Cable firm NTL resolved an acrimonious dispute with the telecoms regulator yesterday by agreeing to offer digital television to all its customers by June 2003.

The agreement follows NTL's failure to honour the terms of its licence, which stipulated that it should upgrade its wireless network - which serves about 20,000 consumers in the Republic - to be able to carry digital TV services.

This failure to offer digital services to parts of Galway, Waterford and Dublin prompted the telecoms regulator to issue a public rebuke to NTL last month and threaten sanctions against it unless it upgraded its networks.

Mr Graham Sutherland, managing director of NTL Ireland, said he was delighted that NTL would now offer a digital service to consumers in rural areas.

The firm, whose parent NTL Group is negotiating to emerge from Chapter 11 bankruptcy protection in the US, has guaranteed a bond of €100,000 million payable to the regulator if it fails to upgrade its wireless network.

In addition, from June 2003, subscribers in the affected areas will be entitled to a reduction of €2 in their monthly bill until the service is capable of being received.

NTL has also agreed to a two-year reduction of its wireless licences as part of the deal, which follows almost two years of discussions with the telecoms regulator. The licences will now expire in 2012 rather than 2014.

Telecoms regulator Ms Etain Doyle said she was disappointed that NTL's wireless subscribers to date had not been able to get digital services but the proposals meant that subscribers would now be able to avail of digital services by June 1st, 2003.

NTL had earlier been in negotiations to sell its wireless network. But a spokeswoman for the company said these plans had been dropped. The deal covers only NTL's wireless network that runs on microwave technology and does not affect its cable operation, which has 350,000 users. Some 90 per cent of NTL's cable network is already digitised.