The news released on Friday marks the end of Wales' railways - north, mid and south, and those along the English border - being operated by separate companies.

The winning bid - which aims to encourage more people to use trains - has been welcomed by the passenger watchdog for Wales.

"There is a vast, untapped customer base out there ready, willing and able to use the trains," said Rail Passengers' Committee for Wales secretary, Clive Williams.

"But poor punctuality, below standard stations, overcrowding, inadequate rolling stock and many other problems deter these passengers from getting on the train.

"Much has already been done, but this new franchise should provide sufficient impetus for long term investment in creating a better service."

Arriva background Started as second hand cycle shop in 1938 Over 6,000 buses in UK Operates in several European countries 1,400 trains per day Around 30,000 staff Manages 242 rail stations

Arriva runs a fleet of buses throughout the UK as well as an urban and inter-city rail network across the north of England.

It will take over the franchise by the end of 2003 and operate it for 15 years, subject to five-year performance reviews.

As well as seven new trains, it will also improve bilingual facilities, including a Welsh language customer service phone line, passenger timetables and information, full bi-lingual signage and recorded station announcements at stations.

And about �400,000 will be spent on improving station car parks at Cardiff Central (Wood Street), Chester, Hereford, Newport and Shrewsbury.

Bob Davies, chief executive of Arriva plc, said the company was delighted to win the franchise.

"We look forward to working with the National Assembly for Wales, the SRA and other stakeholders to deliver high quality rail services for Wales and the border counties," he said.

Euan Cameron, managing director of Arriva Trains, the Group's UK Trains division, added: "Arriva's growing expertise in UK rail, together with our experience in running trains in mainland Europe, means that we are able to respond to the needs of different countries and communities.

Welsh assembly Transport Minister Andrew Davies said: "We have been working very closely with the SRA and the 15-year franchise comes with the promise that existing services will be maintained, and provision for the service enhancements.

"We have pushed for, both on the Vale of Glamorgan and Ebbw Valley lines."

Four rail operators had bid for the 15-year single rail franchise, currently held by National Express.

They were : National Express; Serco NS (Netherlands Railways); GB Railways - in association with Connex; and Arriva, the winner of the franchise.

Wales and Borders Trains operates services across the country, south, mid, west and north.

Arriva Trains MD Euan Cameron: "We respond to needs of communities."

It also runs services to key commuter destinations such as Waterloo (London), Birmingham, Bristol, Manchester, and Liverpool.

The SRA, which owns the franchise, has a budget of �94m, but has hinted this could increase to �114m.

Arriva Trains Managing Director Euan Cameron said: "Arriva's growing expertise in UK rail, together with our experience in running trains in mainland Europe, means that we are able to respond to the needs of different countries and communities."

"When we took over the North of England franchise it was failing and effectively bankrupt. With a strong focus on customer service and performance we have worked in partnership with our employees and other stakeholders to turn it around."