The Government has sharply rejected charges that it offered a preferential €1.8 billion deal to Eircom to speed up the supply of high-speed broadband internet services.

In a written Dail reply yesterday, the Minister for Communications, Marine and Natural Resources, Mr Noel Dempsey, told Fine Gael TD, Mr Bernard Durkan: "These claims are untrue." The Sunday Business Post has alleged that Eircom had been offered a range of incentives such as tax breaks, subsidized loans, building regulation changes and price increases.

"At no stage were negotiations entered into with Eircom or any other party. At no stage were terms such as postulated in the Sunday Business Post article on offer nor did the Government offer to fund Eircom directly or indirectly through subsidised loans, tax breaks or any other means. This has also been publicly confirmed by Eircom," said the Minister.

Both Eircom and Esat BT held discussions with a Government-appointed consultant, Mr Ira Magaziner, about ways of accelerating the sluggish roll-out of the broadband network.

Mr Magaziner's company, SJS, reported to the Cabinet in May 2003 after consultations within the industry and with the Department of Communications, Marine and Natural Resources, headed by the then minister, Mr Dermot Ahern.

The consultants claimed that Ireland could be among the world leaders in broadband within three years with the help of certain incentives and financial assistance.

In his Dail reply, Mr Dempsey said consultants' advice to "a Government subcommittee, agency or a Department should not be misconstrued as Government policy. The telecommunications market is a regulated market and thus any action by Government has to be consonant with national and EU regulation. Accordingly, Government is not in the business of entering exclusive contracts of the kind inferred by the article with any market entities," he said.