Magnet had been offering services to customers through the local loop unbundling (LLU) process, through which Eircom offers its rivals access to the copper wire network connecting homes to its local telephone exchanges.

In a statement issued to the Sunday Tribune the regulator said it was "aware that Magnet Networks has announced its intention to expand its core network infrastructure with a re-focus of its priorities towards the delivery of business and fibre-to-the-home services".

"Comreg believes that to date the lack of sufficient progress on local loop unbundling in ensuring both its robustness and its appeal to consumers is unacceptable, " the statement said.

Alternative operators such as Magnet, Smart and BT have been critical of the slow pace at which Eircom allows its customers to be moved across to competitors. A process which can be accomplished in a matter of days in the US and the UK commonly takes at least three weeks in Ireland.

Comreg said the delays in the LLU process would hamper both the prices and the type of services that would be available to Irish consumers and could act as a barrier to new operators entering the market.

Magnet chief executive Vern Kennedy following a review the company had decided its consumer LLU business was not worthwhile pursuing. The company will focus on recruiting higher-margin business customers and on building out its own fibre cable to new housing developments where it provides television, phone and internet services. "Consumer LLU has the lowest profit potential, it has the most competition and is the most difficult [business] to execute, " he said.