The board of Eircom meets today to discuss terms for a due diligence examination of its books by Babcock & Brown, the Australian investment fund that has built up a stake of almost 29 per cent in the former State telecoms group.

A draft agreement for a due diligence process is under discussion between advisers for both sides, but the question of the price that the Australians might pay remains unresolved.

Babcock & Brown paid no more than €2.20 per Eircom share to build its 28.8 per cent stake and it is not known whether it will pay any premium above that to secure full control.

This presents difficulties for Eircom's directors, who were poised to sell the group for more than €2.40 per share before takeover talks with Swisscom broke down late last year.

The Australians have not yet indicated that they would pay any premium and the debate within Eircom is said to focus on securing an increase above the indicative price level of €2.20 per share.

Such an increase, if forthcoming, is unlikely to be significantly in excess of €2.20.

Eircom shares gained one cent on the Dublin market yesterday, closing at €2.18.

In advance of due diligence, there has been no formal dialogue between Babcock & Brown and the worker-controlled trust in Eircom that owns 21.5 per cent of the group.

When their stakes are taken together, Babcock & Brown and the Employee Share Ownership Trust have some 50.3 per cent of Eircom between them.

Thus they would be seen to be acting in concert if they were to hold formal talks at this relatively early stage of the process.