NTL is on the verge of withdrawing from the residential telecoms market in the Republic in a bid to cut costs as its parent NTL Group prepares to emerge from bankruptcy protection in the US.

The company, which supplies almost 10,000 homes with a telephone service, is conducting a final review of its budget, and is expected to announce it is withdrawing the service within weeks.

A decision to withdraw its residential telephony service would affect NTL consumers who transferred from Eircom in the past two years.

It would also represent a significant blow to the domestic market which has seen several high-profile telecoms firms exit the Republic during the most severe industry crisis in history.

Spirit Telecom, one of the biggest firms which stopped offering telephony to consumers last year, complained it was not possible to compete against Eircom, which holds 90 per cent of the market.

An NTL Ireland spokeswoman refused to comment on the issue yesterday, but senior industry sources believe NTL will exit the market for carrier pre-select telephony (CPS), a type of technology which the company uses to offer its customers a service using Eircom's network.

Its CPS telephony service - which is used by under 10,000 customers - is a loss-maker for the firm, which has had to cut back severely on its capital spending following its parent's bankruptcy.

The firm has conducted a trial with a different type of telephony technology called voice over internet protocol which could utilise NTL's existing network to offer a service. But this type of technology is not expected to be commercially available for years.

NTL Ireland is expected to continue to offer telephony service to business customers, a sector in which it is possible to maintain better margins and make profits.

NTL will also concentrate on offering cable television service to customers, and is also considering restarting the roll-out of its high- speed internet service. The roll-out of this service, which is available to just 8,000 homes over an upgraded cable, was halted in 2001 when NTL ran out of cash.

Industry sources told The Irish Times yesterday that the company was investigating ways to upgrade its cable system in areas where it won't have to dig up the streets.

The Irish division is expected to follow its parent's new corporate strategy announced earlier this year which focuses on boosting earnings, reaching cash break-even point and turning a profit.

NTL Ireland's latest financial accounts show it reported a pre-tax loss of €24.2 million in the year to December 31st, 2001, up from €11.9 million in the previous year.

The losses were caused by higher operating expenditures which jumped to €89.3 million in 2001, up from €77 million in 2000.

• A new Commission for Communications Regulation will report to the Minister for Communications Marine and Natural Resources, Mr Dermot Ahern, next month on the issue of making flat-rate dial up internet available. The Commission, which was formally established yesterday by the Government, has been directed to report to Mr Ahern on the progress made to mandate telecoms providers to offer a flat-rate internet product at cheap prices.