Eircom shares have fallen heavily on the back of sectoral weakness and fears that the sale of Eircell to Vodafone may be delayed until the new year. The shares lost 10 per cent of their value at one stage yesterday, dropping to €2.82 in the early afternoon before recovering to close at €2.92.

Telecom shares across Europe were weaker yesterday but Eircom's slide was amplified by fears over the sale of Eircell to Vodafone. The British group - which will pay for Eircell with shares - fell 6 per cent to 240.75p sterling at one stage, a factor which would have dragged on Eircom.

As reported in The Irish Times two weeks ago, several issues are delaying the Vodafone deal. Eircell had originally planned to announce the €5.1 billion deal in mid-November, when it was due to publish its interim results. In the normal way the deadline for the publication of the interims would have been tomorrow but the company can extend the deadline to the end of December.

Sources close to the talks stressed yesterday that the deal was not coming unstuck but that it could be significantly delayed. "There are a number of issues that are still capable of being resolved in the next week or so. If they are not resolved by this time next week, you could be looking at a more substantial delay," said the source.

Among the issues to be resolved are Eircom's mobile strategy once it has disposed of Eircell. Vodafone wants clarity on whether Eircom will try to re-enter the mobile market, possibly by seeking a third generation licence when the competition to award them is run next year.

Any move by Eircom that might affect the value of Eircell's business is likely to be reflected in the price Vodafone pays. The British group also wants some assurance that it will be able to obtain a third generation licence for Eircell when it takes over the business.

It is understood that Eircom has sought an agreement that would allow it to buy time in bulk from Eircell after the demerger in order to sell on to its fixed-line customers. Eircom will not seek a third generation licence for itself, although Eircell, which will still technically be part of Eircom for several months, will seek one.

Even if the deal is announced before Christmas, it could take months to complete as a shareholder meeting will have to be called.

Vodafone has also satisfied itself on the regulatory environment going forward. Another issue is the position of KPN and Telia, Eircom's two largest shareholders. The Dutch and Swedish telecoms groups, which own 21 per cent and 14 per cent respectively of the company, are trying to exit Eircom as part of the deal as they do not want to remain as shareholders in the group after the demerger of Eircell.

A raft of other agreements on issues such as the sharing of infrastructure and other facilities also have to be concluded.