of that, the cost of mobile phone calls in Ireland is relatively low by European standards, indicating that it will be difficult for the third licensee to undercut Eircell or Esat. That the latest licence round enticed just two bidders is also seen as reflecting a view in the industry that Ireland will find it difficult to support a third operator.