Analysis: Smart Telecom faces two choices. It can be sold and refinanced by its new owner, or it can raise cash from existing or new investors through the markets or some other mechanism.

The company is relying on its biggest shareholder, Brendan Murtagh of Kingspan, for short-term capital. But, no matter how willing he might be to do this, there is presumably a limit to his resources, particularly as Smart's finance director, Brian Timmons, estimates the business is going through €2.5-€3 million a month.

If he decides to stop funding before Smart gets the cash it needs, it would raise the possibility of the company going into examinership, or of one of its four bankers - all of whom have security for their loans - putting it into receivership.

But its chief operations officer, Ciarán Casey, was adamant yesterday that Smart had a future. "We have a business that's viable and has huge potential," he argued. "We will get the capital."

Smart's focus is broadband. Its problem is that it hasn't got enough customers on this service to break even, let alone make a profit.

Yesterday, the company said it had 16,500 broadband customers. But at one point, it had aimed to have 64,000 by now.

It projected that it would have as much money coming in as going out by the end of this year. It now says that it will be mid-2007 before this happens.

To be fair, the difficulties it has experienced in recruiting customers are not of its own making. Smart's approach depends on getting direct access to consumers through exchanges owned by Eircom.

Up to recently, Eircom was unwilling to open up these exchanges, something it is obliged to do. And because of structural difficulties related to this, some customers who want to switch have had to change phone numbers, while others experience a break in service. These are obvious barriers to winning new business.

Eircom, its competitors including Smart and the communications regulator, ComReg, are working towards finding a solution to these problems. But there is no saying how long this could take, and Smart has no real control over the process.

At the moment, it has access to 36 exchanges in the Republic, which limits its reach to 600,000 potential customers. Mr Casey believes that, for a start, by focusing on these areas, it could recruit enough customers to give it a profitable business.

For the moment, that is the only choice it has. Last year, it won a licence to operate a third generation (3G) mobile network in the Republic. But ComReg withdrew this in a row over the financial guarantees that the company had to supply as a condition of getting the licence.

That resulted in a three-week High Court case in which a verdict is not expected before October. The case could go to the Supreme Court. If it does, it could be next year or beyond before there's a resolution. Smart will have to find a resolution to its current difficulties long before that.