ESB has selected Vodafone as its preferred partner to build a €400 million fibre network that will be strung across electricity poles to bring high-speed broadband directly into homes and businesses around the State. Vodafone confirmed yesterday that it had entered exclusive negotiations with ESB for the project, while the power company would only say that "negotiations are ongoing with an international telco".

“ESB has entered into exclusive negotiations with Vodafone Ireland as the preferred bidder to form a joint venture company which will roll out fibre to homes and businesses across Ireland,” said Vodafone.

Vodafone had been in competition with BT Ireland to enter the partnership with ESB, but it is understood that BT withdrew from the process recently, leaving the way clear for Vodafone to tie up a deal that will potentially strengthen its position in the broadband wholesale market.

Minister for Communications Pat Rabbitte has introduced a Bill to allow ESB enter into such an arrangement on a commercial basis.

The talks with Vodafone are at an advanced stage. The deal may have to be notified to the Competition Authority.

The proposed investment, first revealed by The Irish Times last July, will entail building a fibre network to "pass" up to 500,000 homes in towns outside of the main cities of Dublin and Cork. The network would be owned by a joint venture firm, co-owned by ESB and Vodafone. It would be open on a wholesale basis to any operator that wants to sell high-speed services to regional customers, providing stiff competition for Eircom's €1.5 billion network.