Latest bid could see BT split up

A consortium backed by a German bank wants to buy the whole of BT's fixed-line network, rivalling another bid for the UK's local loop
Written by Graeme Wearden, Contributor

A consortium backed by a German bank has offered to buy BT's fixed-line business -- leading to suggestions that the telco is close to breaking up.

The group is backed by West LB, a German investment bank, and is thought to have made a bid of £18bn for BT's whole fixed-line network. BT is playing down the offer, claiming that such proposals are made regularly. However, the company is still trying to pay off its debts -- currently down to around £17bn after the sale of other assets -- and experts feel it could be tempted by the offer. Some shareholders believe that the £18bn offer is too low, but it seems likely that this bid could be raised if necessary.

If BT did decide to sell, it would have to pay for the use of the network in order to carry on selling services to its customers. Given that it is also planning to float BT Wireless, its mobile operations, it is possible that the former state monopoly could soon be split up.

It emerged last week that BT had also received an offer of £8bn for its "local loop", the part of the network between individual houses and offices and the local exchange, from Earthlease -- a company backed by a group of American banks. It initially dismissed this offer, but regulatory body Oftel was in talks with Earthlease last Thursday, leading to suggestions that the deal could be on.

Critics of BT have repeatedly claimed that it is guilty of slowing down the rollout of innovative Internet services in the UK. Rival Internet service providers (ISPs), who currently have to pay BT in order to use its network, believe that it has obstructed their attempts to offer unlimited access and broadband Internet services -- charges that BT has denied.

BT's debt got close to £30bn earlier this year. Since then it has sold several of its assets, including its stake in the Japan Telecom (JT) group and Airtel of Spain which Vodafone bought for £3.5bn.

According to a report in The Times on Tuesday, BT is still planning to float its mobile operations on the stock market later this year. The floatation of BT Wireless is expected to start next month.

See the Broadband News Section for the latest on cable modems, ADSL, satellite and other high-speed access technologies.

Have your say instantly, and see what others have said. Click on the TalkBack button and go to the Telecoms forum.

Let the editors know what you think in the Mailroom. And read other letters.

Editorial standards