There's speculation that Eircom could become the focus of a take-over bid after Australian investment outfit Babcock & Brown acquired a 12.5 per cent stake in the Irish incumbent.

Babcock has shelled out around €400m for its slice of the dominant Irish telco which it believes it currently undervalued.

"We see this as a strategic shareholding in a company with robust fundamentals and a positive outlook which is not fully recognised by the market at the present time."

Part of Babcock's optimism follows Eircom's summer acquisition of Ireland's third largest mobile operator Meteor for €420m.

"In contrast to Telstra in Australia, Eircom has an increasingly superior market position and an outlook for top line growth with its re-entry into mobile. Eircom's market position is more like that of Telecom New Zealand," said Comb.

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