Supplying broadband to business and consumers is Eircom's best opportunity for growth, according to NCB Stockbroker's Eircom - Upcoming IPO report.

Declining revenues in Eircom's core fixed-voice business and recent line rental increases will make it hard to generate additional revenues.

The Commission for Communications' (ComReg's) latest market review shows overall Irish fixed-line revenues fell to €496 million in the three months to the end of December 2003 - a 2 per cent drop on the €514 million generated in the same period 12 months earlier.

Eircom's lack of a mobile strategy sets the firm apart from its European peers, most of which can bank on mobile subsidiaries for new revenues.

NCB highlights that broadband penetration in Ireland at 2 per cent is far below the EU average of some 10 per cent. Following Eircom's decision to reduce broadband prices further this month, consumer demand is expected to rise.

However, the degree to which broadband can generate entirely new revenues for Eircom rather than substituting its existing internet revenues is less certain.

There also remains a question over the price at which Eircom will be forced to offer its broadband network to rivals. A low price set by ComReg could undermine the firm's business.