NOW the dust has settled on its takeover, the new owners of Eircom have ’fessed up: yes, it does have the worst broadband service in Europe after all.

The news will come as no small surprise to senior managers of the telecoms company who, for the past 18 months, have vigorously denied similar criticism. But it is now the considered opinion of Robert Topfer, a senior executive with Babcock & Brown, the Australian company that has just acquired Eircom for €4 billion.

In an interview with The Age, an Australian newspaper, Topfer, global director of corporate finance at Babcock & Brown, said the Irish network needed significant new investment as it had “the worst broadband in Europe”.

His judgment won’t come as a shock to Damien Mulley, chairman of Ireland Offline, a broadband lobby group.

“This is probably Babcock & Brown sending a message to the management that are staying in Eircom,” said Mulley. “I think they do have a commitment to bringing in broadband, but we’ll have to see. There needs to be a lot of investment.”

But David McRedmond, Eircom’s commercial director, denied Topfer’s comments highlighted a need for fresh investment from the new owners.

“Even six months ago you could argue the point, but I believe we have broken the camel’s back now,” said McRedmond. “There has been a huge investment and uptake in broadband in the past six months.” Last week the company announced that its broadband subscriber base was 276,000.

Topfer’s comments contrast with those of Sir Anthony O’Reilly, Eircom’s outgoing chairman. He told the company’s recent annual meeting of shareholders that broadband coverage in Ireland was “in line with the western European average and, unbelievably, ahead of the United States”.

But the latest broadband scorecard from the European Competitive Telecommunications Association (ECTA), shows that Topfer’s claim is nearer the mark than O’Reilly’s.

ECTA releases quarterly league tables ranking western European countries according to broadband penetration levels. Ireland is 14th out of the 15 old EU countries for the last quarter of 2005. The low ranking is expected to remain unchanged, just ahead of Greece in 15th place, when the results for the first quarter of 2006 are published.

McRedmond is unrepentant. “These tables are based on old data and we have moved on so much already. It’s not about tables anyway, it’s about customers being happy with the service and we have had excellent reaction from our product,” he said.

Eircom has taken most of the criticism for Ireland’s poor broadband penetration from lobby groups and other broadband providers. They accuse Eircom of “being in no hurry” to open up access to its local networks, as it is required to do by ComReg, the regulator.

In his interview, Topfer said the broadband network in Ireland needed significant investment to bring it up to an acceptable standard.

By the end of 2005, only 5.3% of the Irish population had broadband compared with a European average of 11.5% and more than 20% in Denmark, Finland and the Netherlands. Eircom says this is partly due to a lack of demand and that most people who want broadband can get it.

Mulley disagrees. “Eircom are in 400 exchanges and there are 1,100 exchanges in the country. Even where it is available, there is a significant failure rate of 20%. Compare that to BT in Northern Ireland, where the failure rate is 0.84%, and in the UK it’s about 0.9%. The reason for this failure rate is because of the state of the network, which hasn’t been looked after enough in the past few years.”

Mulley claims one reason Eircom has been slow to invest in broadband is because the company is making huge profits from internet customers on slower dial-up connections. On Friday, Eircom announced profits of €81m for the first six months of 2006.

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