BT spends £520m to buy Infonet

Job losses not ruled out...

Job losses not ruled out...

BT has announced that it is to acquire managed data and voice service provider Infonet for £520m.

BT will gain Infonet's net cash balance of £210m - making the aggregate total on the deal £310m - with the acquisition expected to conclude in the first half of next year, subject to shareholder and regulatory approval.

BT will land an additional 1,800 corporate customers in six continents through the deal, many of which will have sites in several different countries. The acquisition of Infonet will give BT a better reach in areas including North America and Asia Pacific region and help the telco to better provide services to multinational companies.

While BT and Infonet's businesses overlap - 60 per cent of Infonet's revenues are European - a spokeswoman for BT said the company wasn't concerned about the duplication and said BT's emphasis on IT services would be complementary to Infonet's networking business.

The union of the two businesses will also bring some cost savings, according to BT, some of which will result from the "rationalisation of country operation, back office and administrative functions."

The BT spokeswoman said job losses couldn't be ruled out. BT expects to see £80m in the third year after the acquisition.

Infonet's management team will remain in place and the two companies will continue to offer their own individual products for a time, although the two companies will combine their transport networks and contracts will be moved in due course.

Julian Hewitt, principal analyst at Ovum, said he expected the move to be a good one for BT.

"Neither BT Global Services nor Infonet has adequate scale as a genuinely global networking player. Both organisations have been loss-making but together they should have sufficient scale to generate a profit when the synergies kick in," he said in a statement.