Tentative talks on the possible sale of KPN's 21 per cent stake in Eircom to millionaire businessman Mr Paul Coulson broke down late last week.

It is understood Mr Coulson expressed an interest in acquiring the 21 per cent stake in late October after Vodafone launched its bid to acquire Eircom's mobile unit, Eircell.

It was unclear yesterday whether Mr Coulson's interest emerged before or after Esat's founder Mr Denis O'Brien launched his bid for Eircom's fixed-line business.

There was no firm offer for KPN's stake. The discussions did not advance as far as a final negotiation on the consideration to be paid for the stake.

It was offered for sale by the Dutch company last May along with a 14 per cent stake held by Telia, the Swedish group.

Telia subsequently decided to lock-in to Eircom until January so its shareholding is not currently on the market.

The talks, which continued for more than a month, involved advisers acting for Eircom, KPN and Mr Coulson.

It is not known whether Mr Coulson was acting for his leasing and asset finance company Yeoman International or for a consortium involving other possible investors.

While the talks are not continuing, the possibility of reopening contact has not been ruled out.

Mr Coulson had no interest in acquiring only Eircom's fixed-line business or elements of it. His interest, it is understood, was in acquiring the strategic stake in its entire business currently held by KPN.

Last week Eircom's chief executive, Mr Alfie Kane, said the company received a number of expressions of interest from possible suitors.

It is understood he was referring to the talks with Mr Coulson - and other groups.

While Eircom has concentrated since October on the sale of Eircell, it is believed that its contact with Mr O'Brien's eIsland consortium was stepped up last week.

Mr O'Brien has offered £2.2 billion for the fixed-line business. It is thought the Vodafone deal could be finalised by the middle of next week.

Reports that the Independent News & Media chairman, Dr Tony O'Reilly, was interested in acquiring a stake in Eircom have not been confirmed.

If Dr O'Reilly was interested in acquiring a stake, it is unlikely he would act in concert with Mr Coulson.

An accountant, Mr Coulson (48), controls Tipperary Crystal and he is also non-executive chairman of Ardagh, the glass bottle manufacturer.

Yeoman has a troubled history. In the early 1990s, a £93 million acquisition of a British leasing group CLF Holdings led to a write-off of £18 million, and, within months of its listing, a sharp drop in the price of Yeoman shares.

Mr Coulson subsequently won an out-of-court settlement worth £35 million against SG Warburg, his advisers on the CLF deal. A further £4.5 million was secured in an action against two CLF directors.