British Telecom's bid for Esat Telecom means Ocean, the joint venture here between BT and the ESB, is likely to be gradually absorbed into Esat's operations.

The move will significantly boost Esat's dominance in the residential Internet service provider market, by adding another 90,000 users of Ocean's Oceanfree service to its current base of around 50,000 subscribers.

Ocean, which was set up in June 1998 with the aim of eventually offering a complete range of voice, data and Internet services, now employs 300 people here.

Yesterday, market sources suggested BT's acquisition of Esat marked the beginning of the end for the Ocean initiative.

Esat already offers well-established voice, data and Internet services, not to mention the more attractive mobile telephony services.

It would be in keeping with BT's strategy of maintaining local brands in their respective markets if Ocean's activities were to be gradually merged with those of Esat.

Esat already owns Ireland's largest Internet service provider following its acquisition of PostGem-Ireland OnLine for £115 million last September. The move added 35,000 people to Esat's residential Internet subscriber base of around 15,000 people at the time.

There are understood to be 90,000 regular repeat users of Ocean's Oceanfree Internet service. The absorption of these into Esat would make Esat a powerful player in the Irish ISP market.

Apart from a high volume of residential users, Ocean has had disappointing results in meeting its target penetration rates for corporate voice and data services the areas where the highest margins can be made.

Esat, on the other hand, has made considerable gains in this lucrative market. It has always targeted the higher returns of corporate Internet and data communications. Esat says it has almost 13,000 corporate customers, including blue-chip companies Intel, Dell, Microsoft, Gateway, Reuters and Guinness.

In the final quarter of 1997, just 4 per cent of Esat's business was derived from data and Internet traffic. By the end of 1998, it accounted for 55 per cent of Esat's business.