The merged business will have revenues of over €100 million.

Imagine is backed by European venture capital firm DFJ Esprit, which has invested €15 million in the company since 2006.

Chairman Sean Bolger says: ‘Strategically, we have acquired substantial network assets on a nationwide basis, which enhances our current service offerings and facilitates the cost-effective deployment of WiMAX [wireless data] technology.’

The vendors, Irish infrastructure developer NTR and paving supplier Kilsaran Concrete, retain a stake of 25 per cent in the enlarged group. They will also make a further investment of €7 million in the company.

Imagine Communications operates under a number of brands including Access Telecom, Gaelic Telecom and Imagine Mobile. Following the acquisition of Irish Broadband it claims a ten per cent share of the domestic broadband market with 80,000 customers.

Ireland ranks below countries such as the Czech Republic and Portugal in terms of broadband penetration, with only 9.2 subscribers per 100 inhabitants compared to 19.4 in the UK, according to 2006 data from global research organisation OECD.