Telecom Eireann is to unveil details of major package of reductions in phone charges on Monday. The company is to target inland long distance calls, cutting prices by around one-third.

The reductions will see the price of inland calls - those over 56 kilometres - fall on average from 18p a minute to 12p a minute, The Irish Times has learned. It is expected that the package will produce savings to consumers of well in excess of £60 million a year.

The savings will apply to both business and domestic users. Telecom also will reduce substantially its subscription charges to volume business discount users, cutting them by up to 48 per cent. These packages are incentives aimed at businesses and the volume reductions and subscriptions to the schemes depend on the number of calls made.

It is also expected that Telecom will make further announcements on billing by the second, which provides substantial savings to consumers, compared to the traditional billing per unit.

It is understood that Telecom had proposed introducing the reductions earlier this year. However, industry sources said some of its competitors complained to the new telecommunications regulator saying it amounted to unfair competition. The issue seems to have been resolved.

Telecom is also cutting its rates for phone calls made to the Pacific Rim. Sources said they would fall by up to one-third. It is understood that there is an increasing amount of phone traffic to Pacific Rim countries. By announcing its latest package of call cost reductions, Telecom will put further pressure on competitors who compete for corporate telephone traffic. In its third-quarter results, released recently, Esat Telecom cited lower charges to compete with Telecom Eireann for the fall in its revenues from international traffic. Earlier this year, Telecom announced a series of price cuts for calls to Britain. Telecom claimed the package would save consumers £80 million in a full year. Calls to the US and Canada were reduced by 2p a minute.

At the time, Telecom chief executive, Mr Alfie Kane indicated that further price reductions would be introduced later this year. He said the company, which was using British Telecom's charges as a benchmark, was still charging too much for inland calls.

Although the reductions will substantially reduce Telecom's income, the State company will hope that the shortfall will be made up by people making more calls and the general buoyancy in the economy.

Telecom is also mindful of the fact that British Telecom is currently finalising details of a link-up with the ESB to use its network to provide an infrastructure for calls. It is also rumoured that Cable & Wireless is going to make a very aggressive push into the corporate market shortly.

Such competitors have serious muscle behind them and will undoubtedly win business from Telecom and others if charges are not extremely competitive.

Telecom is trying to restructure its charges to domestic phone users.