TEAM of leading international consultants is to investigate Telecom Eireann's shareholding in Cablelink, in one of the first moves in an EU Commission investigation into the industry across Europe.

The consultants have sought the views of the other cable operators in the Republic on the issue, leading to speculation that Telecom could come under pressure to sell its shareholding to boost competition.

Telecom owns 75 per cent of Cablelink, the cable TV company which serves Dublin, Waterford, Cork and Galway. The remaining shares are held by RTE, but Telecom has an option to buy the other 25 per cent.

The study which is being carried out by London based consultants Arthur D Little, will enquire into the development of telecommunications and multimedia technologies throughout the EU.

It will address two major issues - joint ownership of cable and telecommunications networks by a single dominant operator and restrictions on public telecoms operators from using their national telecommunications networks to provide entertainment services to the residential sector.

The EU has previously indicated that it wants to make a decision liberalising the cable market by 1998.

A spokesman for Telecom Eireann confirmed last night that the company had received a questionnaire regarding its interest in Cablelink. He said all EU telecoms companies which had an interest in cable firms had been contacted.

The spokesman said the questionnaire asked what the status of Telecom's interest in Cablelink was and what plans Telecom had to develop it.

"We are currently finalising plans to develop Cablelink as a multimedia platform which would be open to all service providers," he said.

He added that Telecom would be meeting the consultants shortly.

One of the attractions of such a network is that it can eventually be used to carry telephone traffic.

Telecom's Cablelink stake was a considerable attraction to its eventual suitors KPN/Telia. Dutch telecoms company KPN has great expertise in this area.

Ironically, KPN was recently ordered to divest itself of its cable company.

Rival operators, such as Esat Telecom have long complained that Telecom should be forced to divest itself of its interest in the cable firm. Telecom has also been accused of buying into Cablelink purely as a defensive measure, and has been criticised for not developing the network.

It is understood that the consultants have been asked to recommend possible options which would find the right balance for deregulation to "open the gates on to the playing field" while controlling "the most powerful players to provide the best service to individual consumers".

One of the questions which cable companies are being asked is what would happen if the major telecoms operators were forced to divest themselves of their networks which then were subsequently granted telephony licences. The consultants are asking how this would affect competition in the markets concerned.

Another issue which is being examined is how the joint ownership of cable and telecoms networks affects the economic feasibility of developing alternative delivery platforms by the independent cable television operators.

The consultants are also asking cable firms how advanced their networks are regarding their ability to deliver broadband interactive services and how long would it take to provide competitive telephony services.

The questionnaire points out that different countries vary in their approach to the issue.

In Britain, for example, British Telecom and other large players will not be able to use existing national infrastructure to provide broadcast entertainment services until the year 2001.

"The UK believes this ensures that cable entrants are sufficiently protected to underpin investor confidence to allow new networks with local customer access to be built," it said.

Industry sources said the consultants, who could not be reached yesterday, were aiming to complete their study by July.

If Telecom was eventually forced to sell its Cablelink stake, something which Telecom executives privately admitted was quite probable, it would raise valuable cash for the State telephone company. The money would be a help in reducing Telecom's debt, currently around £600 million.