BT cuts off network sale speculation

BT's incoming chief executive insists that BT's crown jewels are safe in his hands, ending speculation of a sell-off

BT's new chief executive declared on Monday that there is no chance that the company will sell its fixed-line network.

The move is expected to end speculation that BT was considering one of the multi-billion pound bids it had received for its wholesale operations -- which include several thousands local exchanges.

Ben Verwaayen, speaking at a press conference in Germany, told journalists that BT would not sell off its fixed network and concentrate purely on its retail operations. "BT does not intend to become a virtual company," Verwaayen said, adding that it would make no sense for BT to become a pure retail and billing firm with no control over the network over which it provided its services.

A consortium backed by German bank WestLB offered BT around £18bn for its fixed network in summer 2001. BT refused, insisting that its "crown jewels" could never be sold. However, this group is understood to be keen to discuss their proposal with Verwaayen, who officially begins work in February.

Another consortium, called Earthlease, had its £8bn offer for BT's local exchange business rejected last year.

Some in the telecoms industry believe that broadband prices might fall if a third party owned BT's fixed-line network. Companies such as AOL believe that ADSL prices must fall if broadband is to become a mass-market product, but BT blames regulatory restraints for the fact that prices are not lower. BT isn't allowed to sell any products at a loss -- an attempt to prevent the company undercutting rivals to boost market share.

Another company might not face the same financial restraints -- which might allow it to offer cheaper wholesale broadband packages.

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